<PAGE> 1
As Filed with the Securities and Exchange Commission on October 29, 1997
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
GRAND CASINOS, INC. 41-1689535
GRAND CASINOS RESORTS, INC. 41-1730234
GRAND CASINOS OF MISSISSIPPI, INC. -- GULFPORT 41-1726210
GRAND CASINOS OF MISSISSIPPI, INC. -- BILOXI 41-1726211
GRAND CASINOS BILOXI THEATER, INC. 41-1790979
BL DEVELOPMENT CORP. 41-1754530
BL RESORTS I, INC. 41-1889118
GCG RESORTS I, INC. 41-1889119
GRAND CASINOS NEVADA I, INC. 41-1836869
BL RESORTS I, LLC Applied For
GCG RESORTS I, LLC Applied For
MILLE LACS GAMING CORPORATION 41-1683724
GRAND CASINOS OF LOUISIANA, INC. -- TUNICA -- BILOXI 41-1705810
GRAND CASINOS OF LOUISIANA, INC. -- COUSHATTA 41-1705808
GCA ACQUISITION SUBSIDIARY, INC. 41-1815669
(Exact name of registrants as (I.R.S. employer
specified in their charters) identification numbers)
MINNESOTA
(State or other jurisdiction of incorporation
or organization of all registrants)
--------------------------------
Thomas J. Brosig
President
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
(612) 574-4000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------------
With copies to:
Russell F. Lederman, Esq.
Maslon Edelman Borman & Brand, LLP
3300 Norwest Center
Minneapolis, Minnesota 55402
--------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practical after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. /__/
--------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
9% Series B Senior Notes due 2004............ $115,000,000.00 $34,848.48
=================================================================================================================
</TABLE>
(1) ESTIMATED IN ACCORDANCE WITH RULE 457 OF THE SECURITIES ACT SOLELY FOR THE
PURPOSE OF CALCULATING THE REGISTRATION FEE.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 29, 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING
9% SERIES A SENIOR NOTES DUE 2004
IN EXCHANGE FOR 9% SERIES B SENIOR NOTES DUE 2004
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OF
GRAND CASINOS, INC.
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON ___________ , 1997
UNLESS EXTENDED
Grand Casinos, Inc., a Minnesota corporation, (the "Company"), together
with Grand Casinos Resorts, Inc., Grand Casinos of Mississippi, Inc. - Gulfport,
Grand Casinos of Mississippi, Inc. - Biloxi, Grand Casinos Biloxi Theater, Inc.,
Mille Lacs Gaming Corporation Grand Casinos of Louisiana, Inc. - Tunica--Biloxi,
Grand Casinos of Louisiana, Inc. - Coushatta, GCA Acquisition Subsidiary, Inc.,
BL Development Corp., BL Resorts I, Inc., GCG Resorts I, Inc., Grand Casinos
Nevada I, Inc., BL Resorts I, LLC, GCG Resorts I, LLC and GCA Acquisition
Subsidiary, Inc., (each a "Guarantor," and, collectively, the "Guarantors"),
hereby offer, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (which together
constitute the "Exchange Offer"), to exchange with the Eligible Holders
(defined below) thereof, its 9% Series B Senior Notes Due 2004 (the "New
Notes") for an equal principal amount of its outstanding 9% Series A Senior
Notes Due 2004 (the "Old Notes"), of which an aggregate of $115,000,000 in
principal amount is outstanding as of the date hereof. The Old Notes and the
New Notes are collectively referred to herein as the "Notes." See "THE EXCHANGE
OFFER." For purposes of this Exchange Offer, "Eligible Holder" shall mean the
record owner of any Old Notes that remain Transfer Restricted Securities. For
purposes of this Exchange Offer, "Transfer Restricted Securities" is defined in
the Registration Rights Agreement, dated as of October 16, among the Company,
the Guarantors and the original purchasers of the Old Notes (the "Registration
Rights Agreement"). No proxies are being solicited by the Company in
connection with the Exchange Offer.
The Company will accept for exchange any and all validly tendered Old
Notes on or prior to 5:00 p.m., New York City time, on __________, 1997 (if and
as extended, the "Expiration Date"). Tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal amount of Old Notes
being tendered for exchange. Old Notes may be tendered only in integral
multiples of $1,000.
(Continued on next page)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NEITHER THE MISSISSIPPI GAMING COMMISSION, THE NEVADA STATE
GAMING CONTROL BOARD NOR THE NEVADA GAMING COMMISSION
NOR ANY OTHER GAMING AUTHORITY HAS PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR
THE INVESTMENT MERITS OF THE SECURITIES
OFFERED HEREBY.
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that the offering of the
New Notes will have been registered under the Securities Act. The Old Notes have
been, and the New Notes will be, issued under the Indenture, dated as of October
16, 1997, (the "Indenture"), among the Company, the Guarantors, and Firststar
Bank of Minnesota, N.A., as Trustee (the "Trustee").
The New Notes will bear interest from and including their respective
dates of issuance. Eligible Holders whose Old Notes are accepted for exchange
will have the right to receive interest accrued thereon from the last Interest
Payment Date (as defined in "DESCRIPTION OF THE NEW NOTES AND GUARANTY") to, but
not including, the date of issuance of the New Notes, such interest to be
payable with the first interest payment on the New Notes to the holder of the
New Notes, and will be deemed to have waived the right to receive interest on
the Old Notes accrued on and after issuance of the New Notes.
The New Notes will bear interest at the same rate and on the same terms
as the Old Notes. The New Notes will bear interest at a rate equal to 9% per
annum. Interest on the New Notes will be payable semiannually in arrears on
April 15 and October 15 of each year, or if any such date is not a business day,
on the next succeeding business day, commencing on the first such date following
the Expiration Date. See "DESCRIPTION OF THE NEW NOTES AND GUARANTEES."
The New Notes will be redeemable at the option of the Company, in whole
or in part, at any time on or after October 15, 2001 (the "First Optional
Redemption Date") in cash at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated Damages (as defined), if any, thereon
to the date of redemption. In addition, at any time prior to the First Optional
Redemption Date, the Company may, at its option, redeem the New Notes, in whole
or in part, at a redemption price equal to 100% of the aggregate principal
amount thereof, plus the applicable Make-Whole Premium (as defined). In
addition, upon the occurrence of a Change of Control (as defined), each holder
of New Notes will have the right to require the Company to repurchase all or any
part of such holder's New Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. See "DESCRIPTION OF
THE NEW NOTES AND GUARANTEES --REPURCHASE AT THE OPTION OF HOLDERS--CHANGE OF
CONTROL." There can be no assurance that, in the event of a Change of Control,
the Company would have sufficient funds to purchase all Senior Notes tendered.
See "RISK FACTORS--Risks of Leveraged Financial Position--Ability to Service
Debt."
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The Notes are unconditionally guaranteed by all significant
subsidiaries of the Company. See "DESCRIPTION OF THE NEW NOTES AND GUARANTEES -
Note Guarantees."
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to this Exchange
Offer in exchange for Old Notes may be offered for resale, resold, and otherwise
transferred by a holder thereof (other than, (i) a broker-dealer who purchases
such New Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act or (ii) a person that is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the holder is acquiring the New
Notes in its ordinary course of business and is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of the New Notes. Eligible Holders wishing to accept the Exchange Offer must
represent to the Company, as required by the Registration Rights Agreement, that
such conditions have been met.
UNDER NO CIRCUMSTANCES MAY THIS PROSPECTUS BE USED FOR AN OFFER TO
RESELL, RESALE OR OTHER RETRANSFER OF NEW NOTES. THE COMPANY BELIEVES THAT,
SUBJECT TO THE LIMITATIONS AND CONDITIONS SET FORTH IN THE PRECEDING PARAGRAPH,
NEW NOTES ISSUED PURSUANT TO THE EXCHANGE OFFER MAY BE TRANSFERRED WITHOUT
COMPLIANCE WITH THE PROSPECTUS DELIVERY PROVISIONS OF THE SECURITIES ACT. THE
COMPANY FORMED SUCH BELIEF BASED ON NO-ACTION LETTERS ISSUED BY THE COMMISSION
STAFF TO THIRD PARTIES, WHICH ARE NOT RULINGS OF THE COMMISSION OR ITS STAFF. IN
THE EVENT THAT THE COMPANY'S BELIEF IS INACCURATE, HOLDERS WHO TRANSFER NEW
NOTES IN VIOLATION OF THE PROSPECTUS DELIVERY PROVISIONS OF THE SECURITIES ACT
AND WITHOUT AN EXEMPTION FROM REGISTRATION THEREUNDER MAY INCUR LIABILITY
THEREUNDER. THE COMPANY DOES NOT ASSUME OR INDEMNIFY HOLDERS AGAINST ANY SUCH
LIABILITY, ALTHOUGH THE COMPANY DOES NOT BELIEVE THAT ANY SUCH LIABILITY SHOULD
EXIST.
As of the Record Date (as defined in "THE EXCHANGE OFFER - Terms of the
Exchange Offer") of this Prospectus, there were _____ registered holders of Old
Notes. The Company believes that, as of the date of this Prospectus, none of
such holders is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company. Prior to this Exchange Offer, there has been no
public market for the Notes. The Company does not expect an active public market
for the New Notes to develop. To the extent that a market for the New Notes does
develop, the market value of the New Notes will depend on market conditions
(such as yields on alternative investments), general economic conditions, the
Company's financial condition, and other factors. Such conditions might cause
the New Notes, to the extent that they are actively traded, to trade at a
significant discount from face value. See "RISK FACTORS - Absence of Public
Market."
Neither the Company nor the Guarantors will receive any proceeds from
this offering, but, pursuant to the Registration Rights Agreement, the Company
and the Guarantors will be responsible for certain offering expenses. No
underwriter is being utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE
COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD
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NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH
JURISDICTION.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF
CERTAIN RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN
EVALUATING THE EXCHANGE OFFER.
The date of this prospectus is ___________, 1997.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION....................................................
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..........................
RECENT DEVELOPMENTS......................................................
THE COMPANY..............................................................
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER...............................
CONSEQUENCES OF EXCHANGING OLD NOTES ....................................
SUMMARY DESCRIPTION OF THE NEW NOTES ....................................
RISK FACTORS ............................................................
THE EXCHANGE OFFER.......................................................
DESCRIPTION OF THE NEW NOTES AND GUARANTEES..............................
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................................
LEGAL MATTERS............................................................
EXPERTS ................................................................
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENT HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE FROM TIMOTHY
J. COPE, CHIEF FINANCIAL OFFICER, GRAND CASINOS, INC., 130 CHESHIRE LANE,
MINNETONKA, MINNESOTA 55305, (612) 449-9092.
<PAGE> 7
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy and information statements and other information filed by the
Company can be inspected and copied at the public reference facilities of the
Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC
20549, as well as at the following Regional Offices: Seven World Trade Center,
13th Floor, New York, NY 10148 and 500 West Madison Street - Suite 1400,
Chicago, IL 60661. Copies can be obtained from the Commission by mail at
prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington,
DC 20549. In addition, such material may also be accessed electronically at the
Commission's site on the Work Wide Web located at http://www.sec.gov.
In the event that the Company ceases to be subject to the informational
reporting requirements of the Exchange Act, the Company has agreed that, whether
or not it is required to do so by the rules and regulations of the Commission,
for so long as any of the Notes remain outstanding, it will furnish to each of
the holders of Notes and file with the Commission (unless the Commission will
not accept such a filing ) (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" that describes the financial condition and results of operations of
the Company and its Restricted Subsidiaries, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the Commission
for so long as any of the Notes remain outstanding, the Company shall make such
information available to security analysts and prospective investors upon
request. In addition, the Company and the Guarantors have agreed that, for so
long as any of the Notes remain outstanding, they will furnish to holders and to
securities analysts and prospective investors of the Notes the information
required by Rule 144A(d)(4) under the Securities Act.
This Prospectus is part of a Registration Statement on Form S-4
(together with all amendments and exhibits thereto, the "Registration
Statement") which the Company and the Guarantors have jointly filed with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the New Notes offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement.
2
<PAGE> 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company filed with the Securities and
Exchange Commission are incorporated herein by reference:
(i) Annual Report on Form 10-K for the fiscal year ended December
29, 1996.
(ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 30, 1997 and June 29, 1997.
(iii) The Proxy Statement for the Annual Meeting of Shareholders
held on May 9, 1997.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus. All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, and prior to the completion of the offering shall be deemed to be
incorporated herein by reference.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written request of such person, a copy of any
or all of the documents incorporated by reference into this Prospectus (not
including certain exhibits to such documents). Written requests for such copies
should be directed to Timothy J. Cope, 130 Cheshire Lane, Minnetonka, Minnesota
55305.
3
<PAGE> 9
RECENT DEVELOPMENTS
THIRD QUARTER EARNINGS. On October 21, 1997, the Company announced
earnings of $0.51 per share for the third quarter. Financial highlights for the
three-month period ended September 28, 1997, include net revenues of $167.6
million, 14% higher than the $146.7 million of revenue earned in the third
quarter of 1996. EBITDA (earnings before interest, taxes, depreciation, and
amortization) for the quarter were $56.8 million, compared with $48.0 million a
year ago, an 18% increase. Net earnings during the quarter totaled $22.2
million, compared with $3.5 million a year ago. For the first nine months of
1997, the Company generated net revenues of $460.6 million, a 27% increase over
net revenues of $363.5 million for the first nine months of 1996. Consolidated
EBITDA for the first nine months of 1997 totaled $150.6 million compared to
$126.0 million, an increase of 20% over the same time period in 1996. Earnings
per share for the first nine months of 1997 were $1.27 compared to $0.94 for the
same time period in 1996.
WITHDRAWAL FROM STRATOSPHERE CORPORATION REORGANIZATION PROCESS. On
July 25, 1997, Stratosphere Corporation ("Stratosphere") informed the Company
that Stratosphere had received an alternative restructuring proposal which was
more favorable, in its view, than the First Amended Plan of Reorganization filed
by Stratosphere on June 20, 1997. Because the alternative proposal does not
provide the Company with any opportunity to invest in or otherwise participate
in the ownership of the reorganized Stratosphere, and because the Company has
been unable to reach an agreement for a consensual reorganization which would
permit the Company's participation, the Company has recently informed
Stratosphere that it has no present intention to participate in any Stratosphere
plan of reorganization.
NON-RENEWAL OF MANAGEMENT CONTRACT AT GRAND CASINO MILLE LACS. On
September 16, 1997, the Company announced that the Corporate Commission of
Mille Lacs Band of Ojibwe (the "Corporate Commission"), owner of Grand Casino
Mille Lacs, determined not to renew its management contract with the Company.
The current management agreement will expire on April 2, 1998, at which time
the Corporate Commission will assume sole responsibility for
operating the Grand Casino Mille Lacs facility. The Company will continue to
manage Grand Casino Hinckley through the end of its contract term on May 15,
1999. No conclusion regarding a future management contract for Grand Casino
Hinckley has been made at this time. The original management agreements between
the Company and the Corporate Commission granted the Corporate Commission the
right to continue to use the "Grand Casino" name beyond the term of the
management agreements.
STANDBY EQUITY COMMITMENT LITIGATION. A successor trustee under that
certain Indenture pursuant to which Stratosphere issued its First Mortgage
Notes has recently filed a complaint in the United States District Court for
the District of Nevada naming the Company as a defendant. The complaint alleges
that the Company has failed to perform under a Standby Equity Commitment
entered into by Stratosphere and the Company in connection with Stratosphere's
First Mortgage Notes. The trustee filed the complaint as a claimed third party
beneficiary under the Standby Equity Commitment. An adverse determination under
this or other pending litigation may have a material adverse effect on the
Company.
STRATOSPHERE SECURITIES LITIGATION - FEDERAL. As described more fully
in Item 1 of Part II of the Company's Form 10-Q for the fiscal quarter ended
June 29, 1997, in August 1996, a complaint was filed in the United States
District Court for the District of Nevada against Stratosphere and others,
including the Company. The complaint was filed as a class action, and sought
relief on behalf of Stratosphere shareholders who purchased their stock between
December 19, 1995 and July 22, 1996. The complaint included allegations of
misrepresentations, federal securities law violations and various state law
claims. In August through October 1996, several other nearly
4
<PAGE> 10
identical complaints were filed by various plaintiffs in the United States
District Court for the District of Nevada which were ultimately consolidated in
the matter entitled In Re: Stratosphere Corporation Securities Litigation. In
February 1997, various defendants, including the Company, submitted motions to
dismiss the complaint on various grounds, including the Company's claim that the
amended complaint failed to state a valid cause of action against the Company
and the Company's officers and directors. In May 1997, the court issued an order
dismissing the action.
In June 1997, the plaintiffs asked the court to reconsider its
dismissal order, and in July 1997, the court amended its dismissal order to
provide that the amended complaint was dismissed, but that the plaintiffs could
submit a second amended complaint by August 22, 1997. The plaintiffs have since
submitted their second amended complaint to which the Company and the Company's
officers and directors responded with a motion to dismiss the seconded amended
complaint. An adverse determination under this or any other pending litigation
may have a material adverse effect on the Company.
CAPITAL LEASE FACILITY. The Company recently entered into a capital
lease financing agreement covering an aggregate of $100 million. The financing
agreement will be used for the continued development of Grand Casino Tunica and
Grand Casino Gulfport, as well as other general corporate purposes, including
the addition of at least 500 hotel rooms and a health spa at Grand Casino
Gulfport and the construction of at least 400 additional hotel rooms and a
themed restaurant at Grand Casino Tunica.
BILOXI SUBMERGED LAND LEASE RENTAL ADJUSTMENT. Grand Casino Biloxi's
submerged land lease with the State of Mississippi provides that rent will be
adjusted every 5 years. The rent will be required to be adjusted for the five
year term beginning January 28, 1998. The rent is currently $700,000 per annum.
The original rent was set, in part, based upon appraisals of the submerged land
value in 1993. The rent may be substantially increased for the next five year
term. If Grand Casino Biloxi cannot come to an agreement with the lessor, the
lessor may terminate the submerged land lease.
5
<PAGE> 11
THE COMPANY
Grand Casinos, Inc. (the "Company") is a casino entertainment company
that develops, constructs and manages land-based and dockside casinos in
emerging gaming markets. The Company's strategy is to distinguish itself within
its markets by offering superior facilities with extensive nongaming amenities,
combined with experienced corporate and casino management and comprehensive
marketing programs.
The Company owns and operates Grand Casino Biloxi and Grand Casino
Gulfport, the two largest casinos on the Mississippi Gulf Coast. Grand Casinos
Gulfport opened on May 14, 1993 and Grand Casino Biloxi opened on January 17,
1994.
The Company manages two land-based, Indian-owned casinos in Minnesota:
Grand Casino Mille Lacs in Onamia, Minnesota, and Grand Casino Hinckley in
Hinckley, Minnesota. With over 86,000 square feet of combined gaming space,
Grand Casino Mille Lacs and Grand Casino Hinckley rank among Minnesota's largest
Indian gaming enterprises. In addition, the Company manages two land-based,
Indian-owned casinos in Louisiana: Grand Casino Avoyelles, in Marksville,
Louisiana, for the Tunica-Biloxi Tribe and Grand Casino Coushatta, in Kinder,
Louisiana, for the Coushatta Tribe.
Grand Casino Tunica opened on June 24, 1996 and is the largest dockside
casino in Mississippi and one of the largest casinos in the United States. The
Company is developing Grand Casino Tunica into a destination gaming resort
featuring a multi-themed casino. Grand Casino Tunica currently features two
hotels with an aggregate of 766 rooms. Other amenities include a Grand Casino
Kids Quest(sm) child care facility, a Grand Arcade, and valet and self-parking
for approximately 5,400 vehicles. Additions currently under construction include
an 18-hole professionally designed championship golf course and driving range, a
recreational vehicle park and a convention facility. Grand Casino Tunica offers
a 400,000-square-foot, three-story, multi-themed casino complex containing
approximately 140,000 square feet of gaming space with approximately 3,000 slot
machines and 108 table games.
The Company owns approximately 42 percent of Stratosphere Corporation
("Stratosphere"), which owns and operates Stratosphere Tower, Casino & Hotel, an
integrated casino/hotel and entertainment complex located at the north end of
Las Vegas Boulevard South in Las Vegas, Nevada. Stratosphere filed for
reorganization under Chapter 11 of the Bankruptcy Code on January 27, 1997.
The Company periodically evaluates its development program and may
determine to complete projects or may determine not to develop any project,
based upon market, financial, or regulatory factors. No assurance can be given
that any of these projects will be completed as scheduled or contemplated.
6
<PAGE> 12
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer: The Company is offering to exchange $1,000 principal
amount of its New Notes for each $1,000 principal
amount of its outstanding Old Notes that are properly
tendered and accepted. As of the date of this
Prospectus, $115,000,000 in aggregate principal amount
of Old Notes were outstanding, which is the maximum
amount authorized in aggregate by the Indenture for all
Notes. As of the Record Date, there were __ registered
holders of Old Notes.
Expiration Date: 5:00 p.m., New York City time, on ______, 1997 (the
"Expiration Date"). See "THE EXCHANGE OFFER - Terms of
the Exchange Offer; Expiration Date; Termination."
Accrued Interest
on the New
Notes and Old Notes: The New Notes will bear interest from their respective
issuance dates at the same rate and upon the same terms
as the Old Notes. Eligible Holders whose Old Notes are
accepted for exchange will receive accrued but unpaid
interest thereon to, but not including, the issuance
date of the New Notes and will be deemed to have waived
the right to receive any payment in respect of interest
on the Old Notes accrued from and after the date of
issuance of the New Notes. Such accrued but unpaid
interest on the Old Notes will be payable with the
first interest payment on the New Notes to the holder
of the New Notes.
Conditions of the
Exchange Offer: The Exchange Offer is subject to certain customary
conditions, including (i) no commencement of any
action, legal or governmental, with respect to the
Exchange Offer or which the Company reasonably
determines would make it inadvisable to proceed with
the Exchange Offer, (ii) no banking moratorium or
similar event or international calamity involving the
United States, and (iii) no change in the business or
prospects of the Company that may have a material
adverse effect on the Company. The Company expects that
the foregoing conditions will be satisfied. All such
conditions may be waived by the Company. Eligible
Holders of Old Notes may have certain rights and
remedies against the Company under the Registration
Rights Agreement should the Company fail to consummate
the Exchange Offer. See "THE EXCHANGE OFFER -
Conditions of the Exchange Offer."
Procedures for
Tendering Old Notes: Each Eligible Holder wishing to accept the
Exchange Offer must complete and sign the Letter of
Transmittal, have the signature thereon guaranteed if
required by Instruction 5 of the Letter of Transmittal
and mail or deliver the Letter of Transmittal, together
with the Old Notes (or a Notice of Guaranteed Delivery)
7
<PAGE> 13
and any other required documents (such as evidence of
authority to act, if the Letter of Transmittal is
signed by someone acting in a fiduciary or
representative capacity), to the Exchange Agent at the
address set forth herein and in the Letter of
Transmittal on or prior to the Expiration Date. Any
beneficial owner (as described in "THE EXCHANGE OFFER -
Procedures for Tendering Old Notes") of Old Notes whose
Old Notes are registered in the name of a nominee, such
as a broker, dealer, commercial bank or trust company
and who wishes to tender Old Notes in the Exchange
Offer should contact such entity or person promptly and
instruct them to tender on such beneficial owner's
behalf.
Certain brokers, dealers, commercial banks, trust
companies and other nominees who hold Old Notes through
the Depositary Trust Company (the "Book-Entry Transfer
Facility") must effect tenders by book-entry through
the Book-Entry Transfer Facility's automated tender
offer program ("ATOP"). Tendering Eligible Holders of
Old Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions
contained therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile together with
either certificates for such Old Notes or, if tendering
through ATOP, a Book-Entry Confirmation (as defined
herein) of such Old Notes into the Book-Entry Transfer
Facility, if such procedure is available, and any other
required documentation to the exchange agent (the
"Exchange Agent") at the address set forth herein.
Tendering holders of Old Notes that use ATOP will, by
so doing, acknowledge that they are bound by the terms
of the Letter of Transmittal. See "THE EXCHANGE
OFFER--Procedures for Tendering Old Notes." By
executing the Letter of Transmittal, each Holder will
represent to the Company, among other things, that (i)
the New Notes acquired pursuant to the Exchange Offer
by the Holder and any other person are being obtained
in the ordinary course of business of the person
receiving such New Notes, (ii) neither the Holder nor
such other person is participating in, intends to
participate in or has an arrangement or understanding
with any person to participate in the distribution of
such New Notes and (iii) neither the Holder nor such
other person is an "affiliate," as defined under Rule
405 of the Securities Act, of the Company. Each
broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where such Old Notes
were acquired by such broker or dealer as a result of
market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The
Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker or dealer will
not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. See "The
Exchange Offer -- Procedures for Tendering Old Notes"
and "PLAN OF DISTRIBUTION."
8
<PAGE> 14
Guaranteed Delivery
Procedures: Eligible Holders of Old Notes who wish to tender their
Old Notes and (i) whose Old Notes are not immediately
available or (ii) who cannot deliver their Old Notes,
Letter of Transmittal and any other documents required
by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures
set forth in "THE EXCHANGE OFFER - Guaranteed Delivery
Procedures."
Withdrawal of
Tenders: Tenders of Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration
Date. See "THE EXCHANGE OFFER - Withdrawal Rights."
Acceptance of Old
Notes and Delivery
of New Notes: Subject to the satisfaction or waiver of all conditions
of the Exchange Offer, the Company will accept for
exchange any and all Old Notes which are properly
tendered in the Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be delivered
in exchange for the applicable Old Notes accepted in
the Exchange Offer promptly following the Expiration
Date. See "THE EXCHANGE OFFER - Acceptance of Old Notes
for Exchange; Delivery of New Notes."
Certain Federal
Income Tax
Consequences: For a discussion of certain federal income tax
consequences of the exchange of the Old Notes, see
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
Exchange Agent: Firstar Bank of Minnesota, N.A., is the Exchange Agent.
The address and telephone number of the Exchange Agent
are set forth in "THE EXCHANGE OFFER - Assistance."
9
<PAGE> 15
CONSEQUENCES OF EXCHANGING OLD NOTES
Eligible Holders of Old Notes who do not exchange their Old Notes for
New Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register Old Notes under the Securities Act. See "REGISTRATION RIGHTS."
Based on interpretations by the staff of the Commission issued to third parties,
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold or otherwise transferred by Eligible Holders thereof
(other than any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such Eligible
Holders' business and such Eligible Holders have no arrangement with any person
to participate in the distribution of such New Notes. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of New Notes. If any Holder is an affiliate of the
Company or is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the New Notes to be acquired
pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities.
10
<PAGE> 16
SUMMARY DESCRIPTION OF THE NEW NOTES
Issuer: The Company
Guarantor: The Guarantors
Securities Offered: Up to $115 million aggregate principal amount of New
Notes, less the principal amount of Old Notes not
exchanged. See "DESCRIPTION OF THE NEW NOTES AND
GUARANTEES."
Comparison of New
Notes to Old Notes: The form and terms of the New Notes will be identical
in all material respects to the form and terms of the
Old Notes, except that the offering and sale of the New
Notes will have been registered under the Securities
Act. The rights of the holders of New Notes and the
holders of Old Notes will be identical in all material
respects.
Interest Payment Dates: April 15 and October 15 of each year, or if any such
date is not a business day, on the next succeeding
business day, commencing on the first such date
following the Expiration Date.
Interest Rate: The New Notes will bear interest payable in cash from
their respective dates of issuance at the same rate and
upon the same terms as the Old Notes. The New Notes
will bear interest at a rate equal to 9% per annum.
Maturity Date: October 15, 2004.
Mandatory Redemption: The Company will not be required to make mandatory
redemption or sinking fund payments prior to maturity
with respect to the New Notes. The New Notes will not
be redeemable at the option of the Company before the
First Optional Redemption Date. The First Optional
Redemption Date for the New Notes will be October 15,
2001. From and after such First Optional Redemption
Date, the New Notes will be subject to redemption at
the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at a
premium over the principal amount thereof, declining
ratably to par until maturity, plus accrued and unpaid
interest and Liquidated Damages, if any.
Ranking: The New Notes will rank senior in right of payment to
all Subordinated Indebtedness of the Company. Each Note
Guarantee will rank senior in right of payment to all
Subordinated Indebtedness of the respective Guarantor.
The New Notes will be unsecured. The New Notes and the
Note Guarantees will be effectively subordinated in
right of payment to secured Indebtedness of the Company
and the Guarantors,
11
<PAGE> 17
respectively, to the extent of the assets securing such
Indebtedness.
Guaranty: The New Notes will be guaranteed (as are the Old Notes)
by the Guarantors, and each Note Guarantee will be a
senior unsecured obligation of the respective
Guarantor. Stratosphere Corporation will not be a
Guarantor and will be an Unrestricted Subsidiary under
the Indenture. The obligations of each Guarantor under
its Note Guarantee will be limited to the extent
necessary under any applicable corporate law to ensure
it does not constitute a fraudulent conveyance under
applicable law.
Principal Covenants: The Indenture contains covenants relating to certain
business, financial and operating matters of the
Guarantors and the Company, including, without
limitation, a prohibition against (i) Restricted
Payments (as defined); (ii) the incurrence of any
Indebtedness (including Acquired Indebtedness or Deemed
Incurred Indebtedness) (as defined) or any shares of
Disqualified Stock (as defined); or (iii) the creation
or incurrence of any Lien that secures obligations
under any Indebtedness, except Permitted Liens, and,
except in the case of clause (i) and (ii), under
certain specified circumstances. In addition, the
Indenture provides that the Company will not merge or
consolidate with or into, or dispose of all or
substantially all of its assets to, any person unless
certain conditions are met. See "DESCRIPTION OF THE NEW
NOTES AND GUARANTEES - Certain Covenants."
Change of Control: In the event there is a Change of Control (as defined),
the Company is required to offer to redeem all of the
New Notes then outstanding at a purchase price equal to
101% of principal amount of New Notes, plus in each
case accrued and unpaid interest thereon.
For additional information regarding the New Notes, see "DESCRIPTION OF
THE NEW NOTES AND GUARANTEES."
12
<PAGE> 18
RISK FACTORS
Eligible Holders should carefully consider, among other factors, the
following:
RISKS OF LEVERAGED FINANCIAL POSITION--ABILITY TO SERVICE DEBT. The
Company has substantial annual debt service along with other operating expenses.
As of December 29, 1996, (excluding Stratosphere Corporation) the Company had
total indebtedness of approximately $511.7 million, which includes the Company's
$450 million 101/8% First Mortgage Notes due 2003 (the "First Mortgage Notes")
and approximately $61.7 million of other senior indebtedness, including
capitalized lease obligations. The Company may have additional contingent
obligations with respect to Stratosphere Corporation. The First Mortgage Notes
are senior obligations of the Company and rank pari passu in right of payment
with all other senior indebtedness. The First Mortgage Notes and certain other
permitted senior indebtedness, including a senior credit facility, are secured
on an equal and ratable basis (with certain exceptions) by substantially all of
the assets of the Company and the stock of certain of the Company's wholly owned
subsidiaries. The ability of the Company to make interest payments on the First
Mortgage Notes and other indebtedness will depend on its ability to generate
sufficient cash flows from operations. There can be no assurance that the
Company will be able to generate sufficient cash flows from operations to make
interest payments on the First Mortgage Notes and such other indebtedness.
RISK OF INCURRENCE OF ADDITIONAL DEBT. The indenture pursuant to which
the First Mortgage Notes were issued (the "First Mortgage Notes Indenture")
permits, under certain circumstances, additional first mortgage indebtedness
which would be collateralized and rank pari passu with the First Mortgage Notes.
Such incurrence will also be subject to certain other conditions. In addition,
the First Mortgage Notes Indenture permits the Company and its subsidiaries,
under certain circumstances, to incur additional unsecured indebtedness, or
indebtedness secured by assets that do not constitute collateral for the First
Mortgage Notes or other senior indebtedness, such as future gaming facilities
owned or operated by the Company. The ability of the Company to satisfy its
obligations relating to any additional indebtedness will depend on its operating
cash flow. Any inability of the Company to satisfy such debt obligations could
adversely affect the Company's ability to conduct its operations or finance its
capital needs.
GAMING INDUSTRY IS HIGHLY COMPETITIVE. The gaming industry is highly
competitive. Gaming activities include traditional land-based casinos; riverboat
and dockside gaming; casino gaming on Indian land; state-sponsored lotteries and
video poker in restaurants, bars and hotels; parimutuel betting on horse racing,
dog racing and jai-alai; sports bookmaking; and card rooms. The casinos owned,
managed and being developed by the Company compete, and will in the future
compete, with all these forms of gaming, and will compete with any new forms of
gaming that may be legalized in additional jurisdictions, as well as with other
types of entertainment. Several large, well capitalized and experienced gaming
operators have announced plans to enter the already highly competitive
Mississippi Gulf Coast market. The Tunica Mississippi gaming market is also
highly competitive. The Company also competes with other gaming companies for
opportunities to acquire legal gaming sites in emerging and established gaming
jurisdictions and for the opportunity to manage casinos on Indian land. Some of
the competitors of the Company have more personnel and greater financial and
other resources than the Company. Such competition in the gaming industry could
adversely affect the Company's ability to attract customers and thus, adversely
affect its operating results. In addition, further expansion of gaming into new
jurisdictions could also adversely affect the Company's business by diverting
its customers to competitors in such jurisdictions.
13
<PAGE> 19
HIGHLY REGULATED INDUSTRY. The ownership, management and operation of
gaming facilities are subject to extensive federal, state, provincial, tribal
and/or local laws, regulations, and ordinances, which are administered by the
relevant regulatory agency or agencies in each jurisdiction (the "Regulatory
Authorities"). These laws, regulations and ordinances vary from jurisdiction to
jurisdiction, but generally concern the responsibility, financial stability and
character of the owners and managers of gaming operations as well as persons
financially interested or involved in gaming operations.
MANAGEMENT CONTRACTS OF LIMITED DURATION. The Company cannot have an
ownership interest in any casino it manages for Indian tribes. The management
contracts for the various Indian-owned casinos that the Company manages for
Indian tribes generally have a term of seven years. The management contracts for
Grand Casino Mille Lacs and for Grand Casino Hinckley expire April 2, 1998 and
May 15, 1999, respectively, and the management contracts for Grand Casino
Avoyelles and Grand Casino Coushatta expire June 3, 2001 and January 16, 2002,
respectively. There can be no assurance that any of these agreements or any
other management contract will he renewed upon expiration or approved by the
National Indian Gaming Commission ("NIGC") upon any such review. The failure to
renew the Company's management contracts would result in the loss of revenues to
the Company derived from such contracts, which would have an adverse effect on
the Company's results of operations. The Coushatta Tribe and the Tunica-Biloxi
Tribe each entered into tribal-state compacts with the State of Louisiana on
September 29, 1992. These compacts were approved in November, 1992 by the
Secretary of the Interior. These compacts expire in November, 1999 and will
automatically renew for an additional seven year terms unless either the tribes
or the State of Louisiana delivers to the other prior written notice of
non-renewal. The Company's management agreements with the Tunica-Biloxi Tribe
and the Coushatta Tribe expire after November 1999. In the event the compacts
are not renewed, legal gaming will not be permitted at Grand Casino Avoyelles or
Grand Casino Coushatta. There can be no assurance that these compacts will be
renewed on terms and conditions acceptable to either of the tribes. See "RECENT
DEVELOPMENTS."
MANAGEMENT CONTRACTS SUBJECT TO GOVERNMENTAL MODIFICATION. NIGC has the
power to require modifications to Indian management contracts under certain
circumstances or to void such contracts or ancillary agreements including loan
agreements if the management company falls to obtain requisite approvals or to
comply with applicable laws and regulations. While the Company believes that its
management contracts meet the requirements of the Indian Gaming Regulatory Act
(the "IGRA"), NIGC has the right to review each contract and has the authority
to reduce the term of a management contract or the management fee or otherwise
require modification of the contract, which could have an adverse effect on the
Company. In addition, the Company has made loans to Indian tribes in excess of
the loan ceilings set forth in each of the Indian management contracts. Under
certain circumstances, these loans may not be enforceable by the Company.
LIMITED RECOURSE AGAINST TRIBAL ASSETS. The Company has made, and will
make, substantial loans to tribes for the construction, development, equipment
and operations of casinos managed and to be managed by the Company. The
Company's only recourse for collection of indebtedness from a tribe or money
damages for breach or wrongful termination of a management contract is from
revenues, if any, from casino operations. The Company has subordinated, and may
in the future subordinate, the repayment of the Company's loans to a tribe and
other distributions due to the Company from a tribe in favor of other
obligations of the tribe related to the casino operations. Accordingly, in the
event of a default by a tribe, the
14
<PAGE> 20
Company's loans and other claims against the tribe will not be repaid until such
default has been cured or the tribe's senior casino-related creditors have been
repaid in full.
GRAND CASINO GULFPORT--POTENTIAL EARLY TERMINATION OF LEASE. On May 21,
1992, the Company entered into a lease (the "Port Lease") with the Mississippi
State Port Authority (the "Authority") for the Grand Casino Gulfport mooring
site and adjoining land for five years with renewal options totaling 45 years.
The Authority has the option to cancel the Port Lease at any time upon 12
months' written notice if the Authority expands its own facilities to handle
expanded shipping and related commerce activities. The Authority's liability to
Grand Casino Gulfport upon such cancellation is limited to the depreciated value
of the leased property (which does not include the casino). Although the Company
does not believe that the Authority will exercise its option to cancel the Port
Lease, any such cancellation would require the Company to find substitute
property suitable for mooring Grand Casino Gulfport, which, if not then
available on terms acceptable to the Company, would cause Grand Casino Gulfport
to cease operations. In addition, all mooring sites would need to be approved by
the Mississippi Gaming Commission.
SEVERE WEATHER CONDITIONS ON THE GULF COAST; RISK OF FLOODING AT GRAND
CASINO TUNICA. Grand Casino Gulfport and Grand Casino Biloxi are constructed on
barges located adjacent to Gulf-front property and are subject to the risk of
severe weather, including high winds, water action and hurricanes. In the event
of severe weather, the Company has plans to securely moor the barges to their
mooring sites or to evacuate the casinos to the back-bay area of Biloxi. The
Company also maintains insurance policies that contain casualty cost and certain
business interruption coverage for casualties resulting from severe weather,
including hurricanes. However, a hurricane or other severe weather could cause
significant physical damage to Grand Casinos Gulfport and Biloxi and, for a
period of time, reduce the number of people traveling to the Gulf Coast, either
of which could have a material adverse effect on the Company.
Certain improvements at Grand Casino Tunica, including one of its
hotels and certain of the parking lots adjacent to the Grand Casino Tunica are
located on the river side of a levee. The parking lots are graded to
approximately the 12-year flood plain, which means that, statistically, such
grade level floods two weeks out of every 12-year period. While the Company does
not anticipate that Grand Casino Tunica, which is constructed on three
interlocking barges, will be affected by flooding, flooding may disrupt the
casino operations and other amenities at Grand Casino Tunica and any such
disruptions could have a material adverse effect on the Company. Furthermore,
the Company believes that it will not be able to secure flood insurance for part
or all of the Grand Casino Tunica facilities.
PENDING LITIGATION. The Company and certain of its directors and
officers are defendants in several lawsuits related to the Company's investment
in Stratosphere Corporation. The Company has not maintained directors' and
officers' insurance. Under Minnesota corporate law, the Company is required,
subject to certain limitations and exclusions, to indemnify its officers and
directors. Accordingly, the Company will bear the cost of defending itself and
its directors and officers in these matters and may be obligated to indemnify
its officers and directors for any settlement or judgment of such matters.
Although these lawsuits are in their early stages and the Company believes they
are without merit and plans to vigorously defend itself, there can be no
assurance that the costs of defense and any indemnifiable settlement or judgment
will not have an adverse effect on the Company. See "RECENT DEVELOPMENTS."
15
<PAGE> 21
ABSENCE OF PUBLIC MARKET. As of the Record Date, there are ___
registered holders of Old Notes. There has previously been only a limited
secondary market and no public market for the Old Notes. Eligible Holders of the
New Notes may thus be unable to sell them for an extended period of time or at
all. The Old Notes are not, and it is not anticipated that the New Notes will
be, listed on any stock exchange or quoted on NASDAQ or any other quotation
system. The Company does not expect an active public market for the New Notes to
develop. To the extent that a market for the New Notes does develop, the market
value of the New Notes will depend on market conditions (such as yields on
alternative investments), general economic conditions, the Company's financial
condition, and other factors. Such conditions might cause the New Notes, to the
extent that they are actively traded, to trade at a significant discount from
face value.
RISK OF DIMINUTION OF CLAIMS IN BANKRUPTCY. Under an analysis adopted
by at least one Bankruptcy Court, Eligible Holders who receive New Notes
pursuant to the Exchange Offer might have a smaller claim in a subsequent
bankruptcy of the Company than if they had not participated in the Exchange
Offer. In general, a note represents a potential bankruptcy claim equal to its
stated principal amount plus accrued and unpaid interest through the date a
bankruptcy is commenced. Unmatured interest is not allowable as a claim under
the Bankruptcy Code. In In re Chateaugay Corp., 109 Bankr. 51 (Bankr. S.D.N.Y.
1990), the Bankruptcy Court for the Southern District of New York held that the
difference between (a) the market value of securities tendered in an exchange
offer and (b) the face amount of securities issued in exchange therefor,
constitutes unmatured interest that is not allowable as a claim. Under this
reasoning, a bankruptcy court in a bankruptcy proceeding subsequent to the
consummation of the Exchange Offer might determine that the New Notes were
issued at the original issue discount represented by the difference, if any,
between the face value of the New Notes and the fair market value of the Old
Notes as of the date of the Exchange Offer, and reduce an Eligible Holder's
claim by such difference. However, the United States Court of Appeals for the
Second Circuit recently rejected this approach, reversing the decision of the
Bankruptcy Court for the Southern District of New York and holding that, for
bankruptcy law purposes, no new original issue discount arises when notes are
exchanged for new notes of a like face amount. See In re Chateaugay Corp. v.
Valley Fidelity Bank & Trust Co., 961 F.2d 378 (2d Cir. 1992); accord In re
Pengo Industries, Inc. v. Licht, 962 F.2d 543 (5th Cir.
1992).
CONSEQUENCES OF FAILURE TO EXCHANGE. The Old Notes, not tendered, of
Eligible Holders who do not exchange such Old Notes pursuant to the Exchange
Offer will remain restricted securities. Such Old Notes will continue to be
subject to the following restrictions on transfer, as set forth in the each of
the Purchase Agreement dated as of October 9, 1997 among the Company, the
Guarantors, and the original purchaser of the Old Notes (the "Purchase
Agreement") pursuant to which the Old Notes were originally purchased: (i) such
Old Notes may be resold only if registered pursuant to the Securities Act, if an
exemption from registration is available thereunder, or if neither such
registration nor such exemption is required by law, (ii) such Old Notes shall
bear a legend restricting transfer in the absence of registration or an
exemption therefrom, and (iii) any such Eligible Holder who desires to sell or
otherwise dispose of all or any part of such Old Notes under an exemption from
registration under the Securities Act, if requested by the Company, must deliver
to the Company an opinion of independent counsel experienced in Securities Act
matters, reasonably satisfactory in form and substance to the Company, that such
exemption is available.
16
<PAGE> 22
USE OF PROCEEDS
Neither the Company nor the Guarantors will receive any cash proceeds
from the issuance of the New Notes offered hereby. In consideration of issuing
the New Notes as contemplated in this Prospectus, the Company will receive in
exchange Old Notes in like principal amount, the terms of which are identical in
all material respect to the New Notes. The Old Notes surrendered in exchange for
New Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase in the indebtedness of
the Company or the Guarantors. Proceeds from the sale of the privately placed
Old Notes will be used to refinance existing capital lease financing and for
other general corporate purposes.
17
<PAGE> 23
CAPITALIZATION
The following table sets forth: (i) the consolidated capitalization of
Grand Casinos, Inc., on a historical basis as of June 29, 1997 and (ii) the
consolidated capitalization of Grand Casinos, Inc., as of June 29, 1997, as
adjusted to give effect to issuance of the Old Notes. The historical information
in this table is derived from the Consolidated Financial Statements of Grand
Casinos, Inc. and should be read in conjunction with the more detailed
information and financial statements available under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
AS OF JUNE 29, 1997
ACTUAL AS ADJUSTED
------ -----------
(In Thousands)
<S> <C> <C>
Cash and cash equivalents (1) (2) .............................. $ 132,601 $ 133,322
========== ==========
Long-term obligations (including current portion of long-term
indebtedness) (3)
10 1/8% First Mortgage Notes ................................. 450,000 450,000
Capital lease obligations .................................... 109,385 0
Other Indebtedness ........................................... 6,904 6,904
Senior Notes offered hereby .................................. 0 115,000
---------- ----------
Total long-term debt ....................................... 566,289 571,904
Shareholders' Equity
Capital Stock, $.01 par value, 100,000,000 shares authorized,
41,897,000 shares issued and outstanding, respectively ..... 419 419
Additional paid-in capital ................................... 413,216 413,216
Net unrealized gains (losses) on securities available
for sale.................................................... (527) (527)
Retained Earnings (4)......................................... 58,218 55,288
---------- ----------
Total Shareholders' Equity ................................. 471,326 468,396
---------- ----------
Total Capitalization ........................................... $1,037,615 $1,040,300
========== ==========
</TABLE>
(1) Excludes restricted cash and cash equivalents of $6.7 million as of June
29, 1997.
(2) Net of estimated commissions and offering costs estimated at $3.8 million.
(3) Includes short-term indebtedness of $6.9 million and $2.3 million in
capital lease obligations and other indebtedness, respectively.
(4) Reflects an estimated charge of $2.9 million, net of taxes (assuming a 35%
effective tax rate) to be reflected in the Company's consolidated statement
of earnings upon consummation of the Offering.
18
<PAGE> 24
SELECTED HISTORICAL FINANCIAL INFORMATION
(Dollars and Shares in Thousands, Except Earnings Per Share Data)
The following table presents historical financial information derived
from the Company's audited and unaudited consolidated financial statements and
other data as of the date and for the periods indicated. The historical
information in this table is derived from the Consolidated Financial Statements
of Grand Casinos, Inc. and should be read in conjunction with the more detailed
information and financial statements available under "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE." Operating results for the six months ended June 29,
1997 are not necessarily indicative of the results that may be expected for the
entire fiscal year.
<TABLE>
<CAPTION>
SIX SIX Fiscal Years Ended
MONTHS MONTHS --------------------------------------------------------
ENDED ENDED
Statement of Earnings Data: 6-30-96 6-29-97 1996 1995 1994 1993 1992
- -------------------------- ------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total Revenues
(owned & managed properties) $ 476,773 $ 572,335 $1,057,284 $ 776,913 $ 506,413 $ 268,264 $ 118,084
Net Revenues 216,814 293,007 490,019 372,872 285,774 117,032 9,229
Earnings from operations 64,624 69,819 97,408 116,315 51,859 29,328 3,170
Ratio of earnings to fixed charges 3.5x 2.9x 2.5x 3.0x 3.2x 2.5x 28.5x
Earnings (loss) per share
before extraordinary charge 0.86 0.77 (2.43)(1) 1.98 0.87 0.71 0.13
Balance Sheet Data:
- ------------------
Total Assets 1,214,362 1,186,987 1,122,816 1,128,108 483,883 426,644 72,305
Long-term debt 457,439 547,114 511,742 459,070 123,126 118,561 8,650
Shareholders' equity 580,345 471,326 439,673 526,100 276,861 247,864 55,156
Shares outstanding at year-end 41,607 41,897 41,796 40,988 33,447 33,415 22,003
Book value per share 13.95 11.25 10.52 12.84 8.28 7.42 2.51
</TABLE>
(1) Earnings per share excluding the effect of Stratosphere are $1.16.
(2) For purposes of computing the ratio of earnings to fixed charges,
earnings consist of earnings from continuing operations before
income taxes and fixed charges. Fixed charges include interest
expense and amortization of debt issuance costs. For the fiscal
year ended December 29, 1996 earnings exclude the non-cash
write-down of the Stratosphere investment.
19
<PAGE> 25
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Company is making the Exchange Offer to satisfy its obligations
under the Registration Rights Agreement and Purchase Agreement, which have been
included as exhibits to the Registration Statement of which this Prospectus is a
part.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions
set forth herein and in the accompanying letter of transmittal (the "Letter of
Transmittal"), to exchange $1,000 in principal amount of New Notes for each
$1,000 in principal amount of its outstanding Old Notes. New Notes will be
issued only in integral multiples of $1,000 to each tendering Eligible Holder
whose Old Notes are accepted in the Exchange Offer. The Company will accept any
Old Notes validly tendered and not withdrawn prior to 5:00 p.m. New York City
time on the Expiration Date. Old Notes that are not accepted for exchange will
be returned as promptly as practicable after the Expiration Date. Eligible
Holders may tender all or a portion of their Old Notes pursuant to the Exchange
Offer.
The form and terms of the New Notes under the Indenture will be
identical in all material respects to the form and terms of the Old Notes,
except that the offering of the New Notes will have been registered under the
Securities Act. The New Notes will bear interest from their respective dates of
issuance at the same rate and upon the same terms as the Old Notes. See
"DESCRIPTION OF THE NEW NOTES AND GUARANTEES." Accrued and unpaid interest on
the Old Notes accepted for exchange for the period to but not including the date
of issuance of the New Notes (the "Exchange Date") will be paid to the holders
of New Notes on the first Interest Payment Date (as defined) for the New Notes.
Eligible Holders whose Old Notes are accepted for exchange will be deemed to
have waived the right to receive any payment in respect of interest on the Old
Notes accrued on and after the Exchange Date.
As of the date of this Prospectus, $115,000,000 aggregate principal
amount of Old Notes were outstanding.
This Prospectus and the Letter of Transmittal are being sent to all
Eligible Holders of Old Notes as of ______________, 1997 (the "Record Date"). As
of the Record Date, there are ___ registered holders of Old Notes. The Company
believes that, as of the date of this Prospectus, none of such holders is an
affiliate (as defined in Rule 405 under the Securities Act) of the Company.
Tendering Eligible Holders will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Old Notes for New
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain taxes which may be levied in the event of any
transfer of ownership, in connection with the Exchange Offer. See "THE EXCHANGE
OFFER--Transfer Taxes" below.
EXPIRATION DATE; TERMINATION
The Exchange Offer will expire on the Expiration Date, i.e., 5:00 p.m.,
New York City time, on ___________, 1997; provided, however, that if the
Company, in its sole discretion, has
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extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
The Company expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral or
written notice of such extension to the Eligible Holders thereof. During any
such extension, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Old Notes
not accepted for exchange for any reason will be returned without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under "Certain Conditions to the Exchange Offer."
The Company will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender by an Eligible Holder as set forth below and the acceptance
thereof by the Company will constitute a binding agreement between the tendering
Eligible Holder and the Company upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal. Except
as set forth below, an Eligible Holder who wishes to tender Old Notes for
exchange pursuant to the Exchange Offer must transmit such Old Notes, together
with a properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal, to the Exchange Agent at
the address set forth on the back cover page of this Prospectus on or prior to
5:00 p.m. New York City time on the Expiration Date. THE METHOD OF DELIVERY OF
OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE ELIGIBLE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE
ELIGIBLE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Each signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Old Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the Old
Notes who has not completed either the box entitled "Special Exchange
Instructions" or the box entitled "Special Delivery Instructions" on the Letter
of Transmittal or (ii) by an Eligible Institution (as defined below). In the
event that a signature on a Letter of Transmittal or a notice of withdrawal, as
the case may be, is required to be guaranteed, such guarantee must be by a firm
which is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or is otherwise
an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (collectively, "Eligible Institutions"). If Old Notes are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Notes surrendered for exchange must either (i) be endorsed
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by the registered holder, with the signature thereon guaranteed by an Eligible
Institution, or (ii) be accompanied by a bond power, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution along with the other documents required upon transfer by the
Purchase Agreement. The term "registered holder" as used herein with respect to
the Old Notes means any person in whose name the Old Notes are registered on the
books of the Registrar for the Old Notes.
Tenders may be made only in principal amounts of $1,000 and integral
multiples thereof. Subject to the foregoing, Eligible Holders may tender less
than the aggregate principal amounts represented by the Old Notes deposited with
the Exchange Agent provided they appropriately indicate this fact on the Letter
of Transmittal accompanying the tendered Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole, reasonable discretion, which
determination shall be final and binding. The Company reserves the absolute
right to reject any and all tenders of any particular Old Notes not properly
tendered or to reject any particular Old Notes which acceptance might, in the
judgment of the Company or its counsel, be unlawful. The Company also reserves
the absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer (including the Letter of Transmittal
and the instructions thereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes for exchange must be cured within such reasonable period of time as
the Company shall determine. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes
for exchange, but shall not incur any liability for failure to give such
notification. Tenders of the Old Notes will not be deemed to have been made
until such irregularities have been cured or waived.
If any Letter of Transmittal, endorsement, bond power, powers of
attorney or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of such person's authority to so act
must be submitted.
ANY BENEFICIAL OWNER WHOSE OLD NOTES ARE REGISTERED IN THE NAME OF A
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY, OR OTHER NOMINEE AND WHO WISHES
TO TENDER OLD NOTES IN THE EXCHANGE OFFER SHOULD CONTACT SUCH REGISTERED HOLDER
PROMPTLY AND INSTRUCT SUCH REGISTERED HOLDER TO TENDER ON SUCH BENEFICIAL
OWNER'S BEHALF. IF SUCH BENEFICIAL OWNER WISHES TO TENDER DIRECTLY, SUCH
BENEFICIAL OWNER MUST, PRIOR TO COMPLETING AND EXECUTING THE LETTER OF
TRANSMITTAL AND TENDERING OLD NOTES, MAKE APPROPRIATE ARRANGEMENTS TO REGISTER
OWNERSHIP OF THE OLD NOTES IN SUCH BENEFICIAL OWNER'S NAME. BENEFICIAL OWNERS
SHOULD BE AWARE THAT THE TRANSFER OF REGISTERED OWNERSHIP MAY TAKE CONSIDERABLE
TIME.
Each Eligible Holder that tenders the Old Notes in the Exchange Offer
will be required to represent to the Company that the New Notes to be acquired
by such Eligible Holder and any
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beneficial owner(s) pursuant to the Exchange Offer are being acquired in the
ordinary course of business of such Eligible Holder and any beneficial owner(s),
that such Eligible Holder and each beneficial owner are not participating, do
not intend to participate, and have no arrangement with any person to
participate, in the distribution of the New Notes, and to acknowledge that any
person participating in the Exchange Offer for the purpose of distributing the
New Notes must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction of the
New Notes acquired by such person and cannot rely on the position of the staff
of the Commission set forth in various no-action letters that are discussed
under "Resales of the New Notes" below.
GUARANTEED DELIVERY PROCEDURES
Eligible Holders who wish to tender their Old Notes but whose Old Notes
are not immediately available or who cannot deliver their Old Notes and Letter
of Transmittal or any other documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date must tender their Old Notes
according to the guaranteed delivery procedures set forth in the Letter of
Transmittal. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution and a Notice of Guaranteed Delivery (as defined
in the Letter of Transmittal) must be signed by such Eligible Holder; (ii) prior
to the Expiration Date, the Exchange Agent must have received from the Eligible
Holder and the Eligible Institution a properly completed and duly executed
Letter of Transmittal and a Notice of Guaranteed Delivery (by facsimile
transmission, mail, or hand delivery) setting forth the name and address of the
Eligible Holder, the certificate number or numbers of the tendered Old Notes,
and the principal amount of tendered Old Notes, stating that the tender is being
made thereby and guaranteeing that, within four business days after the date of
delivery of the Notice of Guaranteed Delivery, the tendered Old Notes and any
other required documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed documents
required by the Letter of Transmittal and the tendered Old Notes in proper form
for transfer must be received by the Exchange Agent within four business days
after the Expiration Date. Any Eligible Holder who wishes to tender Old Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of
Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time,
on the Expiration Date. Failure to complete the guaranteed delivery procedures
outlined above will not, of itself, affect the validity or effect a revocation
of any Letter of Transmittal form properly completed and executed by an Eligible
Holder who attempted to use the guaranteed delivery process.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all the conditions to the Exchange
Offer, the Company will accept, promptly after the Expiration Date, all Old
Notes properly tendered and will issue the New Notes promptly after acceptance
of the Old Notes. See "Conditions of the Exchange Offer". For purposes of the
Exchange Offer, the Company shall be deemed to have accepted properly tendered
Old Notes for exchange when, as, and if the Company has given oral or written
notice thereof to all Eligible Holders of properly tendered Old Notes.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents; provided, however, that
the Company reserves the absolute right to waive any defects or irregularities
in the tender or conditions of the Exchange Offer. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old
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Notes are submitted for a greater principal amount than the Eligible Holder
desires to exchange, such unaccepted or non-exchanged Old Notes or substitute
Old Notes evidencing the unaccepted portion, as appropriate, will be returned
without expense to the tendering Eligible Holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.
New York City time on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be received by the Exchange Agent at its
address set forth on the back cover page of this Prospectus. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such Old Notes), (iii) be signed by the Eligible Holder in the same manner as
the original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by a
bond power into the name of the person withdrawing the tender, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution along with the other documents required upon transfer by the
Purchase Agreement, and (iv) specify the name in which such Old Notes are to be
re-registered, if different from the Depositor, pursuant to such documents of
transfer. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. The Old Notes so
withdrawn, if any, will be deemed not to have been validly tendered for exchange
for purposes of the Exchange Offer. Any Old Notes which have been tendered for
exchange but which are withdrawn will be returned to the Eligible Holder thereof
without cost to such Eligible Holder as soon as practicable after withdrawal.
Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue the New Notes in
exchange for, any Old Notes and may terminate or amend the Exchange Offer if, at
any time before the acceptance of the Old Notes for exchange or the exchange of
the New Notes for the Old Notes, any of the following events shall occur, which
occurrence, in the sole judgment of the Company and regardless of the
circumstances (including any action by the Company) giving rise to any such
events, makes it inadvisable to proceed with the Exchange Offer:
(a) there shall be threatened, instituted, or pending any action or
proceeding before, or any injunction, order, or decree shall have been issued
by, any court or governmental agency or other governmental regulatory or
administrative agency or commission (i) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof, or (ii) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Old Notes pursuant
to the Exchange Offer; or any statute, rule, regulation, order or injunction
shall be sought, proposed, introduced, enacted, promulgated, or deemed
applicable to the Exchange Offer or any of the transactions contemplated by the
Exchange Offer by any domestic or foreign government or governmental authority
or any action shall have been taken, proposed, or threatened by any domestic or
foreign government or governmental authority that, in the reasonable judgment of
the Company, might directly or indirectly result in any of the
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consequences referred to in clauses (i) or (ii) above or, in the reasonable
judgment of the Company, might result in the holders of the New Notes having
obligations with respect to resales and transfers of New Notes that are greater
than those described in the interpretation of the Commission referred to on the
cover page of this Prospectus or would otherwise in the reasonable judgment of
the Company make it inadvisable to proceed with the Exchange Offer; provided,
however, that the Company will use reasonable efforts to modify or amend the
Exchange Offer or to take such other reasonable steps as to make the provisions
of this section inapplicable;
(b) there shall have occurred (i) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects the
extension of credit, or (ii) a commencement of a war, armed hostilities, or
other similar international calamity directly or indirectly involving the United
States, or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations, or
prospects of the Company that, in the reasonable judgment of the Company, is or
may be adverse to the Company or the Guarantor, or the Company shall have become
aware of facts that, in the sole judgment of the Company, have or may have
adverse significance with respect to the value of the Old Notes or the New
Notes.
The Company expects that the foregoing conditions will be satisfied.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by the Company
concerning the events described above will be final and binding upon all
parties.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement or the qualification of the Senior Note Indenture under
the Trust Indenture Act of 1939.
Eligible Holders of Old Notes may have certain rights and remedies
against the Company under the Registration Rights Agreement should the Company
fail to consummate the Exchange Offer, notwithstanding any nonfulfillment of the
above conditions. Such conditions are not intended to modify such rights and
remedies in any respect.
ASSISTANCE
All tendered Old Notes, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of the Prospectus,
the Letter of Transmittal and other related documents should be addressed to the
Exchange Agent as follows:
Firstar Bank of Minnesota, N.A.
101 East Fifth Street
St. Paul, MN 55101-1860
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FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Registration Rights Agreement
provides that the Company will bear all expenses incident to its performance
thereunder, with certain exceptions.
TRANSFER TAXES
Eligible Holders who tender their Old Notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that holders
who instruct the Company to register New Notes in the name of, or request that
Old Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the tendering Eligible Holder will be responsible for the
payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
The untendered Old Notes of Eligible Holders who do not exchange such
Old Notes for New Notes pursuant to the Exchange Offer will remain restricted
securities. Such Old Notes will continue to be subject to the following
restrictions on transfer of such Old Notes, as set forth in the Purchase
Agreement pursuant to which the Old Notes were originally purchased: (i) such
Old Notes may be resold only if registered pursuant to the Securities Act, if an
exemption from registration is available thereunder, or if neither such
registration nor such exemption is required by law, (ii) such Old Notes shall
bear a legend restricting transfer in the absence of registration or an
exemption therefrom, and (iii) any such Eligible Holder who desires to sell or
otherwise dispose of all or any part of such Old Notes under an exemption from
registration under the Securities Act, if requested by the Company, must deliver
to the Company an opinion of independent counsel experienced in Securities Act
matters, reasonably satisfactory in form and substance to the Company, that such
exemption is available. See "RISK FACTORS- Risk of Diminution of Claims in
Bankruptcy; Consequences of Failure to Exchange."
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. The expenses of the Exchange Offer will be amortized
over the term of the New Notes.
RESALES OF THE NEW NOTES
With respect to resales of New Notes, based on an interpretation by the
staff of the SEC set forth in no-action letters issued to third parties, the
Company believes that an Eligible Holder (other than (i) a broker-dealer who
purchases such New Notes directly from the Company to resell pursuant to Rule
144A or any other available exemption under the Securities Act or (ii) a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act) who exchanges Old Notes for New Notes in the ordinary course of
business and who is not participating, does not intend to participate, and has
no arrangement or understanding with any person to participate, in the
distribution of the New Notes, will be allowed to resell the New Notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the New Notes a prospectus that satisfies the
requirements of Section 10 thereof. However, if any Eligible Holder acquires New
Notes in the Exchange Offer for the purpose of distributing or participating in
a distribution of the New Notes, such Eligible Holder
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cannot rely on the position of the staff of the Commission enunciated in Exxon
Capital Holdings Corporation (available April 13, 1989) or similar no-action
letters or any similar interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available.
As contemplated by the above no-action letters and the Registration
Rights Agreement, each Eligible Holder accepting the Exchange Offer is required
to represent to the Company in the Letter of Transmittal that (i) the New Notes
are to be acquired by the Eligible Holder and each beneficial owner in the
ordinary course of business, (ii) the Eligible Holder and each beneficial owner
are not participating, do not intend to participate, and have no arrangement or
understanding with any person to participate, in the distribution of the New
Notes, and (iii) the Eligible Holder and each beneficial owner acknowledge that
any person participating in the Exchange Offer for the purpose of distributing
the New Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale of the
New Notes and cannot rely on the above no-action letters.
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DESCRIPTION OF THE NEW NOTES AND GUARANTEES
The Old Notes have been, and the New Notes will be, issued under the
Indenture and pursuant to the Purchase Agreement. The terms of the Notes include
those stated in the Indenture and, with respect to the New Notes, those made a
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") as in effect on the date of the Indenture.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture, including definitions
therein and those terms made a part of the Indenture by reference to the Trust
Indenture Act in effect on the date of the Indenture. Capitalized terms used
herein and not otherwise defined in this Prospectus have the meanings ascribed
to them in the Indenture. A copy of the Indenture has been incorporated by
reference as an Exhibit to the Registration Statement of which this Prospectus
is a part.
GENERAL
The New Notes will be issued by Grand Casinos, Inc. (the "Company")
pursuant to the Exchange Offer and the Senior Note Indenture between the Company
and Firstar Bank of Minnesota, N.A., as trustee (the "Trustee"). The New Notes
will be unconditionally guaranteed, jointly and severally (each a "Note
Guarantee" and, together, the "Note Guarantees"), by Grand Casinos Resorts,
Inc., the subsidiaries that own and operate the Gulfport, Biloxi and Tunica
casinos, the subsidiaries operating the Gulfport and Biloxi hotels and by each
Restricted Subsidiary of the Company now existing or formed hereafter pursuant
to the terms of the Senior Note Indenture (each a "Guarantor" and, together, the
"Guarantors"). The terms of the New Notes include those stated in the Senior
Note Indenture and those made part of the Senior Note Indenture by reference to
the Trust Indenture Act as in effect on the date of the Senior Note Indenture.
The Senior Notes are subject to all such terms, and holders of Senior Notes are
referred to the Senior Note Indenture and the Trust Indenture Act for a
statement thereof. The following summary of certain provisions of the Senior
Note Indenture does not purport to be complete and is qualified in its entirety
by reference to the Senior Note Indenture, including the definitions therein of
certain terms used below.
RANKING
The New Notes will rank senior in right of payment to all Subordinated
Indebtedness of the Company. Each Note Guarantee will rank senior in right of
payment to all Subordinated Indebtedness of the respective Guarantor. The New
Notes will be unsecured. The New Notes and the Note Guarantees will be
effectively subordinated in right of payment to secured Indebtedness of the
Company and the Guarantors, respectively, to the extent of the assets securing
such Indebtedness.
NOTE GUARANTEES
The Company's obligations under the New Notes and the Senior Note
Indenture will be jointly and severally and unconditionally guaranteed by the
Guarantors, and each Note Guarantee will be a senior unsecured obligation of the
respective Guarantor. Stratosphere Corporation will not be a Guarantor,
and will be an Unrestricted Subsidiary under the Senior Note Indenture. The
obligations of each Guarantor under its Note Guarantee will be limited to the
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extent necessary under any applicable corporate law to ensure it does not
constitute a fraudulent conveyance under applicable law.
Except for the sale of a Guarantor by way of merger or consolidation,
the Senior Note Indenture will provide that no Guarantor shall consolidate with
or merge with or into (whether or not such Guarantor is the surviving Person)
another Person, whether or not affiliated with such Guarantor, unless: (i)
subject to the provisions of the following paragraph and certain other
provisions of the Senior Note Indenture, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Person shall
unconditionally guarantee, on a senior basis, all of such Guarantor's
obligations under such Guarantor's Note Guarantee and the Senior Note Indenture
on the terms set forth in the Senior Note Indenture; (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists; (iii)
such transaction will not result in the loss or suspension or material
impairment of any material Gaming License; and (iv) such transactions would not
require any holder of the New Notes to obtain a gaming license or be qualified
under the laws of any applicable gaming jurisdiction, provided that such holder
would not have been required to obtain a gaming license or be qualified under
the laws of any applicable gaming jurisdiction in the absence of such
transactions.
The Senior Note Indenture provides that in the event of (i) a sale or
other disposition of all or substantially all of the assets of any Guarantor or
the sale of a Guarantor, by way of merger, consolidation or otherwise, (ii) a
Restricted Subsidiary becoming an Unrestricted Subsidiary pursuant to terms of
the Senior Note Indenture or (iii) or a sale or other disposition of all of the
Capital Stock of any Guarantor, then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor or the Restricted Subsidiary becomes an
Unrestricted Subsidiary pursuant to the terms of the Senior Note Indenture) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) shall
be released and relieved of any obligations under its Note Guarantee; provided
that (x) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof and (y) the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of the Senior Note
Indenture; and provided further that any Mississippi Licensee and any
corporation acquiring the property of a Mississippi Licensee (in the event of a
sale or other disposition of all or substantially all of the assets of such
Mississippi Licensee) shall not be released as provided in this sentence unless
prior to the event described in clauses (i), (ii) or (iii) above the approval of
the Mississippi Gaming Commission of this Offering of Notes has been received.
See "Repurchase at the Option of Holders--Asset Sales."
The Senior Note Indenture provides that the Company shall cause each
Restricted Subsidiary, now existing or hereafter formed or acquired, to (i)
execute and deliver to the Trustee a supplemental indenture in form reasonably
satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the New Notes
on the terms set forth in the Senior Note Indenture and (ii) deliver to the
Trustee an opinion of counsel that, subject to customary assumptions and
exclusions, such supplemental indenture has been duly executed and delivered by
such Restricted Subsidiary. The Note Guarantee shall be released if the Company
or its Restricted Subsidiaries cease to own any Equity Interests in such
Restricted Subsidiary or if such Restricted Subsidiary becomes an Unrestricted
Subsidiary in accordance with the terms of the Senior Note Indenture.
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PRINCIPAL, MATURITY AND INTEREST
The New Notes will be general unsecured obligations of the Company to
be issued as provided in the Senior Note Indenture. The New Notes offered in the
Offering will mature on October 15, 2004.
Each New Note will bear interest at the rate of 9% per annum of the
principal amount then outstanding from the Issuance Date to the date of payment
of such principal amount of such New Note. Installments of fixed interest will
become due and payable semi-annually in arrears on each April 15 and October 15
to the holders of record at the close of business on the preceding April 1 or
October 1.
The New Notes will be payable both as to principal and interest at the
office or agency of the Company maintained for such purpose within the City and
State of New York or, at the option of the Company, payment of interest may be
made by check mailed to the holders of the New Notes at their respective
addresses set forth in the register of holders of New Notes. Until otherwise
designated by the Company, its office or agency in New York will be the office
or agency of the Trustee maintained for such purpose. The New Notes will be
issued in registered form, without coupons, and in denominations of $1,000 and
integral multiples thereof.
MANDATORY REDEMPTION
The Company will not be required to make mandatory redemption or
sinking fund payments prior to maturity with respect to the New Notes.
OPTIONAL REDEMPTION
Except as described below, the New Notes are not redeemable at the
Company's option prior to the date set forth on such New Note (the "First
Optional Redemption Date"). The First Optional Redemption Date for the New Notes
will be October 15, 2001. From and after such First Optional Redemption Date,
the New Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date, if redeemed during the twelve-month period
beginning on October 15 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2001.......................................................... 104.500%
2002.......................................................... 102.250%
2003 and thereafter........................................... 100.000%
In addition, at any time prior to the First Optional Redemption Date,
the Company may, at its option, redeem the New Notes, in whole or in part, at
the redemption price equal to 100% of the principal amount thereof plus the
applicable Make-Whole Premium.
Notwithstanding any other provision hereof, if any Gaming Authority
requires that a holder or beneficial owner of the New Notes must be licensed,
qualified or found suitable under any applicable gaming laws in order to
maintain any gaming license or franchise of the Company or any Restricted
Subsidiary under any applicable gaming laws, and the holder or beneficial owner
fails to apply for a license, qualification or finding of suitability within 30
days after being
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requested to do so by the Gaming Authority (or such lesser period that may be
required by such Gaming Authority) or if such holder or beneficial owner is not
so licensed, qualified or found suitable, the Company shall have the right, at
its option, (i) to require such holder or beneficial owner to dispose of such
holder's or beneficial owner's New Notes within 30 days of such failure to
comply with such requirement in a timely manner or upon receipt of a demand for
such divestiture by the applicable Gaming Authority (or such earlier date as may
be required by the applicable Gaming Authority) or (ii) to call for redemption
all of the New Notes of such holder or beneficial owner at a redemption price
equal to the lesser of the principal amount thereof, the price at which such
holder or beneficial owner acquired the New Notes or the fair market value
thereof, together with, in either case, accrued and unpaid interest and
Liquidated Damages, if any, to the earlier of the date of redemption or, the
date of the finding of unsuitability by such Gaming Authority, which may be less
than 30 days following the notice of redemption if so ordered by such Gaming
Authority. In connection with any such redemption, and except as may be required
by a Gaming Authority, the Company shall comply with the procedures contained in
the New Notes for redemptions of the New Notes. Under the Senior Note Indenture,
the Company is not required to pay or reimburse any holder of the New Notes or
beneficial owner who is required to apply for such license, qualification or
finding of suitability for the costs or fees of the licensure or investigation
for such qualification or finding of suitability. Such expenses will, therefore,
be the obligation of such holder or beneficial owner.
REPURCHASE AT THE OPTION OF ELIGIBLE HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will make an
offer to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of the New Notes pursuant to the offer described below (the "Change of
Control Offer") at a price in cash (the "Change of Control Payment") equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date of purchase. Within 30 days
following any Change of Control, the Company will mail a notice to each holder
with the following information: (1) a Change of Control Offer is being made
pursuant to the covenant entitled "Change of Control," and that all New Notes
properly tendered pursuant to such Change of Control Offer will be accepted for
payment; (2) the purchase price and the purchase date, which will be no earlier
than 30 days nor later than 60 days from the date such notice is mailed, except
as may be otherwise required by applicable law (the "Change of Control Payment
Date"); (3) any New Note not properly tendered will remain outstanding and
continue to accrue interest; (4) unless the Company defaults in the payment of
the Change of Control Payment, all New Notes accepted for payment pursuant to
the Change of Control Offer will cease to accrue interest after the Change of
Control Payment Date; (5) holders electing to have any New Notes purchased
pursuant to a Change of Control Offer will be required to surrender the New
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the New Notes completed, to the paying agent specified in the notice
at the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date; (6) holders
will be entitled to withdraw their tendered New Notes and their election to
require the Company to purchase the New Notes, provided that the paying agent
receives, not later than the close of business on the last day of the Offer
Period (as defined in the Senior Note Indenture), a telegram, telex, facsimile
transmission or letter setting forth the name of the holder, the principal
amount of New Notes tendered for purchase, and a statement that such holder is
withdrawing his tendered New Notes and his election to have such New Notes
purchased; and (7) that holders whose New Notes are being purchased only in part
will be issued New Notes equal in principal amount to the
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<PAGE> 37
unpurchased portion of the New Notes surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the New Notes pursuant to a Repurchase Offer.
On the Change of Control Payment Date, the Company will, to the extent
permitted by law, (1) accept for payment all New Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
paying agent an amount equal to the aggregate Change of Control Payment in
respect of all New Notes or portions thereof so tendered and (3) deliver, or
cause to be delivered, to the Trustee for cancellation the New Notes so accepted
together with an Officers' Certificate stating that such New Notes or portions
thereof have been tendered to and purchased by the Company. The paying agent
will promptly mail to each holder of New Notes the Change of Control Payment for
such New Notes, and the Trustee will promptly authenticate and mail to each
holder a New Note equal in principal amount to any unpurchased portion of the
New Notes surrendered, if any, provided that each such New Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The existence of a holder's right to require the Company to repurchase
such holder's New Notes upon the occurrence of a Change of Control may deter a
third party from seeking to acquire the Company in a transaction that would
constitute a Change of Control.
The source of funds for any repurchase of New Notes upon a Change of
Control will be the Company's cash or cash generated from operations or other
sources, including borrowings, sales of assets or Capital Stock. However, there
can be no assurance that sufficient funds will be available at the time of any
Change of Control to make any required repurchases. Any failure by the Company
to repurchase New Notes tendered pursuant to a Change of Control Offer will be
deemed an Event of Default.
ASSET SALES
The Senior Note Indenture provides that the Company will not, and will
not permit any of its Restricted Subsidiaries to, cause, make or suffer to exist
an Asset Sale, unless (w) no Default or Event of Default exists or is continuing
immediately prior to or after giving effect to such Asset Sale, (x) the Company,
or its Restricted Subsidiaries, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value (as
determined in good faith by the Company) of the assets sold or otherwise
disposed of and (y) at least 90% of the consideration therefor received by the
Company, or such Restricted Subsidiary, as the case may be, is in the form of
cash or Cash Equivalents; provided that the amount of (A) any liabilities (as
shown on the Company's, or such Restricted Subsidiary's, as the case may be,
most recent balance sheet or in the notes thereto) of the Company, or any
Restricted Subsidiary, as the case may be (other than liabilities that are by
their terms expressly subordinated to the New Notes or any Note Guarantee), that
are assumed by the transferee of any such assets and (B) any notes or other
obligations received by the Company, or any Restricted Subsidiary, as the case
may be, from such transferee that are converted by the Company, or such
Restricted Subsidiary, as the case may be, into cash (to the extent of the cash
received) within 90 days following the closing of such Asset Sale, shall be
deemed to be cash only for purposes of satisfying clause (y) of this paragraph
and for no other purpose.
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Within 270 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale to either (i)
permanently reduce Indebtedness that is not subordinated to the New Notes or
redeem or retire New Notes or (ii) or to the investment in any one or more
business, capital expenditure or other tangible asset of the Company or any
Restricted Subsidiary, in each case, engaged, used or useful in the Principal
Business or to an Investment in a Grand Managed Entity if such Investment is
permitted by the covenant described under the caption "Restricted Payments,"
with no concurrent obligation to make an offer to purchase any New Notes.
Pending the final application of any such Net Proceeds, the Company or such
Restricted Subsidiary may temporarily reduce Indebtedness under a revolving
credit facility, if any, or otherwise such Net Proceeds in Cash Equivalents. Any
Net Proceeds from the Asset Sale that are not invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
make an offer to all holders of New Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of New Notes, that is an integral multiple of
$1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, to the date fixed for the
closing of such offer, in accordance with the procedures set forth in the Senior
Note Indenture. The Company will commence an Asset Sale Offer with respect to
Excess Proceeds within 30 days after the date that Excess Proceeds exceeds $10.0
million by mailing the notice required pursuant to the terms of the Senior Note
Indenture. To the extent that the aggregate amount of New Notes tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company
may use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of New Notes surrendered by holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the New Notes to be
purchased in the manner described under the caption "Selection and Notice"
below. Upon completion of any such Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero.
SELECTION AND NOTICE
If less than all of the New Notes are to be purchased in an Asset Sale
Offer or redeemed at any time, selection of New Notes for purchase or redemption
will be made by the Trustee in compliance with the requirements of the New York
Stock Exchange or the principal national securities exchange, if any, on which
the New Notes are listed, or, if the New Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee shall deem fair and
appropriate (and in such manner as complies with applicable legal requirements),
provided that (i) all New Notes of every series shall be treated as a single
class and (ii) no New Notes of $1,000 or less shall be purchased or redeemed in
part.
Notices of purchase or redemption shall be mailed by first class mail,
postage prepaid, at least 30 but not more than 60 days before the purchase or
redemption date to each holder of New Notes to be purchased or redeemed at such
holder's registered address. If any New Note is to be purchased or redeemed in
part only, any notice of purchase or redemption that relates to such New Note
shall state the portion of the principal amount thereof that has been or is to
be purchased or redeemed.
A New Note in principal amount equal to the unpurchased or unredeemed
portion of any New Note purchased or redeemed in part will be issued in the name
of the holder thereof upon cancellation of the original New Note. On and after
the purchase or redemption date, unless the Company defaults in payment of the
purchase or redemption price, interest shall cease to accrue on New Notes or
portions thereof purchased or called for redemption.
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CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Senior Note Indenture provides that the Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (other than (1)
dividends or distributions by the Company payable in Equity Interests (other
than Disqualified Stock) of the Company or (2) dividends or distributions by a
Restricted Subsidiary of the Company, provided that to the extent that a portion
of such dividend or distribution is paid to a holder other than the Company or a
Restricted Subsidiary, such portion of such dividend or distribution is not
greater than such holder's pro rata aggregate common equity interest in such
Restricted Subsidiary; (ii) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Company; (iii) purchase, redeem or
otherwise acquire or retire for value any Subordinated Indebtedness of the
Company or any of its Restricted Subsidiaries prior to the scheduled dates for
payment of principal and interest in accordance with the original documentation
for such Subordinated Indebtedness or, if refinanced, the documentation relating
to such refinancing or (iv) make any Restricted Investment or any Contingent
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) for any Restricted Payment the Company would, at the time of such
Restricted Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to clauses (a), (b) or (c) under the first paragraph of the description
of the covenant described under the caption "Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries after
the Issuance Date (including Restricted Payments permitted by the next
succeeding paragraph, other than clauses (2), (3), (7), (9), (10) and (12), is
less than the sum of (X) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the fiscal quarter that first
begins after the Issuance Date to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available (or, in the
case such Consolidated Net Income for such period is a deficit, minus 100% of
such deficit), plus (Y) 100% of the aggregate net cash proceeds received by the
Company since the Issuance Date from the issue or sale of Equity Interests or
debt securities of the Company that have been converted into such Equity
Interests of the Company (other than Equity Interests or convertible debt
securities of the Company sold to a Restricted Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (Z) to the extent not otherwise included in the
Company's Consolidated Net Income, 100% of the cash dividends or distributions
or the amount of the cash principal and interest payments received since the
Issuance Date by the Company or any Restricted Subsidiary from any Unrestricted
Subsidiary or in respect of any Restricted Investment (other than dividends or
distributions to pay obligations of such Unrestricted Subsidiary such as income
taxes), provided that such calculation will be made (i) without duplication for
any actual Restricted Investment paid in respect of any Contingent Restricted
Investment previously made, and (ii) such that any
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<PAGE> 40
Contingent Restricted Investment terminated or released will no longer be deemed
to be an outstanding Restricted Payment to the extent so terminated or released.
The foregoing provisions will not prohibit the following Restricted
Payments:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the Senior Note Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of the Company or any Restricted Subsidiary
in exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests of
the Company (other than any Disqualified Stock);
(3) the redemption, repurchase, retirement or other acquisition of any
Subordinated Indebtedness of the Company or any Restricted Subsidiary in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Subordinated
Indebtedness of the Company or Equity Interests of the Company (other than
Disqualified Stock), provided that (x) the principal amount of such Subordinated
Indebtedness shall not exceed the principal amount of the Subordinated
Indebtedness so redeemed, repurchased, retired or otherwise acquired (plus the
amount of reasonable expenses incurred and any premium in connection therewith),
(y) the Subordinated Indebtedness shall have a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of the
Subordinated Indebtedness being redeemed, repurchased, retired or otherwise
acquired, and (z) such Subordinated Indebtedness is subordinate in right of
payment to the New Notes and any Note Guarantee on terms at least as favorable
to the holders of the New Notes as those contained in the documentation
governing the Subordinated Indebtedness being redeemed, repurchased, retired or
otherwise acquired;
(4) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of any Equity Interests of the Company held
by any employee or director of the Company or any Subsidiary pursuant to any
management equity plan or stock option plan, provided that the Restricted
Payments made under this clause (4) does not exceed $5.0 million in the
aggregate in any one fiscal year;
(5) any redemption or purchase by the Company or any Restricted
Subsidiary of Equity Interests of the Company required by a Gaming Authority in
order to preserve a material Gaming License, provided that so long as such
efforts do not jeopardize any material Gaming License, the Company or such
Restricted Subsidiary shall have diligently tried to find a third-party
purchaser for such Equity Interests and no third-party purchaser acceptable to
the applicable Gaming Authority was willing to purchase such Equity Interests
within a time period acceptable to such Gaming Authority;
(6) (i) Restricted Investments or Contingent Restricted Investments of
up to $50 million in the aggregate outstanding at any one time in Grand
Controlled Entities or Gaming Support Businesses plus (ii) Restricted
Investments or Contingent Restricted Investments in Grand Controlled Entities or
Gaming Support Businesses, provided that the Company has, at the time of making
such Restricted Investment or Contingent Restricted Investment, a Consolidated
Net Debt to Cash Flow Ratio of not more than 3.0 to 1 on a pro forma basis
giving effect to the Restricted Investment;
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(7) Restricted Investments or Contingent Restricted Investments to the
extent that such Restricted Investment or the payment under such Contingent
Restricted Investment is made using Equity Interests of the Company (other than
Disqualified Stock);
(8) Restricted Investments in Stratosphere; provided that the aggregate
payments do not exceed the aggregate payments provided for under the
Stratosphere Agreements in existence on the Issuance Date;
(9) Restricted Investments to purchase, retire or otherwise acquire all
or part of any outstanding Equity Interests in Stratosphere Corporation that the
Company or a Restricted Subsidiary does not own all of the beneficial equity
interest thereof;
(10) Restricted Investments in, or a lease or sublease to, any
Unrestricted Subsidiary consisting of Substantially Undeveloped Land owned or
leased by the Company or a Restricted Subsidiary as of the Issuance Date;
(11) Contingent Restricted Investments in any Indian tribe recognized
as a sovereign entity for any gaming enterprise as to which the Company or a
Restricted Subsidiary has been officially selected by such Indian tribe as the
manager thereof pursuant to an executed management agreement, if such Contingent
Restricted Investments under this clause does not exceed $10 million in the
aggregate;
(12) Restricted Investments in debt securities of the Mississippi
Business Finance Corporation (an agency of the State of Mississippi chartered to
promote the development of business within the State of Mississippi), provided
that the proceeds from such debt securities are invested in the Company or a
Restricted Subsidiary; and
(13) Restricted Payments not otherwise permitted in an aggregate amount
outstanding under this clause (13) not to exceed $20.0 million at any one time;
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (4), (6), (9), (10), (11), (12) and
(13), no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof.
The amount of any Restricted Payment, as of any date, consisting of a
Contingent Restricted Investment shall be the amount of the maximum obligation
(the "Maximum Obligation") under such Contingent Restricted Investment on such
date. The Maximum Obligation of any Contingent Restricted Investment as of any
date shall be:
(i) for Guarantees of Capital Lease Obligations or purchase money loans
for equipment, an amount equal to the then outstanding principal balance of such
Capital Lease Obligation or loan minus 75% of the depreciated book value of the
Equipment so financed;
(ii) for Guarantees of other Indebtedness, an amount equal to the then
outstanding principal balance of such Indebtedness so Guaranteed minus any cash
collateral then securing such Indebtedness; or
(iii) for any other Contingent Restricted Investment, an amount equal
to the dollar amount or value of the Maximum Obligation or commitment;
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provided the Maximum Obligation of any Contingent Restricted Investment
shall be zero so long as the Consolidated Net Debt to Cash Flow Ratio of the
Guaranteed Party is less than 2.5 to 1 for the four consecutive fiscal quarters
last completed for which internal financial statements are then available or the
Fixed Charge Coverage Ratio of the Guaranteed Party is at least 3.5 to 1. If any
Contingent Restricted Investment is released or satisfied, the Maximum
Obligation will be correspondingly reduced.
If the outstanding principal amount guaranteed or the amount obligated
or committed to be invested of any Contingent Restricted Payment increases on
any date, then the Guarantor Party shall be deemed to have made a Contingent
Restricted Investment on such date in the amount of such increase. If the
Maximum Obligation of any Contingent Restricted Payment decreases on any date
(other than solely as a result of any change in the Guaranteed Party's
Consolidated Debt to Cash Flow Ratio or Fixed Charge Coverage Ratio), then the
corresponding Contingent Restricted Investment will not be deemed outstanding in
the amount of such decrease and the amount of such Contingent Restricted
Investment shall be deemed not to have been made as a Restricted Payment in the
amount of such decrease.
Upon making any Contingent Restricted Investment, the Company will be
deemed to have incurred on such date Deemed Incurred Indebtedness in the amount
of the Maximum Obligation thereunder less any cash segregated and restricted
solely for the satisfaction of such Contingent Restricted Investment.
For purposes of determining the amount of Restricted Investments
outstanding at any time, all Restricted Investments will be valued at their fair
market value at the time such Restricted Investments were made or, if such
Restricted Investments consists of property acquired within 2 years of the date
of investment, at the election of the Company, at historical cost (in each case
as determined in good faith by the Company's Board of Directors), and no
adjustments will be made for subsequent changes in fair market value.
DESIGNATION OF UNRESTRICTED SUBSIDIARY
The Senior Note Indenture provides that the Board of Directors of the
Company may designate any Restricted Subsidiary to be an Unrestricted
Subsidiary, provided that:
(i) at the time of designation, the Investment by the Company and any
of its Restricted Subsidiaries in such Subsidiary shall be deemed a Restricted
Investment (to the extent not previously included as a Restricted Investment)
made on the date of such designation in the amount of the greater of (1) the net
book value of such Investment or (2) the fair market value of such Investment as
determined in good faith by the Board of Directors and any contingent obligation
or commitment to make an Investment in such Restricted Subsidiary or any
Guarantee of the Indebtedness of such Restricted Subsidiary shall be deemed a
Contingent Restricted Investment made on such date;
(ii) at the time of designation, no Default or Event of Default has
occurred and is continuing or results immediately after such designation or as a
result of any Restricted Investment in such Subsidiary;
(iii) at the time of designation, such Subsidiary has no Indebtedness
other than Permitted Unrestricted Subsidiary Indebtedness of such Subsidiary or
a Note Guarantee; and
(iv) such Subsidiary does not own any Equity Interests in a Restricted
Subsidiary.
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An Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary
and shall become a Restricted Subsidiary if either (i) at any time while it is a
Subsidiary of the Company (1) such Subsidiary acquires any assets from the
Company or any Restricted Subsidiary other than as permitted by the provisions
of the Senior Note Indenture, including the provisions described under the
covenants entitled "Restricted Payments" and "Asset Sales;" (2) such Subsidiary
has any Indebtedness other than Permitted Unrestricted Subsidiary Indebtedness;
and (3) such Subsidiary owns any Equity Interests in a Restricted Subsidiary of
the Company; or (ii) the Company designates such Unrestricted Subsidiary to be a
Restricted Subsidiary and no Default or Event of Default occurs or is continuing
immediately after such designation. If the Company designates any Unrestricted
Subsidiary to be a Restricted Subsidiary and no Default or Event of Default
occurs or is continuing immediately after such designation, then any Restricted
Investments previously made in such Unrestricted Subsidiary and any outstanding
Contingent Restricted Investments or Deemed Incurred Indebtedness will no longer
be deemed outstanding and shall be deemed not to have been made under the
covenants entitled "Restricted Payments" or "Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock."
Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
Any Restricted Subsidiary that has been designated as an Unrestricted
Subsidiary pursuant to the terms of the Company's 101/8% First Mortgage Notes
Indenture shall be deemed to be an Unrestricted Subsidiary under the Senior
Note Indenture as of the date thereof.
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Senior Note Indenture will provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guaranty or otherwise become directly or
indirectly liable with respect to (collectively, "incur" and correlatively, an
"incurrence" of) any Indebtedness (including Acquired Indebtedness or Deemed
Incurred Indebtedness) or any shares of Disqualified Stock; provided that the
Company or any Restricted Subsidiary may incur:
(a) Indebtedness or shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company and its Restricted Subsidiaries for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of such incurrence would have been
at least 2.0 to 1.0 determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the Disqualified Stock had been issued, as the case may be,
and application of proceeds had occurred at the beginning of such four-quarter
period;
(b) Subordinated Indebtedness (and related subordinated guarantees by
any Restricted Subsidiary) or Disqualified Stock, in each case with a Weighted
Average Life to Maturity that is longer than the New Notes by at least one year,
if the Fixed Charge Coverage Ratio for the Company and its Restricted
Subsidiaries for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date of
such incurrence would have been at least 1.75 to 1.0 determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, and application of proceeds had occurred at the
beginning of such four-quarter period;
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(c) Senior Secured Indebtedness if the Consolidated Net Secured Debt to
Cash Flow Ratio for the Company and its Restricted Subsidiaries for the most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of such incurrence would have been
less than 2.5 to 1 determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom) as if the additional Indebtedness had
been incurred or the Disqualified Stock had been issued, as the case may be, and
application of proceeds had occurred at the beginning of such four-quarter
period;
(d) any Indebtedness in an aggregate principal amount not to exceed
$50.0 million at any one time outstanding under this clause (d);
(e) Existing Indebtedness;
(f) Indebtedness represented by the New Notes or a Note Guarantee;
(g) Indebtedness (the "Refinancing Indebtedness") issued in exchange
for, or the proceeds of which are used to extend, refinance, renew, replace, or
refund Indebtedness incurred pursuant to clauses (a), (b), (c), (e), (f), (k),
(l) or this clause (g), provided that (1) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount of Indebtedness
so extended, refinanced, renewed, replaced, substituted or refunded (plus the
amount of reasonable expenses incurred and any premium paid in connection
therewith), (2) the Refinancing Indebtedness shall have a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to Maturity of
the Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded and (3) if the Indebtedness being refinanced is subordinated, the
Refinancing Indebtedness shall be subordinate in right and priority of payment
to the New Notes and any Note Guarantee on terms at least as favorable to the
holders of New Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded;
(h) intercompany Indebtedness between or among the Company and any
Restricted Subsidiary, including any Subordinated Indebtedness owed to the
Mississippi Business Finance Corporation, provided that the Company or
Restricted Subsidiary holds the corresponding Indebtedness of the Mississippi
Business Finance Corporation;
(i) Hedging Obligations that are incurred (1) for the purpose of fixing
or hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Senior Note Indenture to be outstanding or
(2) for the purpose of fixing or hedging currency exchange rate risk with
respect to any currency exchanges;
(j) Indebtedness represented by Capital Lease Obligations or purchase
money obligations or Non-Recourse Financing, in each case incurred for the
purpose of financing or refinancing all or any part of the purchase or lease of
personal or real property or equipment used in the business of the Company or
such Restricted Subsidiary and acquired after the date of the Senior Note
Indenture;
(k) Acquired Indebtedness or Disqualified Stock of any Person (other
than an Unrestricted Subsidiary) that becomes, or which merged into, a
Restricted Subsidiary after the date of the Senior Note Indenture, which
Acquired Indebtedness was outstanding at the time such Person becomes, or which
merged into, a Restricted Subsidiary, provided (1) that such Acquired
Indebtedness was not incurred in contemplation of such Person becoming a
Restricted Subsidiary,
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and (2) none of the Company or any other Restricted Subsidiary is required to
guarantee or become liable for the repayment of such Acquired Indebtedness; and
(l) Deemed Incurred Indebtedness permitted pursuant to clause (11) of
the second paragraph of the covenant entitled "Restricted Payments."
The Senior Note Indenture provides that the Company will not permit any
of its Unrestricted Subsidiaries to incur any Indebtedness (including Acquired
Indebtedness) or issue any shares of Disqualified Stock, other than Permitted
Unrestricted Subsidiary Indebtedness; provided that if any such Unrestricted
Subsidiary ceases to be an Unrestricted Subsidiary and becomes a Restricted
Subsidiary, such event shall be deemed to constitute the incurrence of the
Indebtedness in such Subsidiary by a Restricted Subsidiary.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described above, the Company shall, in its
sole discretion, classify such item of Indebtedness in any manner that complies
with this covenant. Accrual of interest, the accretion of accreted value and the
payment of interest in the form of additional Indebtedness will not be deemed to
be an incurrence of Indebtedness for purposes of this covenant.
LIENS
The Senior Note Indenture provides that the Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or suffer to exist any Lien that secures obligations under any
Indebtedness, except Permitted Liens, on any asset owned as of the Issuance Date
or thereafter acquired by the Company or such Restricted Subsidiary, or any
income or profits therefrom, or assign or convey any right to receive income
therefrom.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Senior Note Indenture provides that the Company may not consolidate
or merge with or into or wind up into (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to, any Person unless:
(i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof,
(ii) the Person formed by or surviving any such consolidation or merger
(if other than the Company) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made assumes all
the obligations of the Company under the Senior Note Indenture and all
outstanding New Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee under the New Notes
and the Senior Note Indenture;
(iii) immediately after such transaction no Default or Event of Default
exists;
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(iv) the Company or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made, will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to any of clauses (a),
(b) or (c) set forth in the first paragraph of the covenant entitled
"Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock;"
and
(v) such transactions would not require any holder of New Notes to
obtain a gaming license or be qualified under the law of any applicable gaming
jurisdiction, provided that such holder would not have been required to obtain a
gaming license or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transactions.
TRANSACTIONS WITH AFFILIATES
The Senior Note Indenture provides that the Company will not, and will
not permit any of its Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and
(b) the Company delivers to the Trustee (i) with respect to any
Affiliate Transaction involving aggregate payments in excess of $5.0 million, a
resolution adopted by a majority of the disinterested nonemployee directors of
the Board of Directors approving such Affiliate Transaction and set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (a) above and (ii) with respect to any Affiliate Transaction that is a
loan transaction involving a principal amount in excess of $20.0 million or any
other type of Affiliate Transaction involving aggregate payments in excess of
$20.0 million, an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view issued by an Independent Financial
Advisor.
The restrictions contained in this covenant will not apply to the
following: (1) transactions between or among the Company and/or any of its
Restricted Subsidiaries; (2) Restricted Payments permitted by the provisions of
the Senior Note Indenture described above under the covenant "Restricted
Payments;" or (3) the transactions pursuant to the Stratosphere Agreements.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Senior Note Indenture provides that the Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction on the ability of any such Restricted
Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries (A) on its Capital Stock or (B) with respect
to any other interest or participation in, or measured by, its profits, or (ii)
pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries
(other than in respect of the subordination of such
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Indebtedness to the Existing First Mortgage Notes, guarantees thereof, the New
Notes, the Note Guarantees or any permitted refinancing thereof, as the case may
be), or
(b) make loans or advances to the Company,
except (in each case) for such encumbrances or restrictions existing
under or by reason of:
(1) contractual encumbrances or restrictions in effect on the Issuance
Date and contractual encumbrances or restrictions contained in secured
Indebtedness permitted to be incurred under the Senior Note Indenture,
(2) the Senior Note Indenture, the New Notes and any Note Guarantees,
(3) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any Restricted Subsidiary as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired,
(4) by reason of customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices,
(5) purchase money obligations for property acquired in the ordinary
course of business or Permitted Liens that impose restrictions of the nature
discussed in clause (c) above on the property so acquired or to which such Lien
attaches,
(6) applicable law or any applicable rule or order of any Gaming
Authority, or
(7) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (6) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the Company's
Board of Directors, no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the dividend or
other payment restrictions prior to such amendment, modification, restatement,
renewal, increase, supplement, refunding, replacement or refinancing.
LINE OF BUSINESS
The Senior Note Indenture provides that for so long as any New Notes
are outstanding, the Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in any business or activity other than the
Principal Business.
INSURANCE
The Senior Note Indenture provides that, until the New Notes have been
paid in full, the Company will, and will cause its Restricted Subsidiaries to,
maintain insurance with responsible carriers against such risks and in such
amounts as is customarily carried by similar businesses with such deductibles,
retentions, self insured amounts and coinsurance provisions as are customarily
carried by similar businesses of similar size, including, without limitation,
property and casualty.
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SEC REPORTS
Under the terms of the Senior Note Indenture, the Company and the
Guarantors will file with the Trustee and provide holders of New Notes, within
15 days after it files them with the SEC, copies of their annual reports and of
the information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rule or regulation prescribe) which the
Company and the Guarantors are required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. Notwithstanding that the Company or the
Guarantors may not be required to remain subject to the reporting requirements
of Section 13 or 15 (d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the Senior Note
Indenture requires the Company and the Guarantors to continue to file with the
SEC and provide the Trustee and holders with, without cost to each holder, (a)
within 90 days after the end of each fiscal year, annual reports on Form 10-K
(or any successor or comparable form) containing the information required to be
contained therein (or required in such successor or comparable form); (b) within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q (or any successor or comparable form); and (c)
promptly from time to time after the occurrence of an event required to be
therein reported, such other reports on Form 8-K (or any successor or comparable
form) containing the information required to be contained therein (or required
in any successor or comparable form); provided that the Company and the
Guarantors shall not be so obligated to file such reports with the SEC if the
SEC does not permit such filings. The Company and the Guarantors will in all
cases, without cost to each recipient, provide copies of such information to the
holders of the New Notes and shall make available such information to
prospective purchasers and to securities analysts and broker-dealers upon their
written request. In addition, the Company and the Guarantors have agreed that,
for so long as any New Notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Not later than 15 days after the date of filing any quarterly or annual
report, the Company shall deliver to the Trustee an Officers' Certificate
stating that each Restricted Payment made in the prior fiscal quarter was
permitted and setting forth the basis upon which the calculations required by
the covenant relating to "Restricted Payments" were computed, which calculations
may be based upon the Company's latest available financial statements at the
time of such Restricted Payment.
EVENTS OF DEFAULT AND REMEDIES
The Senior Note Indenture provides that each of the following
constitutes an Event of Default:
(i) default in payment when due and payable, upon redemption or
otherwise, of principal or premium, if any, on any Senior Note or under any Note
Guarantee;
(ii) default for 30 days or more in the payment when due of interest
on, or Liquidated Damages with respect to, any Senior Note or under any Note
Guarantee;
(iii) failure by the Company or any Guarantor to offer to purchase, or
to purchase the New Notes when required under an offer made pursuant to the
Senior Note Indenture;
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(iv) failure by the Company or any Guarantor to comply with the
provisions described under the captions "Restricted Payments," "Limitations on
Incurrence of Indebtedness and Issuance of Disqualified Stock," "Asset Sales,"
or "Change of Control."
(v) failure by the Company or any Guarantor for 60 days after receipt
of written notice to comply with any of its other agreements in the Senior Note
Indenture, or the New Notes;
(vi) default under any mortgage, indenture or instrument under which
there is issued or by which there is secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Restricted Subsidiaries or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such Indebtedness or Guarantee now exists or is created
after the Issuance Date, which default (a) is caused by a failure to pay when
due principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity or would constitute a default in the payment of such issue of
Indebtedness at final maturity of such issue and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which a Payment Default then exists or with respect to
which the maturity thereof has been so accelerated or that has not been paid at
maturity, aggregates $15.0 million or more;
(vii) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $15.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more than 60
days;
(viii) material breach by the Company, any Guarantor or any of their
Subsidiaries of any representation or warranty set forth in any Note Guarantee
or default by the Company or any Guarantor in the performance of any covenant
set forth in any Note Guarantee which continues for 60 days after notice
thereof, or the repudiation by the Company, any Guarantor or any of their
Subsidiaries of its obligations under, or any judgment or decree by a court or
governmental agency of competent jurisdiction declaring the unenforceability of,
any Note Guarantee for any reason that would materially impair the benefits to
the Trustee or the holders of the New Notes thereunder;
(ix) certain events of bankruptcy or insolvency with respect to the
Company or any Guarantor that is a Significant Subsidiary of the Company or any
group of Guarantors that together would constitute a Significant Subsidiary of
the Company;
(x) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License which results in the cessation or suspension
of gaming operations at any Existing Casino that results in Consolidated Cash
Flow at the end of any four consecutive fiscal quarters being less than 80% of
the Consolidated Cash Flow for the four consecutive fiscal quarters prior to
such revocation, termination, suspension or other cessation of effectiveness of
such Gaming License; or
(xi) prior to the approval of the Mississippi Gaming Commission of this
Offering of Notes, the transfer of equity securities of any Mississippi
Licensees.
If any Event of Default (other than by reason of bankruptcy or
insolvency) occurs and is continuing, the Trustee or the holders of at least 25%
in principal amount of the then outstanding New Notes may declare the principal,
premium, if any, interest and Liquidated Damages and any
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other monetary obligations on all the New Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company or any Guarantor, all outstanding New Notes will become due and payable
without further action or notice. Holders of the New Notes may not enforce the
Senior Note Indenture or the New Notes except as provided in the Senior Note
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding New Notes may direct the Trustee in its exercise
of any trust or power. The Trustee may withhold from holders of New Notes notice
of any continuing Default or Event of Default (except a Default or Event
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. In addition, the Trustee shall have no
obligation to accelerate the New Notes if in the best judgment of the Trustee
acceleration is not in the best interest of the holders of the New Notes.
In the case of any Event of Default occurring on or after the First
Optional Redemption Date for New Notes of any series by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention and for the purpose of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the New
Notes pursuant to the optional redemption provisions of the Senior Note
Indenture, an equivalent premium shall also become and be immediately due and
payable on New Notes of such series to the extent permitted by law. If an Event
of Default occurs prior to the First Optional Redemption Date for New Notes of
any series, by reason of any willful action (or inaction) taken (or not taken)
by or on behalf of the Company with the intention and for the purpose of
avoiding the prohibition on redemption of the New Notes prior to the First
Optional Redemption Date, then the implied call premium set forth in the Senior
Note Indenture for an optional redemption on such date (as if an optional
redemption would have been permitted by the terms of the Senior Note Indenture)
shall also become immediately due and payable on New Notes of such series to the
extent permitted by law.
The holders of a majority in aggregate principal amount of the New
Notes then outstanding by notice to the Trustee may on behalf of the holders of
all of the New Notes waive any existing Default or Event of Default and its
consequences under the Senior Note Indenture except a continuing Default or
Event of Default in the payment of interest on, premium or Liquidated Damages,
if any, or the principal of, any Senior Note held by a non-consenting holder.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Senior Note Indenture, and the Company is
required, within five Business Days, upon becoming aware of any Default or Event
of Default or any default under any document, instrument or agreement
representing Indebtedness of the Company, to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company or the Guarantors, as such, shall have any liability for any obligations
of the Company or the Guarantors under the New Notes, any Note Guarantee or the
Senior Note Indenture, as applicable, or for any claim based on, in respect of,
or by reason of such obligations or their creation. Each holder of an Old Note
by accepting such Old Note waived and released all such liability. The waiver
and release are part of the consideration for issuance of the Old Notes and the
Note Guarantees. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The obligations of the Company and the Guarantors under the Senior Note
Indenture will terminate (other than certain obligations) upon payment in full
of all of the New Notes. The Company may, at its option and at any time, elect
to have all of its and any Guarantor's obligations discharged with respect to
the outstanding New Notes and any Note Guarantees ("Legal Defeasance") and cure
all then existing Events of Default except for (i) the rights of holders of
outstanding New Notes to receive payments in respect of the principal of,
premium, if any, and interest and Liquidated Damages on such New Notes when such
payments are due solely out of the trust created pursuant to the Senior Note
Indenture, (ii) the Company's and any Guarantor's obligations with respect to
the New Notes concerning issuing temporary New Notes, registration of New Notes,
mutilated, destroyed, lost or stolen New Notes and the maintenance of an office
or agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
and any Guarantor's obligations in connection therewith and (iv) the Legal
Defeasance provisions of the Senior Note Indenture. In addition, the Company
may, at its option and at any time, elect to have the obligations of the Company
and any Guarantor released with respect to certain covenants that are described
in the Senior Note Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the New Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the New Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the holders of the New Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages due on the outstanding New Notes on the stated maturity date
or on the applicable redemption date, as the case may be, of such principal,
premium, if any, or interest or Liquidated Damages on the outstanding New Notes;
(ii) in the case of Legal Defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee confirming that, subject to customary assumptions and exclusions, (A)
the Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling or (B) since the Issuance Date of the Senior
Note Indenture, there has been a change in the applicable U.S. federal income
tax law, in either case to the effect that, and based thereon such opinion of
counsel in the United States shall confirm that, subject to customary
assumptions and exclusions, the holders of the outstanding New Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Legal Defeasance and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that, subject to customary assumptions and exclusions, the holders of the
outstanding New Notes will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to such tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing with respect
to certain Events of Default on the date of such deposit; (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
the Senior Note Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its
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Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
opinion of counsel in the United States to the effect that, as of the date of
such opinion and subject to customary assumptions and exclusions following the
deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally under any applicable United States law, state law and that the
Trustee has a perfected security interest in such trust funds for the ratable
benefit of the holders of New Notes; (vii) the Company shall have delivered to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of defeating, hindering, delaying or defrauding any
creditors of the Company or others; and (viii) the Company shall have delivered
to the Trustee an Officers' Certificate and an opinion of counsel in the United
States (which opinion of counsel may be subject to customary assumptions and
exclusions) each stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Senior
Note Indenture, the New Notes and the Note Guarantees may be amended or
supplemented with the consent of the holders of at least a majority in principal
amount of all of the New Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for New Notes), and any
existing default or compliance with any provision of the Senior Note Indenture,
the New Notes or the Note Guarantees may be waived with the consent of the
holders of a majority in principal amount of all of the then outstanding New
Notes (including consents obtained in connection with a tender offer or exchange
offer for New Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any New Notes held by a nonconsenting holder of New Notes):
(i) reduce the principal amount of New Notes whose holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Senior Note or alter or waive the provisions with respect
to the redemption of the New Notes (other than provisions relating to the
covenants described under "Repurchase at the Option of Holders"), (iii) reduce
the rate of or change the time for payment of interest on any Senior Note, (iv)
waive a Default or Event of Default in the payment of principal of, premium, if
any, or interest or Liquidated Damages on the New Notes (except a rescission of
acceleration of the New Notes by the holders of at least a majority in aggregate
principal amount of the New Notes and a waiver of the payment default that
resulted from such acceleration), (v) make any Senior Note payable in money
other than that stated in the New Notes, (vi) make any change in the provisions
of the Senior Note Indenture relating to waivers of past Defaults or the rights
of holders of New Notes to receive payments of principal of or premium, if any,
or interest or Liquidated Damages on the New Notes or (vii) make any change in
the foregoing amendment and waiver provisions.
Without the consent of holders of at least 662/3% of the outstanding
principal amount of any New Notes then outstanding (including consents obtained
in a tender offer or exchange offer for such New Notes) regardless of whether
such New Notes were issued in one or more series, the Company may not amend,
alter or waive the provisions with respect to a "Change of Control."
Notwithstanding the foregoing, without the consent of any holder of New
Notes, the Company and the Trustee together may amend or supplement the Senior
Note Indenture, the New Notes or the Note Guarantees to cure any ambiguity,
defect or inconsistency, to comply with the covenant relating to mergers,
consolidations and sales of assets, to provide for uncertificated New Notes in
addition to or in place of certificated New Notes, to provide for the assumption
of the
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Company's or any Guarantor's obligations to holders of the New Notes in the case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of the New Notes (including
providing for additional Note Guarantees pursuant to the Senior Note Indenture),
or that does not adversely affect the legal rights under the Senior Note
Indenture of any such holder, to comply with requirements of the SEC in order to
effect or maintain the qualification of the Senior Note Indenture under the
Trust Indenture Act.
CONCERNING THE TRUSTEE
The Senior Note Indenture contains certain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the SEC for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding
New Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Senior Note Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent person in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Senior
Note Indenture at the request of any holder of New Notes, unless such holder
shall have offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
GOVERNING LAW
The Senior Note Indenture and the New Notes are, subject to certain
exceptions, governed by and construed in accordance with the internal laws of
the State of New York, without regard to the choice of law rules thereof,
subject to certain requirements under the Mississippi gaming laws.
ADDITIONAL INFORMATION
Any holder of the New Notes or prospective investor may obtain a copy
of the Senior Note Indenture and the Registration Rights Agreement without
charge by writing to Grand Casinos, Inc., 130 Cheshire Lane, Minnetonka,
Minnesota 55305, Attention: Corporate Secretary.
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were initially represented by a single Note in registered,
global form (collectively, the "Old Global Note"). The Old Global Note was
deposited upon issuance with the Trustee as custodian for DTC and registered in
the name of Cede & Co., DTC's nominee, for credit to any account of a direct or
indirect participant in DTC as described below.
Except as set forth below, the Global Note(s) may be transferred, in
whole and not in part, only to the Depositary or another nominee of the
Depositary. Investors may hold their beneficial interests in the Global Note(s)
directly through the Depositary if they are Participants (as defined herein) in
such system or indirectly through organizations that are Participants in such
system.
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The Depositary is a limited-purpose trust company that was created to
hold securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between Participants
through electronic book-entry changes in accounts of its Participants. The
Depositary's Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect Participants"
or the "Depositary's Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Persons who are not Participants may beneficially own securities held by or on
behalf of the Depositary only through the Depositary's Participants or the
Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon the issuance of the Global Note(s), the Depositary will
credit the accounts of Participants designated by the Initial Purchasers with
portions of the principal amount of the Global Note(s) and (ii) ownership of the
New Notes evidenced by the Global Note(s) will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by the
Depositary (with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer New Notes evidenced by the
Global Note(s) will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Senior
Note, the Global Note Holder will be considered the sole Holder under the Senior
Note Indenture of any New Notes evidenced by the Global Note(s). Beneficial
owners of New Notes evidenced by the Global Note(s) will not be considered the
owners or Eligible Holders thereof under the Senior Note Indenture for any
purpose, including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records of the
Depositary or for maintaining, supervising or reviewing any records of the
Depositary relating to the New Notes.
Payments in respect of the principal of, premium, if any, and
Liquidated Damages, if any, on any New Notes registered in the name of the
Global Note Holder on the applicable record date will be payable by the Trustee
to or at the direction of the Global Note Holder in its capacity as the
registered Holder under the Senior Note Indenture. Under the terms of the Senior
Note Indenture, the Company and the Trustee may treat the persons in whose names
New Notes, including the Global Note(s), are registered as the owners thereof
for the purpose of receiving such payments. Consequently, neither the Company
nor the Trustee has or will have any responsibility or liability for the payment
of such amounts to beneficial owners of New Notes (including principal, premium,
if any, and Liquidated Damages, if any). The Company believes, however, that it
is currently the policy of the Depositary to immediately credit the accounts of
the relevant Participants with such payments, in amounts proportionate to their
respective holdings of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of New Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED SECURITIES
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Subject to certain conditions, any person having a beneficial interest
in the Global Note(s) may, upon request to the Trustee, exchange such beneficial
interest for New Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (i) the Company notifies the
Trustee in writing that the Depositary is no longer willing or able to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of New Notes in the form of Certificated Securities
under the Senior Note Indenture, then, upon surrender by the Global Note Holder
of its Global Note(s), New Notes in such form will be issued to each person that
the Global Note Holder and the Depositary identify as being the beneficial owner
of the related New Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of New
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
NEXT DAY SETTLEMENT AND PAYMENT
The Senior Note Indenture requires that payments in respect of the New
Notes represented by the Global Note(s) (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available next day funds to the accounts specified by the Global Note Holder.
With respect to Certificated Securities, the Company will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available next day funds to the accounts specified by
the Eligible Holders thereof or, if no such account is specified, by mailing a
check to each such Holder's registered address. The Company expects that
secondary trading in the Certificated Securities will also be settled in
immediately available funds.
Because of time-zone differences, the securities account of a "Member
Organization" purchasing an interest in a Global Note from a Participant that is
not a Member Organization will be credited during the securities settlement
processing day (which must be a business day for Euroclear or Cedel Bank, as the
case may be) immediately following the Depositary settlement date. Transactions
in interests in a Global Note settled during any securities settlement
processing day will be reported to the relevant Member Organization on the same
day. Cash received in Euroclear or Cedel Bank as a result of sales of interests
in a Global Note by or through a Member Organization to a Participant that is
not a Member Organization will be received with value on the Depositary
settlement date, but will not be available in the relevant Euroclear or Cedel
Bank cash account until the business day following settlement at the Depositary.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Senior Note
Indenture. Reference is made to the Senior Note Indenture for a full disclosure
of all such terms, as well as any other capitalized terms used herein for which
no definition is provided. For purposes of the Senior Note Indenture, unless
otherwise specially indicated the term "consolidated" with respect to any Person
refers to such Person consolidated with its Restricted Subsidiaries, and
excludes from such consolidation any Unrestricted Subsidiary as if such
Unrestricted Subsidiary were not an Affiliate of such Person.
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"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person
merged with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Restricted Subsidiary of such
specified Person and (ii) Indebtedness encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided that
beneficial ownership of 15% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and leaseback)
of the Company or any Restricted Subsidiary (each referred to in this definition
as a "disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than (a) a disposition of inventory or goods
held for sale in the ordinary course of business, (b) the disposition of all or
substantially all of the assets of the Company in a manner permitted pursuant to
the provisions described above under "Merger, Consolidation or Sale of Assets"
or any disposition that constitutes a Change of Control pursuant to the Senior
Note Indenture, (c) any disposition that is a Restricted Payment or that is a
dividend or distribution permitted under the covenant described above under
"Restricted Payments" or any Investment that is not prohibited thereunder or any
disposition of cash or Cash Equivalents, (d) any disposition pursuant to the
settlement of litigation or court order, and (e) any single disposition, or
related series of dispositions, of assets with an aggregate fair market value
(as determined in good faith by the Company) of less than $10.0 million.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
the balance sheet in accordance with GAAP.
"Capital Stock" means with respect to any Person, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock of such Person, including, without limitation, if such Person is
a partnership, partnership interests (whether general or limited) and any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, such partnership.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of 12 months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding 12 months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the
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equivalent thereof by Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within one year after the date of
acquisition and (vi) investment funds investing solely in securities of the
types described in clauses (ii) through (v) above.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease or transfer, in one or a series of transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, other than to the Permitted Holder and its Related Parties; (ii) the
Company becomes aware of (by way of a report or any other filing pursuant to
Section 13 (d) of the Exchange Act, proxy, vote, written notice or otherwise)
the acquisition by any person or group (within the meaning of Section 13 (d) (3)
or Section 14 (d) (2) of the Exchange Act, or any successor provision),
including any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5 (b) (1) under the Exchange Act),
other than the Permitted Holder and its Related Parties, in a single transaction
or in a related series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of
the total voting power of the Voting Stock of the Company, or (iii) the first
day within any two-year period on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.
"Company" means Grand Casinos, Inc., a Minnesota corporation, until a
successor to Grand Casinos, Inc. as the Company is appointed under the Senior
Note Indenture, and thereafter, means such successor.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a) an
amount equal to an extraordinary or nonrecurring loss plus any net loss realized
in connection with an Asset Sale (to the extent such losses were deducted in
computing Consolidated Net Income), plus (b) provision for taxes based on income
or profits of such Person for such period, to the extent such provision for
taxes was included in computing Consolidated Net Income, plus (c) Consolidated
Interest Expense of such Person for such period to the extent such Consolidated
Interest Expense was deducted in computing Consolidated Net Income, plus (d)
Consolidated Depreciation and Amortization Expense of such Person for such
period to the extent such depreciation and amortization were deducted in
computing Consolidated Net Income, in each case, on a consolidated basis for
such Person and its Restricted Subsidiaries (without any adjustment as a result
of minority interests in any Restricted Subsidiaries) and otherwise determined
in accordance with GAAP, plus (e) any noncash compensation relating to stock
options or other equity compensation or payment arrangements.
"Consolidated Depreciation and Amortization Expense" means with respect
to any Person for any period, the total amount of depreciation and amortization
expense and other noncash charges (excluding any noncash item that represents an
accrual, reserve or amortization of a cash expenditure for a past, present or
future period) of such Person and its Restricted Subsidiaries for such period on
a consolidated basis and otherwise determined in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, the
sum of (a) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount and deferred financing fees, non-cash
interest payments, the interest component of Capital Lease Obligations, and net
payments (if any) pursuant to Hedging Obligations, excluding amortization of
deferred financing fees), (b) commissions, discounts and other fees and charges
paid or accrued with respect to letters of credit
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and bankers' acceptance financing, and (c) to the extent not included above, the
maximum amount of interest which would have to be paid by such Person or its
Restricted Subsidiaries under any Deemed Incurred Indebtedness; in each case of
such Person and its Restricted Subsidiaries on a consolidated basis and
otherwise determined in accordance with GAAP.
"Consolidated Net Debt to Cash Flow Ratio" means, with respect to any
Person at any date, the ratio of (i) the aggregate principal amount of
Indebtedness of such Person and its Restricted Subsidiaries outstanding on a
consolidated basis as of such date minus the amount of unrestricted cash and
unrestricted Cash Equivalents of such Person and its Restricted Subsidiaries
outstanding on a consolidated basis as of such date (excluding any cash and cash
equivalents resulting from the proceeds of the Indebtedness proposed to be
incurred) to (ii) Consolidated Cash Flow of such Person for the four fiscal
quarters most recently completed for which internal financial statements are
available. The Consolidated Net Debt to Cash Flow Ratio will be calculated on a
pro forma basis in the same manner as described in the definition of "Fixed
Charge Coverage Ratio."
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries (without deductions for minority interests in any Restricted
Subsidiaries) for such period, on a consolidated basis, and otherwise determined
in accordance with GAAP; provided that (i) the Net Income for such period of any
Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is
accounted for by the equity method of accounting, shall be included only to the
extent of the amount of dividends or distributions or other payments paid in
cash (or to the extent converted into cash) to the referent Person or a Wholly
Owned Subsidiary thereof in respect of such period, and (ii) the cumulative
effect of a change in accounting principles shall be excluded.
"Consolidated Net Secured Debt to Cash Flow Ratio" means, with respect
to any Person at any date, the ratio of (i) the aggregate principal amount of
Indebtedness of such Person and its Restricted Subsidiaries outstanding on a
consolidated basis as of such date that is secured by assets that are or would
be Note Collateral (as defined in the First Mortgage Note Indenture and related
collateral documents without amendment, whether or not any First Mortgage Notes
are then outstanding) minus the amount of unrestricted cash and unrestricted
Cash Equivalents of such Person and its Restricted Subsidiaries outstanding on a
consolidated basis as of such date (excluding any cash and cash equivalents
resulting from the proceeds of the Indebtedness proposed to be incurred) to (ii)
Consolidated Cash Flow of such Person for the four fiscal quarters most recently
completed for which internal financial statements are available. The
Consolidated Net Secured Debt to Cash Flow Ratio will be calculated on a pro
forma basis in the same manner as described in the definition of "Fixed Charge
Coverage Ratio."
"Consolidated Net Worth" means, with respect to any Person at any time,
the sum of the following items, as shown on the consolidated balance sheet of
such Person and its Restricted Subsidiaries as of such date, and otherwise as
determined in accordance with GAAP, (i) the common equity of such Person and its
Restricted Subsidiaries; (ii) (without duplication), (a) the aggregate
liquidation preference of Preferred Stock of such Person and its Restricted
Subsidiaries (other than Disqualified Stock), and (b) any increase in
depreciation and amortization resulting from any purchase accounting treatment
from an acquisition or related financing; and (iii) less any goodwill incurred
subsequent to the Issuance Date; and (iv) less any write up of assets (in excess
of fair market value) after the Issuance Date, in each case on a consolidated
basis for such Person and its Restricted Subsidiaries, determined in accordance
with GAAP.
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"Contingent Restricted Investment" means, with respect to any Person
(the "Guarantor Party"), (i) any Guarantee by such Guarantor Party of
Indebtedness of another Person (the "Guaranteed Party") or (ii) any enforceable
obligation or commitment of the Guarantor Party to make any Investment in any
other Person (the "Guaranteed Party") (whether or not the obligation or
commitment to make such Investment is subject to conditions or contingencies)
if:
(i) such Guarantee or obligation or commitment would be
required to be disclosed as a contingent obligation in the footnotes to
the consolidated financial statements of the Guarantor Party and its
Restricted Subsidiaries prepared in accordance with GAAP, and
(ii) the funding or payment upon such Guarantee or obligation
or commitment would constitute a Restricted Investment in the
Guaranteed Party.
For purposes of this definition, the Stratosphere Agreements shall
constitute Contingent Restricted Investments made by the Company.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the Issuance Date or (ii) was nominated for election or elected to such Board
of Directors with, or whose election to such Board of Directors was approved by,
the affirmative vote of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination or election.
"Deemed Incurred Indebtedness" means Indebtedness that is deemed to be
incurred pursuant to the covenant entitled "Restricted Payments" in respect of
any guarantee, and shall be deemed to carry an interest rate equal to the
interest rate on the New Notes.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any Capital Stock into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the last
stated maturity of any of the New Notes then outstanding; other than a
redemption or maturity that is expressly subject to treating such event as a
Restricted Payment and compliance with the Senior Note Indenture.
"Equipment" means any gaming, restaurant, hotel, theater, sports or
recreation furniture, fixtures, vehicles and equipment or any furniture,
fixtures, vehicles or equipment ancillary or related thereto.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Casinos" means Grand Casino Gulfport, Grand Casino Biloxi,
Grand Casino Tunica and if the Stratosphere Corporation becomes a Restricted
Subsidiary, the Stratosphere Tower, Hotel and Casino.
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"Existing First Mortgage Note Indenture" means the Indenture, dated as
of November 30, 1995, among the Company, the guarantors party thereto and
American Bank National Association, as trustee, with respect to the Company's
Existing First Mortgage Notes.
"Existing First Mortgage Notes" means the Company's 101/8% First
Mortgage Notes due 2003, issued pursuant to the Existing First Mortgage Note
Indenture.
"Existing Indebtedness" means all Indebtedness of the Company or its
Restricted Subsidiaries in existence on the Issuance Date, plus interest
accruing thereon, after application of the net proceeds of sale of the Old
Notes, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but prior to the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable four-quarter period. For purposes of making the
computation referred to above, acquisitions, dispositions and discontinued
operations (as determined in accordance with GAAP) that have been made by the
Company or any of its Restricted Subsidiaries, including all mergers,
consolidations and dispositions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be calculated on a pro forma basis assuming that all such acquisitions,
dispositions, discontinued operations, mergers, consolidations (and the
reduction of any associated fixed charge obligations resulting therefrom) had
occurred on the first day of the four-quarter reference period.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (a) Consolidated Interest Expense of such Person for such period and all
capitalized interest paid or accrued during such period by such Person and (b)
the product of (i) all cash dividend payments (and non-cash dividend payments in
the case of a Person that is a Restricted Subsidiary) on any series of Preferred
Stock of such Person, times (ii) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory income tax rate of such Person, expressed as a decimal. in
each case, on a consolidated basis of such Person and its Restricted
Subsidiaries, and otherwise in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issuance Date. For the purposes of the
Senior Note Indenture, the term "consolidated" with respect to any Person shall
mean such Person consolidated with its Restricted Subsidiaries, and shall not
include any Unrestricted Subsidiary.
"Gaming Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision, whether now or hereafter existing, or any officer
or official thereof, including without limitation, the Mississippi Gaming
Commission,
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the National Indian Gaming Commission and any other agency with authority to
regulate any gaming operation (or proposed gaming operation) owned, managed or
operated by the Company or any of it Subsidiaries.
"Gaming License" means every license, franchise registration,
qualification, finding of suitability or other authorization required to own,
lease, operate or otherwise conduct gaming activities of the Company or any of
its Subsidiaries, including without limitation, all such licenses granted by any
Gaming Authority, and the regulations promulgated pursuant thereto, and other
applicable federal, state, foreign or local laws.
"Gaming Support Business" means any Person or entity engaged in or
which proposes to engage in a business related to, in support of, or useful to,
any part of the Principal Business operated by or proposed to be operated by the
Company or its Restricted Subsidiaries but will exclude any Person or entity
engaged in, or whose subsidiaries are engaged in, the casino gaming business.
"Global Notes" means one or more permanent global notes that are
deposited with and registered in the name of the Depositary or its nominee,
representing a series of New Notes sold in reliance on Rule 144A.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3 (a) (2) of the Securities Act of 1933, as amended) as custodian with respect
to any such Government Security or a specific payment of principal of or
interest on any such Government Security held by such custodian for the account
of the holder of such depository receipt; provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific payment of
principal of or interest on the Government Securities evidenced by such
depository receipt.
"Grand Casino Tunica" means that certain resort located in Tunica
County, Mississippi known as Grand Casino Tunica.
"Grand Controlled Entities" means (i) any Unrestricted Subsidiary of
the Company, (ii) any other Person at least 33% of the common equity of which is
owned by the Company, a Restricted Subsidiary of the Company or a Guarantor, and
whose day-to-day operations are managed by the Company, a Restricted Subsidiary
of the Company or a Guarantor pursuant to a contractual arrangement or (iii) any
casino operated by an Indian tribe under the Indian Gaming Regulatory Act of
1988, as amended, any other Indian tribe legally authorized to conduct gaming
and for which the Company, a Restricted Subsidiary of the Company, Guarantor, or
a subsidiary of a Guarantor is the manager pursuant to a contract approved or
subject to approval by the National Indian Gaming Commission (or by a foreign
government or foreign regulatory agency if such approval is legally required).
"Guarantee" means with respect to any Person a guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including without limitation,
letters of credit and reimbursement agreements in respect
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thereof), of all or any part of an Indebtedness of another Person, or any
enforceable commitment to make an Investment in such other Person.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under such derivative securities as (i) currency
exchange or interest rate swap agreements, currency exchange or interest rate
cap agreements and currency exchange or interest rate collar agreements and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange or interest rates.
"Indebtedness" means, with respect to any Person, (a) any indebtedness
of such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof), (iii) representing the
balance deferred and unpaid of the purchase price of any property (including
Capital Lease Obligations), except any such balance that constitutes an accrued
expense or trade payable, or (iv) representing any Hedging Obligations, if and
to the extent any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, (b) to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as obligor,
guarantor or otherwise, on the Indebtedness of another Person (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business) if such obligation would be a contingent obligation that is required
to be described in the footnotes to the financial statements of such Person in
accordance with GAAP, (c) to the extent not otherwise included, Indebtedness of
another Person secured by a Lien on any asset owned by such Person (whether or
not such Indebtedness is assumed by such Person) and (d) any Deemed Incurred
Indebtedness of such Person. For purposes of this definition, the term
"Indebtedness" shall not include any amount of the liability in respect of an
operating lease that at such time would not be required to be capitalized and
reflected as a liability on the balance sheet in accordance with GAAP.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Company's Board of Directors, (i) qualified to perform the task
for which it has been engaged and (ii) disinterested and independent with
respect to the Company and all of the Subsidiaries, each Affiliate of the
Company, and the Permitted Holder and its Related Parties.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans or
Guarantees, advances or capital contributions (excluding commission, travel,
relocation, loans to purchase equity in the Company and other advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions by such Person for consideration of Indebtedness, Equity
Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the closing date for the sale and original
issuance of the first series of New Notes issued under the Senior Note
Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
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"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Make-Whole Premium" means, with respect to any Senior Note, an amount
equal to the greater of (i) the premium above the principal amount if such
Senior Note were redeemed on the First Optional Redemption Date and (ii) the
excess of (a) the present value of all remaining interest, premium and principal
payments due on such Senior Note as if such Senior Note were redeemed on the
First Optional Redemption Date, computed using a discount rate equal to the
Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of
such Senior Note.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries, and (ii) excluding any
extraordinary gain (but not loss), together with any related provision for taxes
on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale, net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien (other than the New Notes) on
the asset or assets that are the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets.
"Non-Recourse Financing" means Indebtedness incurred in connection with
the purchase or lease of personal or real property useful in the Principal
Business and (i) as to which the lender upon default may seek recourse or
payment only through the return or sale of the property or equipment so
purchased or leased and (ii) may not otherwise assert a valid claim for payment
on such Indebtedness against the Company or any Restricted Subsidiary or any
other property of the Company or any Restricted Subsidiary.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed on behalf of the
Company or a Guarantor, as the case may be, by two Officers of the Company or a
Guarantor, as the case may be, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company or a Guarantor, as the case may be, that meets
the requirements set forth in the Senior Note Indenture.
"Permitted Holder" means Lyle Berman.
"Permitted Investments" means (a) any Investments in the Company or in
any Guarantor; (b) any Investments in Cash Equivalents; and (c) Investments by
the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes
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a Guarantor or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Guarantor.
"Permitted Liens" means:
(a) Liens in favor of or by the Company or a Guarantor;
(b) Liens on property of a Person existing at the time such Person is
merged into or consolidated with or into, or wound up into, the Company or any
Restricted Subsidiary of the Company or at the time such Person becomes a
Restricted Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such merger or consolidation or winding up, or
such Person becoming a Restricted Subsidiary, and do not extend to any other
assets other than those of such Person;
(c) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(d) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business or in the construction of projects and which
obligations are not expressly prohibited by the Senior Note Indenture;
(e) Liens on assets that are or would be Note Collateral (as defined in
the First Mortgage Note Indenture and related collateral documents without
amendment, whether or not any First Mortgage Notes are then outstanding)
securing obligations in respect of the Existing First Mortgage Note Indenture
and the Existing First Mortgage Notes or any guarantee thereof or other
Indebtedness permitted to be incurred under the Senior Note Indenture which may
be incurred under paragraphs (c) and (d) under the covenant entitled
"Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock"
or refinancings of secured Indebtedness permitted thereunder;
(f) Liens and leases existing on the Issuance Date;
(g) (1) Liens for taxes, assessments or governmental charges or claims
or (2) statutory Liens of landlords, and carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business or in the construction of any project, in the case
of each of (1) and (2), with respect to amounts that either (A) are not yet
delinquent or (B) are being contested in good faith by appropriate proceedings
as to which appropriate reserves or other provisions have been made in
accordance with GAAP;
(h) easements, rights-of-way, navigational servitudes, restrictions,
defects or irregularities in title and other similar charges or encumbrances
which do not interfere in any material respect with the ordinary conduct of
business of the Company and its Restricted Subsidiaries;
(i) Liens securing purchase money or lease obligations otherwise
permitted by the Senior Note Indenture incurred or assumed in connection with
the acquisition, purchase or lease of real or personal property to be used in
the Principal Business of the Company or any of its Restricted Subsidiaries;
provided that such Lien does not extend to any property or assets of the
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Company or any Restricted Subsidiary other than the property or assets so
purchased or leased or any proceeds therefrom, replacements thereof or
accessions thereto.
(j) a leasehold mortgage in favor of a party financing the lessee's
development of improvements on property leased to lessee; provided that neither
the Company nor any Restricted Subsidiary is liable for the payment of any
principal of, or interest or premium on, such financing;
(k) Liens on assets that are not or would not be Note Collateral (as
defined in the First Mortgage Note Indenture and related collateral documents
without amendment, whether or not any First Mortgage Notes are then outstanding)
to secure obligations under any Indebtedness permitted to be incurred by the
Senior Note Indenture that is not expressly subordinated to the New Notes;
(l) Liens for workers' compensation, unemployment insurance and other
types of social security benefits;
(m) attachment or judgment liens not giving rise to an Event of
Default;
(n) leases and subleases granted to or by the Company or its Restricted
Subsidiaries that do not interfere with the ordinary conduct of the business of
the Company and its Restricted Subsidiaries;
(o) Liens imposed by operation of law that do not materially affect the
Company's or any Guarantor's ability to perform its respective obligations under
the Senior Note Indenture; provided that any such Liens do not secure
Indebtedness; and
(p) Liens securing extensions, refinancings, renewals, replacements and
refunding of the obligations secured by Liens referred to in clauses (a), (e),
(i), (j) and (k) above.
"Permitted Unrestricted Subsidiary Indebtedness" means Indebtedness or
Disqualified Stock, as the case may be, or that portion of Indebtedness or
Disqualified Stock, as the case may be, (a) as to which neither the Company nor
any of its Restricted Subsidiaries (i) provides credit support pursuant to any
undertaking, agreement or instrument that would constitute Indebtedness or
Disqualified Stock, as the case may be, or (ii) is directly or indirectly
liable, and (b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness or Disqualified Stock, as the case may be, of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or Disqualified Stock, as the case may be, or cause the payment
thereof to be accelerated or payable prior to its stated maturity; provided that
the Company or a Restricted Subsidiary may guarantee Permitted Unrestricted
Subsidiary Indebtedness if such Guarantee is permitted as a Restricted Payment.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principal Business" means the casino gaming and resort business and
any activity or business incidental, directly related or similar thereto, or any
business or activity that is a
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reasonable extension, development or expansion thereof or ancillary thereto,
including any hotel, theme park, observation tower, golf course, entertainment,
recreation or other activity or business designed to promote, market, support,
develop, complement, construct or enhance the casino gaming or resort business
operated by the Company or its Restricted Subsidiaries.
"Related Parties" means any Person controlled by the Permitted Holder,
any member of the immediate family or descendant of the Permitted Holder, any
trust for the benefit of the Permitted Holder or any member of the immediate
family or descendant of the Permitted Holder.
"Repurchase Offer" means an offer made by the Company to purchase all
or any portion of a holder's New Notes pursuant to the covenants described under
the covenants entitled "Change of Control" and "Asset Sales."
"Restricted Investment" means (i) an Investment other than a Permitted
Investment or (ii) any sale, conveyance, lease, transfer or other disposition of
assets at less than fair market value to an Unrestricted Subsidiary, provided
that the amount of such Restricted Investment under this clause (iii) shall be
such difference in value.
"Restricted Subsidiary" means, at any time, any Subsidiary of the
Company that is not then an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"New Notes" means the Company's New Notes to be issued pursuant to the
Senior Note Indenture.
"Senior Secured Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary that is secured by assets of the Company or any Restricted
Subsidiary that is permitted to be incurred by the Senior Note Indenture.
"Series B Notes" shall have the meaning set forth in the Registration
Rights Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the Issuance
Date.
"Stratosphere Agreements" means the Completion Guarantee (or otherwise
to complete the development of Stratosphere that, in combination with the
Completion Guarantee, does not exceed $50 million in the aggregate), the Standby
Equity Commitment, outstanding warrants and the other documents and agreements
in existence on the Issuance Date between the Company or any of its Subsidiaries
and Stratosphere Corporation.
"Stratosphere Corporation" means the Stratosphere Corporation, a
Delaware corporation.
"Subordinated Indebtedness" means any Indebtedness of the Company or
any of its Restricted Subsidiaries which is expressly by its terms subordinated
in right of payment to the New Notes or any Note Guarantee.
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"Subsidiary" means, with respect to any Person, (i) any corporation.
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership of
which more than 50% of the partnership's capital accounts, distribution rights
or general or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof. A Subsidiary of the Company shall be either a
Restricted Subsidiary or an Unrestricted Subsidiary, but not both.
"Substantially Undeveloped Land" means any real estate that does not
have any building other than any building whose fair market value is less than
$1 million and does not have any substantial improvement other than roads,
utility, water and sewage connections, paved or cleared parking areas or other
significant improvement necessary for the operation of the Existing Casinos.
"Treasury Rate" means the yield to maturity at the time of the
computation of the United States Treasury securities with a constant maturity
(as complied by and published in the most recent Federal Reserve Statistical
Release H.15(519)), which has become publicly available at least two business
days prior to the date fixed for prepayment (or, if such Statistical Release is
no longer published, any publicly available source of similar market data) most
nearly equal to the then remaining average life to the First Optional Redemption
Date; provided, however, that if the average life of such Senior Note is not
equal to the constant maturity of the United States Treasury security for which
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the average life of such Mortgage Notes is less than one
year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"Unrestricted Subsidiary" means a Subsidiary that has been designated
as an "Unrestricted Subsidiary" in accordance with the provisions of the Senior
Note Indenture and any Subsidiary of such entity, so long as it remains an
Unrestricted Subsidiary in accordance with the terms of the Senior Note
Indenture.
"Voting Stock" means, with respect to any Person, any class or series
of capital stock of such Person that is ordinarily entitled to vote in the
election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the number
of years obtained by dividing (a) the sum of the products obtained by
multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount or liquidation
preference, as applicable, of such Indebtedness or Disqualified Stock, as the
case may be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying
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shares) shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such
Person.
REGISTRATION RIGHTS
Eligible Holders of New Notes (other than as set forth below) are not
entitled to any registration rights with respect to the New Notes. Pursuant to
the Registration Rights Agreement, Eligible Holders of Old Notes are entitled to
certain registration rights. Under the the Registration Rights Agreement, the
Company has agreed for the benefit of holders of the Old Notes to (i) to file an
Exchange Offer Registration Statement with the SEC on or prior to 30 days after
the issuance of the Old Notes; (ii) use its best efforts to have the Exchange
Offer Registration Statement declared effective by the SEC on or prior to 120
days after the issuance of the Old Notes; (iii) unless the Exchange Offer would
not be permitted by applicable law or SEC policy, to commence the Exchange Offer
and use its best efforts to issue on or prior to 30 business days after the date
on which the Exchange Offer Registration Statement was declared effective by the
SEC, New Notes in exchange for all Old Notes tendered prior thereto in the
Exchange Offer and (iv) if obligated to file the Shelf Registration Statement
(as defined in the Registration Rights Agreement), to use its best efforts to
file the Shelf Registration Statement with the SEC on or prior to 30 days
after such filing obligation arises and to cause the Shelf Registration to be
declared effective by the SEC on or prior to 120 days after such obligation
arises. The Registration Statement of which this Prospectus is a part
constitutes the Exchange Offer Registration Statement.
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company will offer to the Eligible Holders of Transfer Restricted Securities
pursuant to the Exchange Offer who are able to make certain representations the
opportunity to exchange their Transfer Restricted Securities for New Notes.
If (i) the Company is not required to file the Exchange Offer
Registration Statement or permitted to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law or SEC policy or (ii) any
Holder of Transfer Restricted Securities notifies the Company prior to the 20th
day following consummation of the Exchange Offer that (A) it is prohibited by
law or SEC policy from participating in the Exchange Offer or (B) that it may
not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales or
(C) that it is a broker-dealer and owns New Notes acquired directly from the
Company or an affiliate of the Company, the Company will file with the SEC a
Shelf Registration Statement to cover resales of the New Notes by the Eligible
Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement.
For purposes of the foregoing, "Transfer Restricted Securities" means
each Old Note until (i) the date on which such Old Note has been exchanged by a
person other than a broker-dealer for a New Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of an Old Note
for a New Note, the date on which such New Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Old Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Old Note is distributed to the public pursuant to Rule
144 under the Act.
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If (a) the Company fails to file any of the Registration Statements
required by the Registration Rights Agreement on or before the date specified
for such filing, (b) any of such Registration Statements is not declared
effective by the SEC on or prior to the date specified for such effectiveness
(the "Effectiveness Target Date"), or (c) the Company fails to consummate the
Exchange Offer within 30 business days of the Effectiveness Target Date with
respect to the Exchange Offer Registration Statement, or (d) the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default in
an amount equal to $.05 per week per $1,000 principal amount of New Notes held
by such Holder. The amount of the Liquidated Damages will increase by an
additional $.05 per week per $1,000 principal amount of New Notes with respect
to each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000
principal amount of New Notes. All accrued Liquidated Damages will be paid by
the Company on each Interest Payment Date to the Global Note Holder by wire
transfer of immediately available funds or by federal funds check and to
Eligible Holders of Certificated Securities by wire transfer to the accounts
specified by them or by mailing checks to their registered addresses if no such
accounts have been specified. Following the cure of all Registration Defaults,
the accrual of Liquidated Damages will cease.
Eligible Holders of Old Notes will be required to make certain
representations to the Company (as described in the Registration Rights
Agreement) in order to participate in the Exchange Offer and will be required to
deliver information to be used in connection with the Shelf Registration
Statement and to provide comments on the Shelf Registration Statement within the
time periods set forth in the Registration Rights Agreement in order to have
their Old Notes included in the Shelf Registration Statement and benefit from
the provisions regarding Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus is a part.
The filing and effectiveness of the Registration Statement of which
this Prospectus is a part and the consummation of the Exchange Offer will
eliminate all rights of the holders of Old Notes eligible to participate in the
Exchange Offer to receive Liquidated Damages that would have been payable if
such actions had not occurred.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain United States Federal income
tax considerations associated with the exchange of Old Notes for New Notes and
the ownership and disposition of the New Notes by holders who acquire the New
Notes pursuant to the Exchange Offer. This discussion is based upon existing
United States Federal income tax law, which is subject to change, possibly
retroactively. This discussion does not describe all aspects of United States
Federal income taxation which may be important to particular holders in light of
their individual investment circumstances or certain types of holders subject to
special tax rules (e.g., financial institutions, insurance companies,
broker-dealers, or tax-exempt organizations) or to persons that hold or will
hold the Notes as a position in a "straddle" or as part of a "hedging" or
"conversion"
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transaction, all of whom may be subject to tax rules that differ significantly
from those described below. In addition, this discussion does not described any
foreign, state, or local tax considerations. This discussion deals only with Old
Notes and New Notes held by initial purchasers of Old Notes as "capital assets"
(generally, property held for investment) under the United States Internal
Revenue Code.
The consummation of the Exchange Offer will not be a taxable event for
United States Federal income tax purposes. Accordingly, a holder receiving New
Notes pursuant to the terms of the Exchange Offer will have the same adjusted
tax basis and holding period in New Notes, for United States Federal income tax
purposes, as such holder had in the Old Notes tendered in exchange therefor.
Interest payable on the New Notes will be includible in the income of a
holder in accordance with such Holder's normal method of accounting.
Except in the case of an Old Note purchased at a discount to its
original issue price, a holder will recognize capital gain or loss upon the sale
or other disposition of a New Note in an amount equal to the difference between
the amount realized from such disposition and his tax basis in the New Note.
Such gain or loss will be long-term if the New Note is held for more than one
year.
In the case of a holder who has purchased a New Note at a discount to
its original issue price in excess of a statutorily defined de minimis amount
and has not elected to include such discount in income on a current basis, (i)
any gain recognized on the disposition of a New Note will be subject to tax as
ordinary income, rather than capital gain, to the extent of accrued market
discount and (ii) a portion of the interest expense on indebtedness incurred or
maintained to purchase or carry such note may not be deducted until the note is
disposed of in a taxable transaction.
PROSPECTIVE HOLDERS OF THE NEW NOTES ARE URGED TO CONSULT THEIR TAX
ADVISORS CONCERNING THE PARTICULAR TAX CONSEQUENCES OF EXCHANGING SUCH HOLDER'S
OLD NOTES FOR THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with the resales of New Notes received in exchange for Old Notes
where such Old Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business on the 90th day following
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1998 (90 days from the date of this Prospectus), all dealers
effecting transactions in the New Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers or any other persons. New Notes received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold form time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to its performance of, or compliance with, the Registration Rights
Agreement and will indemnify the Eligible Holders (including any broker-dealers)
and certain parties related to the Eligible Holders against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes and the guaranty thereof by the
Guarantors has been passed upon for the Company by Maslon Edelman Borman &
Brand, LLP, Minneapolis, Minnesota. Neil I. Sell, a director of the Company, is
a partner in the law firm of Maslon Edelman Borman & Brand, LLP. Mr. Sell
beneficially owns __________, shares of Common Stock, which include __________
shares beneficially owned as trustee, and other partners of Maslon Edelman
Borman & Brand, LLP beneficially own __________ shares of Common Stock, which
are also beneficially owned as trustee. Mr. Sell and other partners of Maslon
Edelman Borman & Brand, LLP have disclaimed beneficial ownership of all shares
beneficially owned as trustee.
65
<PAGE> 72
EXPERTS
The audited consolidated financial statements of the Company as of
December 29, 1996 and December 31, 1995 and for each of the years in the
two-year period ended Decmeber 29,1996 incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports. The
consolidated financial statements of the Company for the year ended January 1,
1995 incorporated by reference in this Prospectus and elsewhere in the
Registration Statement have been audited by KPMG Peat Marwick LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said reports.
The consolidated financial statements of Stratosphere as of December
29, 1996 and December 31, 1995 and for each of the years in the two-year
period ended December 29,1996 incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto (which contains an explanatory paragraph with respect to substantial
doubt about Stratosphere's ability to continue as a going concern), and are
incorporated by reference herein in reliance upon the authority of said firm
as experts in giving said reports. The consolidated financial statements of
Stratosphere for the year ended December 31, 1994 incorporated by reference in
this Prospectus and elsewhere in the Registration Statement have been audited
by KPMG Peat Marwick LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said reports.
66
<PAGE> 73
GRAND CASINOS, INC.
All tendered Old Notes, executed Letters of Transmittal and other
related documents should be directed to the Exchange Agent. Questions and
requests for assistance and requests for additional copies of the Prospectus,
the Letter of Transmittal and other related documents should be addressed to the
Exchange Agent as follows:
Firstar Bank of Minnesota, N.A.
101 East Fifth Street
St. Paul, MN 55101-1860
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the
accompanying Letter of Transmittal, and, if given or made, such information or
representations must not be relied upon as having been authorized. Neither this
Prospectus nor the accompanying Letter of Transmittal nor both together
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which the Prospectus relates or an offer
to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus or the Letter of Transmittal or both together nor
any exchange made hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
time subsequent to its date.
<PAGE> 74
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Grand Casinos, is governed by Minnesota Statutes Chapter 302A.
Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify
any person made or threatened to be made a party to any proceeding by reason of
the former or present official capacity of such person against judgments,
penalties, fines, including, without limitation, excise taxes assessed against
such person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorney's fees and disbursements, incurred by
such person in connection with the proceeding, if, with respect to the acts or
omissions of such person complained of in the proceeding, such person has not
been indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation.
As permitted by Section 302A.251 of the Minnesota Statutes, the
Articles of Incorporation and Bylaws of Grand Casinos provide that a director
shall have no personal liability to Grand Casinos and its shareholders for
breach of his fiduciary duty as a director, to the fullest extent permitted by
law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
4.1 Indenture, dated as of October 16, 1997, between Grand Casinos, Inc.
and Firstar
Bank of Minnesota, N.A., including form of Notes and Guarantors
4.3 Registration Rights Agreement, dated as of October 16, 1997, by and
among Grand
Casinos, Inc., the Guarantors and Donaldson Lufkin Jenrette Securities
Corporation
5 Opinion of Maslon Edelman Borman & Brand, LLP re: legality.
10.1 Purchase Agreement, dated as of October 9, 1997, by and among Grand
Casinos, Inc., the Guarantors and Donaldson Lufkin Jenrette Securities
Corporation.
11.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP with respect to Grand Casinos, Inc.
23.3 Consent of Arthur Andersen LLP with respect to Stratosphere Corporation.
23.4 Consent of KPMG Peat Marwick LLP with respect to Grand Casinos, Inc.
23.5 Consent of KPMG Peat Marwick LLP with respect to Stratosphere
Corporation
24 Power of Attorney (included on signature page)
25 Form T-1 Statement of Eligibility of Firstar Bank of Minnesota, N.A.
to act as trustee under the Indenture.
99.1 Form of Letter of Transmittal.
(b) Financial Statement Schedules.
II-1
<PAGE> 75
None
(c) Not Applicable
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
A. Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
B. (1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h)under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. It will respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
D. It will supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement
when it became effective.
E. For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filling of any employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Minneapolis,
State of Minnesota, on October 27th, 1997.
GRAND CASINOS, INC.
Registrant
By /s/Lyle Berman
---------------------------
Name: Lyle Berman
Title: Chief Executive Officer
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Thomas J. Brosig, Timothy J. Cope and Russell F.
Lederman, and each or either of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and re-substitution for him and in his
name, place and stead, in any and all capacities, to sign and any and all
amendments (including post-effective amendments) to this Registration Statement
and to file the same with all exhibits thereto, and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 27th day of October, 1997 by
the following persons in the capacities indicated:
Name Title
- ---- -----
/s/Lyle Berman Chief Executive Officer and Director
- --------------------------- (Principal Executive Officer)
Lyle Berman
/s/Thomas J. Brosig President and Director
- ---------------------------
Thomas J. Brosig
/s/Timothy J. Cope Chief Financial Officer and Secretary
- --------------------------- (Principal Financial Officer)
Timothy J. Cope
/s/Stanley M. Taube Executive Vice President and Director
- ---------------------------
Stanley M. Taube
/s/Morris Goldfarb Director
- ---------------------------
Morris Goldfarb
/s/Ronald Kramer Director
- ---------------------------
Ronald Kramer
<PAGE> 77
/s/David L. Rogers Director
- ---------------------------
David L. Rogers
/s/Neil I. Sell Director
- ---------------------------
Neil I. Sell
/s/Joel N. Waller Director
- ---------------------------
Joel N. Waller
<PAGE> 1
EXHIBIT 4.1
______________
____________________________
GRAND CASINOS, INC.
GRAND CASINOS RESORTS, INC.
GRAND CASINOS OF MISSISSIPPI, INC.--GULFPORT
GRAND CASINOS OF MISSISSIPPI, INC.--BILOXI
GRAND CASINOS BILOXI THEATER, INC.
MILLE LACS GAMING CORPORATION
GRAND CASINOS OF LOUISIANA, INC.--TUNICA--BILOXI
GRAND CASINOS OF LOUISIANA, INC.--COUSHATTA
GCA ACQUISITION SUBSIDIARY, INC.
BL DEVELOPMENT CORP.
BL RESORTS I, INC.
GCG RESORTS I, INC.
GRAND CASINOS NEVADA I, INC.
BL RESORTS I, LLC
GCG RESORTS I, LLC
SERIES A AND SERIES B
9% SENIOR NOTES DUE 2004
INDENTURE
____________________________
Dated as of October 16, 1997
____________________________
FIRSTAR BANK OF MINNESOTA, N.A.
as Trustee
______________
<PAGE> 2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1).......................................................7.10
(a)(2)......................................................7.10
(a)(3)......................................................N.A.
(a)(4)......................................................N.A.
(a)(5)......................................................7.10
(b).........................................................7.10
(c).........................................................N.A.
311(a)..........................................................7.11
(b).........................................................7.11
(c).........................................................N.A.
312(a)..........................................................2.05
(b)........................................................11.03
(c)........................................................11.03
313(a)..........................................................7.06
(b)(1)......................................................N.A.
(b)(2)......................................................7.07
(c)...................................................7.06;11.02
(d).........................................................7.06
314(a)....................................................4.03;11.02
(b).........................................................N.A.
(c)(1).....................................................11.04
(c)(2).....................................................11.04
(c)(3)......................................................N.A.
(d).........................................................N.A.
(e)........................................................11.05
(f).........................................................N.A.
315(a)..........................................................7.01
(b....................................................7.05,11.02
(c).........................................................7.01
(d).........................................................7.01
(e).........................................................6.11
316(a)(last sentence)...........................................2.09
(a)(1)(A)...................................................6.05
(a)(1)(B)...................................................6.04
(a)(2)......................................................N.A.
(b).........................................................6.07
(c).........................................................2.12
317(a)(1).......................................................6.08
(a)(2)......................................................6.09
(b).........................................................2.04
318(a).........................................................11.01
(b).........................................................N.A.
(c)........................................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1
Section 1.01. Definitions...................................................................1
Section 1.02. Other Definitions............................................................16
Section 1.03. 16
Section 1.04. Rules of Construction........................................................17
ARTICLE 2. THE NOTES ............................................................................17
Section 2.01. Form and Dating..............................................................17
Section 2.02. Execution and Authentication.................................................18
Section 2.03. Registrar and Paying Agent...................................................18
Section 2.04. Paying Agent to Hold Money in Trust..........................................19
Section 2.05. Holder Lists.................................................................19
Section 2.06. Transfer and Exchange........................................................19
Section 2.07. Replacement Notes............................................................30
Section 2.08. Outstanding Notes............................................................30
Section 2.09. Treasury Notes...............................................................31
Section 2.10. Temporary Notes..............................................................31
Section 2.11. Cancellation.................................................................31
Section 2.12. Defaulted Interest...........................................................31
ARTICLE 3. REDEMPTION AND PREPAYMENT ............................................................32
Section 3.01. Notices to Trustee...........................................................32
Section 3.02. Selection of Notes to Be Redeemed............................................32
Section 3.03. Notice of Redemption.........................................................32
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Section 3.04. Effect of Notice of Redemption...............................................33
Section 3.05. Deposit of Redemption Price..................................................33
Section 3.06. Notes Redeemed in Part.......................................................34
Section 3.07. Optional Redemption..........................................................34
Section 3.08. Mandatory Redemption.........................................................34
Section 3.09. Offer to Purchase by Application of Excess Proceeds..........................34
ARTICLE 4. COVENANTS ............................................................................36
Section 4.01. Payment of Notes.............................................................36
Section 4.02. Maintenance of Office or Agency..............................................36
Section 4.03. Reports......................................................................37
Section 4.04. Compliance Certificate.......................................................37
Section 4.05. Taxes........................................................................38
Section 4.06. Stay, Extension and Usury Laws...............................................38
Section 4.07. Restricted Payments..........................................................38
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries...............42
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock...................43
Section 4.10. Asset Sales..................................................................45
Section 4.11. Transactions with Affiliates.................................................46
Section 4.12. Liens........................................................................46
Section 4.13. Line of Business.............................................................46
Section 4.14. Corporate Existence..........................................................46
Section 4.15. Offer to Repurchase Upon Change of Control...................................47
Section 4.16. Insurance....................................................................48
Section 4.17. Designation of Unrestricted Subsidiary.......................................48
Section 4.18. No Personal Liability of Directors, Officers, Employees and Stockholders.....49
</TABLE>
ii
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<TABLE>
<S> <C>
Section 4.19. Additional Note Guarantees...................................................49
ARTICLE 5. SUCCESSORS ...........................................................................49
Section 5.01. Merger, Consolidation, or Sale of Assets.....................................49
Section 5.02. Successor Corporation Substituted............................................50
ARTICLE 6. DEFAULTS AND REMEDIES ................................................................50
Section 6.01. Events of Default............................................................50
Section 6.02. Acceleration.................................................................52
Section 6.03. Other Remedies...............................................................53
Section 6.04. Waiver of Past Defaults......................................................54
Section 6.05. Control by Majority..........................................................54
Section 6.06. Limitation on Suits..........................................................54
Section 6.07. Rights of Holders of Notes to Receive Payment................................54
Section 6.08. Collection Suit by Trustee...................................................55
Section 6.09. Trustee May File Proofs of Claim.............................................55
Section 6.10. Priorities...................................................................55
Section 6.11. Undertaking for Costs........................................................56
ARTICLE 7. TRUSTEE ..............................................................................56
Section 7.01. Duties of Trustee............................................................56
Section 7.02. Rights of Trustee............................................................57
Section 7.03. Individual Rights of Trustee.................................................58
Section 7.04. Trustee's Disclaimer.........................................................58
Section 7.05. Notice of Defaults...........................................................58
Section 7.06. Reports by Trustee to Holders of the Notes...................................58
Section 7.07. Compensation and Indemnity...................................................58
Section 7.08. Replacement of Trustee.......................................................59
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
Section 7.09. Successor Trustee by Merger, etc.............................................60
Section 7.10. Eligibility; Disqualification................................................60
Section 7.11. Preferential Collection of Claims Against Company............................60
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE .............................................61
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.....................61
Section 8.02. Legal Defeasance and Discharge...............................................61
Section 8.03. Covenant Defeasance..........................................................61
Section 8.04. Conditions to Legal or Covenant Defeasance...................................62
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions.....................................................63
Section 8.06. Repayment to Company.........................................................63
Section 8.07. Reinstatement................................................................64
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER .....................................................64
Section 9.01. Without Consent of Holders of Notes..........................................64
Section 9.02. With Consent of Holders of Notes.............................................65
Section 9.03. Compliance with Trust Indenture Act..........................................66
Section 9.04. Revocation and Effect of Consents............................................66
Section 9.05. Notation on or Exchange of Notes.............................................66
Section 9.06. Trustee to Sign Amendments, etc..............................................67
ARTICLE 10. NOTE GUARANTEES .....................................................................67
Section 10.01. Guarantee....................................................................67
Section 10.02. Limitation on Guarantor Liability............................................68
Section 10.03. Execution and Delivery of Note Guarantee.....................................68
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms...........................69
Section 10.05. Releases Following Sale of Assets............................................69
</TABLE>
iv
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<TABLE>
<S> <C>
ARTICLE 11. MISCELLANEOUS .......................................................................70
Section 11.01. Trust Indenture Act Controls.................................................70
Section 11.02. Notices......................................................................70
Section 11.03. Communication by Holders of Notes with Other Holders of Notes................71
Section 11.04. Certificate and Opinion as to Conditions Precedent...........................71
Section 11.05. Statements Required in Certificate or Opinion................................72
Section 11.06. Rules by Trustee and Agents..................................................72
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders.....72
Section 11.08. Governing Law................................................................72
Section 11.09. No Adverse Interpretation of Other Agreements................................72
Section 11.10. Successors...................................................................73
Section 11.11. Severability.................................................................73
Section 11.12. Counterpart Originals........................................................73
Section 11.13. Table of Contents, Headings, etc.............................................73
</TABLE>
EXHIBITS
- ---------
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE> 8
INDENTURE dated as of October 16, 1997 between Grand Casinos, Inc., a
Minnesota corporation (the "Company"), the Guarantors listed on Schedule I
hereto and Firstar Bank of Minnesota, N.A., as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9% Series A Senior Notes due 2004 (the "Series A Notes") and the 9% Series
B Senior Notes due 2004 (the "Series B Notes" and, together with the Series A
Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of,
such other Person merging with or into or becoming a Restricted Subsidiary of
such specified Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided that
beneficial ownership of 15% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary (each referred to in this definition as a
"disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than (a) a disposition of inventory or goods
held for sale in the ordinary course of business, (b) the disposition of all or
substantially all of the assets of the Company in a manner permitted pursuant
to Article 5 hereof or any disposition that constitutes a Change of Control
pursuant to this Indenture, (c) any disposition that is a Restricted Payment
<PAGE> 9
or that is a dividend or distribution permitted under Section 4.07 hereof or
any Investment that is not prohibited thereunder or any disposition of cash or
Cash Equivalents, (d) any disposition pursuant to the settlement of litigation
or court order, and (e) any single disposition, or related series of
dispositions, of assets with an aggregate fair market value (as determined in
good faith by the Company) of less than $10.0 million
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability
on the balance sheet in accordance with GAAP.
"Capital Stock" means with respect to any Person, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock of such Person, including, without limitation, if such Person
is a partnership, partnership interests (whether general or limited) and any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of. or distributions of assets of, such
partnership.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of 12 months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding 12 months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within one year after the date of
acquisition and (vi) investment funds investing solely in securities of the
types described in clauses (ii) through (v) above.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease or transfer, in one or a series of transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, other than to the Permitted Holder and its Related Parties; (ii) the
Company becomes aware of (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise)
the acquisition by any person or group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any successor provision), including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5 (b)(1) under the Exchange Act),
other than the Permitted Holder and its Related Parties, in a single
transaction or in a related series of transactions, by way of merger,
consolidation or other business combination or purchase of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 50% or more of the total voting power of the
2
<PAGE> 10
Voting Stock of the Company, or (iii) the first day within any two-year
period on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Company" means Grand Casinos, Inc., a Minnesota corporation, until a
successor to Grand Casinos, Inc. as the Company is appointed under this
Indenture, and thereafter, means such successor.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to an extraordinary or nonrecurring loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing Consolidated Net Income), plus (b) provision for taxes based on
income or profits of such Person for such period, to the extent such provision
for taxes was included in computing Consolidated Net Income, plus (c)
Consolidated Interest Expense of such Person for such period to the extent such
Consolidated Interest Expense was deducted in computing Consolidated Net
Income, plus (d) Consolidated Depreciation and Amortization Expense of such
Person for such period to the extent such depreciation and amortization were
deducted in computing Consolidated Net Income, in each case, on a consolidated
basis for such Person and its Restricted Subsidiaries (without any adjustment
as a result of minority interests in any Restricted Subsidiaries) and otherwise
determined in accordance with GAAP, plus (e) any noncash compensation relating
to stock options or other equity compensation or payment arrangements.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense and other noncash charges (excluding any noncash item that represents
an accrual, reserve or amortization of a cash expenditure for a past, present
or future period) of such Person and its Restricted Subsidiaries for such
period on a consolidated basis and otherwise determined in accordance with
GAAP.
"Consolidated Interest Expense" means, with respect to any period, the sum
of (a) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount and deferred financing fees, non-cash
interest payments, the interest component of Capital Lease Obligations, and net
payments (if any) pursuant to Hedging Obligations, excluding amortization of
deferred financing fees), (b) commissions, discounts and other fees and charges
paid or accrued with respect to letters of credit and bankers' acceptance
financing, and (c) to the extent not included above, the maximum amount of
interest which would have to be paid by such Person or its Restricted
Subsidiaries under any Deemed Incurred Indebtedness; in each case of such
Person and its Restricted Subsidiaries on a consolidated basis and otherwise
determined in accordance with GAAP.
"Consolidated Net Debt to Cash Flow Ratio" means, with respect to any
Person at any date, the ratio of (i) the aggregate principal amount of
Indebtedness of such Person and its Restricted Subsidiaries outstanding on a
consolidated basis as of such date minus the amount of unrestricted cash and
unrestricted Cash Equivalents of such Person and its Restricted Subsidiaries
outstanding on a consolidated basis as of such date (excluding any cash and
cash equivalents resulting from the proceeds of the Indebtedness proposed to be
incurred) to (ii) Consolidated Cash Flow of such Person for the four fiscal
quarters most recently completed for which internal financial statements are
available. The Consolidated Net Debt to Cash Flow Ratio will be calculated on
a pro forma basis in the same manner as described in the definition of "Fixed
Charge Coverage Ratio."
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<PAGE> 11
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries (without deductions for minority interests in any Restricted
Subsidiaries) for such period, on a consolidated basis, and otherwise
determined in accordance with GAAP; provided that (i) the Net Income for such
period of any Person that is not a Subsidiary, or is an Unrestricted
Subsidiary, or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions or
other payments paid in cash (or to the extent converted into cash) to the
referent Person or a Wholly Owned Subsidiary thereof in respect of such period,
and (ii) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Secured Debt to Cash Flow Ratio" means, with respect to
any Person at any date, the ratio of (i) the aggregate principal amount of
Indebtedness of such Person and its Restricted Subsidiaries outstanding on a
consolidated basis as of such date that is secured by assets that are or would
be Note Collateral (as defined in the First Mortgage Indenture and related
collateral documents without amendment, whether or not any First Mortgage Notes
are then outstanding) minus the amount of unrestricted cash and unrestricted
Cash Equivalents of such Person and its Restricted Subsidiaries outstanding on
a consolidated basis as of such date (excluding any cash and cash equivalents
resulting from the proceeds of the Indebtedness proposed to be incurred) to
(ii) Consolidated Cash Flow of such Person for the four fiscal quarters most
recently completed for which internal financial statements are available. The
Consolidated Net Secured Debt to Cash Flow Ratio will be calculated on a pro
forma basis in the same manner as described in the definition of "Fixed Charge
Coverage Ratio."
"Consolidated Net Worth" means, with respect to any Person at any time,
the sum of the following items, as shown on the consolidated balance sheet of
such Person and its Restricted Subsidiaries as of such date, and otherwise as
determined in accordance with GAAP, (i) the common equity of such Person and
its Restricted Subsidiaries; (ii) (without duplication), (a) the aggregate
liquidation preference of Preferred Stock of such Person and its Restricted
Subsidiaries (other than Disqualified Stock), and (b) any increase in
depreciation and amortization resulting from any purchase accounting treatment
from an acquisition or related financing; and (iii) less any goodwill incurred
subsequent to the Issuance Date; and (iv) less any write up of assets (in
excess of fair market value) after the Issuance Date, in each case on a
consolidated basis for such Person and its Restricted Subsidiaries, determined
in accordance with GAAP.
"Contingent Restricted Investment" means, with respect to any Person (the
"Guarantor Party"), (i) any Guarantee by such Guarantor Party of Indebtedness
of another Person (the "Guaranteed Party") or (ii) any enforceable obligation
or commitment of the Guarantor Party to make any Investment in any other Person
(the "Guaranteed Party") (whether or not the obligation or commitment to make
such Investment is subject to conditions or contingencies) if:
(i) such Guarantee or obligation or commitment would be required to be
disclosed as a contingent obligation in the footnotes to the consolidated
financial statements of the Guarantor Party and its Restricted Subsidiaries
prepared in accordance with GAAP, and
(ii) the funding or payment upon such Guarantee or obligation or
commitment would constitute a Restricted Investment in the Guaranteed Party.
For purposes of this definition, the Stratosphere Agreements shall
constitute Contingent Restricted Investments made by the Company.
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<PAGE> 12
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on
the Issuance Date or (ii) was nominated for election or elected to such Board
of Directors with, or whose election to such Board of Directors was approved
by, the affirmative vote of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Deemed Incurred Indebtedness" means Indebtedness that is deemed to be
incurred pursuant to Section 4.07 hereof in respect of any guarantee, and shall
be deemed to carry an interest rate equal to the interest rate on the Notes.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form
of Exhibit A hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to Notes issuable or issued in whole or
in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any Capital Stock into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
last stated maturity of any of the Notes then outstanding; other than a
redemption or maturity that is expressly subject to treating such event as a
Restricted Payment and compliance with this Indenture.
"Equipment" means any gaming, restaurant, hotel, theater, sports or
recreation furniture, fixtures, vehicles and equipment or any furniture,
fixtures, vehicles or equipment ancillary or related thereto.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
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<PAGE> 13
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement
"Existing Casinos" means Grand Casino Gulfport, Grand Casino Biloxi, Grand
Casino Tunica and if the Stratosphere Corporation becomes a Restricted
Subsidiary, the Stratosphere Tower, Hotel and Casino.
"Existing First Mortgage Indenture" means the indenture, dated as of
November 30, 1995, among the Company, the guarantors party thereto and American
Bank National Association, as trustee, with respect to the Company's Existing
First Mortgage Notes.
"Existing First Mortgage Notes" means the Company's 10 1/8% First Mortgage
Notes due 2003, issued pursuant to the Existing First Mortgage Indenture.
"Existing Indebtedness" means all Indebtedness of the Company or its
Restricted Subsidiaries in existence on the Issuance Date, plus interest
accruing thereon, after application of the net proceeds of sale of the Notes as
described in this Offering Memorandum, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues
Preferred Stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated but prior to the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter period. For
purposes of making the computation referred to above, acquisitions,
dispositions and discontinued operations (as determined in accordance with
GAAP) that have been made by the Company or any of its Restricted Subsidiaries,
including all mergers, consolidations and dispositions, during the four-quarter
reference period or subsequent to such reference period and on or prior to the
Calculation Date shall be calculated on a pro forma basis assuming that all
such acquisitions, dispositions, discontinued operations, mergers,
consolidations (and the reduction of any associated fixed charge obligations
resulting therefrom) had occurred on the first day of the four-quarter
reference period.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (a) Consolidated Interest Expense of such Person for such period and all
capitalized interest paid or accrued during such period by such Person and (b)
the product of (i) all cash dividend payments (and non-cash dividend payments
in the case of a Person that is a Restricted Subsidiary) on any series of
Preferred Stock of such Person, times (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory income tax rate of such Person, expressed as
a decimal, in each case, on a consolidated basis of such Person and its
Restricted Subsidiaries, and otherwise in accordance with GAAP.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issuance Date. For the purposes of this
Indenture, the term
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<PAGE> 14
"consolidated" with respect to any Person shall mean such Person consolidated
with its Restricted Subsidiaries, and shall not include any Unrestricted
Subsidiary.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States or foreign government, any state, province or any city or other
political subdivision, whether now or hereafter existing, or any officer or
official thereof, including without limitation, the Mississippi Gaming
Commission, the National Indian Gaming Commission and any other agency with
authority to regulate any gaming operation (or proposed gaming operation)
owned, managed or operated by the Company or any of its Subsidiaries.
"Gaming License" means every license, franchise registration,
qualification, finding of suitability or other authorization required to own,
lease, operate or otherwise conduct gaming activities of the Company or any of
its Subsidiaries, including without limitation, all such licenses granted by
any Gaming Authority, and the regulations promulgated pursuant thereto, and
other applicable federal, state, foreign or local laws.
"Gaming Support Business" means any Person or entity engaged in or which
proposes to engage in a business related to, in support of, or useful to, any
part of the Principal Business operated by or proposed to be operated by the
Company or its Restricted Subsidiaries but will exclude any Person or entity
engaged in, or whose subsidiaries are engaged in, the casino gaming business.
"Global Notes" means one or more permanent global notes that are deposited
with and registered in the name of the Depositary or its nominee, representing
a series of Notes sold in reliance on Rule 144A.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3 (a)(2)
of the Securities Act of 1933, as amended) as custodian with respect to any
such Government Security or a specific payment of principal of or interest on
any such Government Security held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific payment of
principal of or interest on the Government Securities evidenced by such
depository receipt.
"Grand Casino Tunica" means that certain resort located in Tunica County,
Mississippi known as Grand Casino Tunica.
"Grand Controlled Entities" means (i) any Unrestricted Subsidiary of the
Company, (ii) any other Person at least 33% of the common equity of which is
owned by the Company, a Restricted Subsidiary of the Company or a Guarantor,
and whose day-to-day operations are managed by the
7
<PAGE> 15
Company, a Restricted Subsidiary of the Company or a Guarantor pursuant to a
contractual arrangement or (iii) any casino operated by an Indian tribe under
the Indian Gaming Regulatory Act of 1988, as amended, any other Indian tribe
legally authorized to conduct gaming and for which the Company, a Restricted
Subsidiary of the Company, Guarantor, or a subsidiary of a Guarantor is the
manager pursuant to a contract approved or subject to approval by the National
Indian Gaming Commission (or by a foreign government or foreign regulatory
agency if such approval is legally required).
"Guarantee" means with respect to any Person a guarantee (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner (including without limitation,
letters of credit and reimbursement agreements in respect thereof), of all or
any part of an Indebtedness of another Person, or any enforceable commitment to
make an Investment in such other Person.
"Guarantor" means any Subsidiary, including without limitation the
Guarantors listed on Schedule I hereto, that executes a Note Guarantee in
accordance with the provisions of this Indenture, and its respective successors
and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under such derivative securities as (i) currency exchange or
interest rate swap agreements, currency exchange or interest rate cap
agreements and currency exchange or interest rate collar agreements and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange or interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the Global Note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes transferred to Institutional Accredited
Investors.
"Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof), (iii) representing the
balance deferred and unpaid of the purchase price of any property (including
Capital Lease Obligations), except any such balance that constitutes an accrued
expense or trade payable, or (iv) representing any Hedging Obligations, if and
to the extent any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, (b) to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as
obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business) if such obligation would be a contingent obligation that is
required to be described in the footnotes to the financial statements of such
Person in accordance with GAAP, (c) to the extent not otherwise included,
Indebtedness of another Person secured by a Lien on any asset owned by such
Person (whether or not such Indebtedness is assumed by such Person) and (d) any
Deemed Incurred Indebtedness of such Person. For purposes of this definition,
the term "Indebtedness" shall not include any amount of the liability in
respect of an operating lease that at such time would not be required to be
capitalized and reflected as a liability on the balance sheet in accordance
with GAAP.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
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<PAGE> 16
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Company's Board of Directors, (i) qualified to perform the task
for which it has been engaged and (ii) disinterested and independent with
respect to the Company and all of the Subsidiaries, each Affiliate of the
Company, and the Permitted Holder and its Related Parties.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette Securities
Corporation.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans or
Guarantees, advances or capital contributions (excluding commission, travel,
relocation, loans to purchase equity in the Company and other advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions by such Person for consideration of Indebtedness, Equity
Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the closing date for the sale and original issuance
of the first series of Notes issued under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" shall have the meaning set forth in the Registration
Rights Agreement.
"Make-Whole Premium" means, with respect to any Note, an amount equal to
the greater of (i) the premium above the principal amount if such Note were
redeemed on the First Optional Redemption Date and (ii) the excess of (a) the
present value of all remaining interest, premium and principal payments due on
such Note as if such Note were redeemed on the First Optional Redemption Date,
computed using a discount rate equal to the Treasury Rate plus 75 basis points,
over (b) the outstanding principal amount of such Note.
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<PAGE> 17
"Mississippi Licensees" means each of Grand Casinos of Mississippi,
Inc.--Gulfport, Grand Casinos of Mississippi, Inc.--Biloxi and BL Development
Corp.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Restricted Subsidiaries, and (ii) excluding any
extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions), and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien (other than the Notes) on the
asset or assets that are the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets.
"Non-Recourse Financing" means Indebtedness incurred in connection with
the purchase or lease of personal or real property useful in the Principal
Business and (i) as to which the lender upon default may seek recourse or
payment only through the return or sale of the property or equipment so
purchased or leased and (ii) may not otherwise assert a valid claim for payment
on such Indebtedness against the Company or any Restricted Subsidiary or any
other property of the Company or any Restricted Subsidiary.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and the Notes, executed pursuant to
the provisions of this Indenture.
"Notes" means the Company's Notes to be issued pursuant to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company or a Guarantor, as the case may be, by two Officers of the Company or a
Guarantor, as the case may be, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company or a Guarantor, as the case may be, that
meets the requirements set forth in this Indenture.
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<PAGE> 18
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 11.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Holder" means Lyle Berman.
"Permitted Investments" means (a) any Investments in the Company or in any
Guarantor; (b) any Investments in Cash Equivalents; and (c) Investments by the
Company or any Restricted Subsidiary of the Company in a Person, if as a result
of such Investment (i) such Person becomes a Guarantor or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Guarantor.
"Permitted Liens" means:
(a) Liens in favor of or by the Company or a Guarantor;
(b) Liens on property of a Person existing at the time such Person is
merged into or consolidated with or into, or wound up into, the Company or any
Restricted Subsidiary of the Company or at the time such Person becomes a
Restricted Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation or winding
up, or such Person becoming a Restricted Subsidiary, and do not extend to any
other assets other than those of such Person;
(c) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company; provided that such
Liens were in existence prior to the contemplation of such acquisition;
(d) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business or in the construction of projects and which
obligations are not expressly prohibited by this Indenture;
(e) Liens on assets that are or would be Note Collateral (as defined in
the Existing First Mortgage Indenture and related collateral documents without
amendment, whether or not any Existing First Mortgage Notes are then
outstanding) securing obligations in respect of the Existing First Mortgage
Indenture and the Existing First Mortgage Notes or any guarantee thereof or
other Indebtedness permitted to be incurred under this Indenture which may be
incurred under paragraphs (c) and (d) under Section 4.09 or refinancings of
secured Indebtedness permitted thereunder;
(f) Liens and leases existing on the Issuance Date;
(g) (1) Liens for taxes, assessments or governmental charges or
claims or (2) statutory Liens of landlords, and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other similar Liens
arising in the ordinary course of business or in the construction of any
11
<PAGE> 19
project, in the case of each of (1) and (2), with respect to amounts that
either (A) are not yet delinquent or (B) are being contested in good faith by
appropriate proceedings as to which appropriate reserves or other provisions
have been made in accordance with GAAP;
(h) easements, rights-of-way, navigational servitudes, restrictions,
defects or irregularities in title and other similar charges or encumbrances
which do not interfere in any material respect with the ordinary conduct of
business of the Company and its Restricted Subsidiaries;
(i) Liens securing purchase money or lease obligations otherwise
permitted by this Indenture incurred or assumed in connection with the
acquisition, purchase or lease of real or personal property to be used in the
Principal Business of the Company or any of its Restricted Subsidiaries;
provided that such Lien does not extend to any property or assets of the
Company or any Restricted Subsidiary other than the property or assets so
purchased or leased or any proceeds therefrom, replacements thereof or
accessions thereto.
(j) a leasehold mortgage in favor of a party financing the lessee's
development of improvements on property leased to lessee; provided that neither
the Company nor any Restricted Subsidiary is liable for the payment of any
principal of, or interest or premium on, such financing;
(k) Liens on assets that are not or would not be Note Collateral (as
defined in the Existing First Mortgage Indenture and related collateral
documents without amendment, whether or not any Existing First Mortgage Notes
are then outstanding) to secure obligations under any Indebtedness permitted to
be incurred by this Indenture that is not expressly subordinated to the Notes;
(l) Liens for workers' compensation, unemployment insurance and other
types of social security benefits;
(m) attachment or judgment liens not giving rise to an Event of
Default;
(n) leases and subleases granted to or by the Company or its Restricted
Subsidiaries that do not interfere with the ordinary conduct of the business of
the Company and its Restricted Subsidiaries;
(o) Liens imposed by operation of law that do not materially affect the
Company's or any Guarantor's ability to perform its respective obligations
under this Indenture; provided that any such Liens do not secure Indebtedness;
and
(p) Liens securing extensions, refinancings, renewals, replacements and
refunding of the obligations secured by Liens referred to in clauses (a), (e),
(i), (j) and (k) above.
"Permitted Unrestricted Subsidiary Indebtedness" means Indebtedness or
Disqualified Stock, as the case may be, or that portion of Indebtedness or
Disqualified Stock, as the case may be, (a) as to which neither the Company nor
any of its Restricted Subsidiaries (i) provides credit support pursuant to any
undertaking, agreement or instrument that would constitute Indebtedness or
Disqualified Stock, as the case may be, or (ii) is directly or indirectly
liable, and (b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness or Disqualified Stock, as the case may be, of the Company or
any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or Disqualified Stock, as the case may be, or cause the payment
thereof to be
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accelerated or payable prior to its stated maturity; provided that the Company
or a Restricted Subsidiary may guarantee Permitted Unrestricted Subsidiary
Indebtedness if such Guarantee is permitted as a Restricted Payment.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principal Business" means the casino gaming and resort business and any
activity or business incidental, directly related or similar thereto, or any
business or activity that is a reasonable extension, development or expansion
thereof or ancillary thereto, including any hotel, theme park, observation
tower, golf course, entertainment, recreation or other activity or business
designed to promote, market, support, develop, complement, construct or enhance
the casino gaming or resort business operated by the Company or its Restricted
Subsidiaries.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of October 16, 1997, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S Global Note" means a permanent Global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registers in the name of the
Depositary or its nominee, issued in a denomination equal to the outstanding
principal amount of Notes transferred pursuant to an offshore transaction
meeting the requirements of Rule 903 or 904.
"Related Parties" means any Person controlled by the Permitted Holder, any
member of the immediate family or descendant of the Permitted Holder, any trust
for the benefit of the Permitted Holder or any member of the immediate family
or descendant of the Permitted Holder.
"Repurchase Offer" means an offer made by the Company to purchase all or
any portion of a holder's Notes pursuant to Sections 4.10 and 4.15 hereof.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
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"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means (i) an Investment other than a
Permitted Investment or (ii) any sale, conveyance, lease, transfer or other
disposition of assets at less than fair market value to an Unrestricted
Subsidiary, provided that the amount of such Restricted Investment under this
clause (iii) shall be such difference in value.
"Restricted Subsidiary" means, at any time, any Subsidiary of the
Company that is not then an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Secured Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary that is secured by assets of the Company or any
Restricted Subsidiary that is permitted to be incurred by this Indenture.
"Series B Notes" shall have the meaning set forth in the Registration
Rights Agreement.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the Issuance
Date.
"Stratosphere Agreements" means the Completion Guarantee (or otherwise to
complete the development of Stratosphere that, in combination with the
Completion Guarantee, does not exceed $50 million in the aggregate), the
Standby Equity Commitment, outstanding warrants and the other documents and
agreements in existence on the Issuance Date between the Company or any of its
Subsidiaries and Stratosphere Corporation.
"Stratosphere Corporation" means the Stratosphere Corporation, a Delaware
corporation.
"Subordinated Indebtedness" means any Indebtedness of the Company or any
of its Restricted Subsidiaries which is expressly by its terms subordinated in
right of payment to the Notes or any Note Guarantee.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
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directors, managers or trustees thereof is at the time of determination owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof and (ii) any partnership of
which more than 50% of the partnership's capital accounts, distribution rights
or general or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof. A Subsidiary of the Company shall be either a
Restricted Subsidiary or an Unrestricted Subsidiary, but not both.
"Substantially Undeveloped Land" means any real estate that does not have
any building other than any building whose fair market value is less than $1
million and does not have any substantial improvement other than roads,
utility, water and sewage connections, paved or cleared parking areas or other
significant improvement necessary for the operation of the Existing Casinos.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Treasury Rate" means the yield to maturity at the time of the
computation of the United States Treasury securities with a constant maturity
(as compiled by and published in the most recent Federal Reserve Statistical
Release H.15(519)), which has become publicly available at least two business
days prior to the date fixed for prepayment (or, if such Statistical Release is
no longer published, any publicly available source of similar market data) most
nearly equal to the then remaining average life to the First Optional
Redemption Date; provided, however, that if the average life of such Note is
not equal to the constant maturity of the United States Treasury security for
which weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the average life of such Mortgage Notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note in the form of
Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means a Subsidiary that has been designated as
an "Unrestricted Subsidiary" in accordance with the provisions of this
Indenture and any Subsidiary of such entity, so long as it remains an
Unrestricted Subsidiary in accordance with the terms of this Indenture.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means, with respect to any Person, any class or series of
capital stock of such Person that is ordinarily entitled to vote in the
election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the number
of years obtained by dividing (a) the sum of the products obtained by
multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount or liquidation
preference, as applicable, of such Indebtedness or Disqualified Stock, as the
case may be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"......................4.11
"Asset Sale Offer"...........................3.09
"Authentication Order".......................2.02
"Change of Control Offer"....................4.15
"Change of Control Payment"..................4.15
"Change of Control Payment Date" ............4.15
"Covenant Defeasance"........................8.03
"DTC"........................................2.03
"Event of Default"...........................6.01
"Excess Proceeds"............................4.10
"incur"......................................4.09
"Legal Defeasance" ..........................8.02
"Offer Amount"...............................3.09
"Offer Period"...............................3.09
"Paying Agent"...............................2.03
"Purchase Date"..............................3.09
"Registrar"..................................2.03
"Restricted Payments"........................4.07
SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
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"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Note Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. Notes issued in global form shall be substantially
in the form of Exhibit A attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be
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substantially in the form of Exhibit A attached hereto (but without the Global
Note Legend thereon and without the "Schedule of Exchanges of Interests in the
Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer (an "Authentication Order"), authenticate Notes for original issue
up to the aggregate principal amount stated in paragraph 4 of the Notes.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in 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 Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary. All Global Notes will be
exchanged by the Company for Definitive Notes if (i) the Company delivers to the
Trustee notice from the Depositary that it is unwilling or unable to continue to
act as Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth
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herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of
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Exhibit B hereto, including the certifications and certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such holder
in the form of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
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Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than
those listed in subparagraphs (B) through (D) above, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a
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beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note pursuant
to this Section 2.06(c)(i) shall bear the Private Placement Legend and
shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial interest to
a Person who shall take delivery thereof in the form of a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such
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beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount
of the applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall not bear the Private
Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable;
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(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, in the case
of clause (B) above, the 144A Global Note, in the case of clause (c)
above, the Regulation S Global Note, and in all other cases, the IAI
Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
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Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any
time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Unrestricted Definitive Note and
increase or cause to be increased the aggregate principal amount of one of
the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
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(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a
Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions
from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.02,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
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the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN CLAUSE 2 OF THE NEXT SENTENCE HEREOF.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (2)
AGREES THAT IT WILL NOT, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) (1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI"))
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A
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PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this
Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THIS INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THIS INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or cancelled in whole and not in part, each such Global Note shall be returned
to or retained and cancelled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such reduction; and if the beneficial interest is being exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note by
the Trustee or by the Depositary at the direction of the Trustee to reflect such
increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
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(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
of or to exchange a Note between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be
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<PAGE> 38
outstanding because the Company or an Affiliate of the Company holds the Note;
however, Notes held by the Company or a Subsidiary of the Company shall not be
deemed to be outstanding for purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the
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Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the New York Stock Exchange or the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or by such other method the Trustee shall
deem fair and appropriate (and in such manner as complies with applicable legal
requirements) provided that (i) all of the Notes of every series shall be
treated as a single class and (ii) no Note of $1,000 or less shall be purchased
or redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, postage prepaid, a notice of
purchase or redemption to each Holder whose Notes are to be purchased or
redeemed at its registered address.
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The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officer's Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name
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such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company, a new Note in
principal amount equal to the unpurchased or unredeemed portion of any Note
purchased or redeemed in part and such Note shall be issued in the name of the
Holder thereof upon cancellation of the original Note.
SECTION 3.07. OPTIONAL REDEMPTION.
The Optional Redemption provisions shall be as stated in the
Definitive Notes, Restricted Definitive Notes and the Global Notes issued
pursuant to this Indenture, substantially in the form of Exhibit A hereto. Any
redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders to purchase Notes
(an "Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
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(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the Company shall authenticate
and mail or deliver such new Note to such Holder, in a principal amount equal to
any unpurchased portion of the Note surrendered. Any Note not so accepted shall
be
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promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company 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 hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
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SECTION 4.03. REPORTS.
(a) The Company and the Guarantors shall file with the Trustee and
provide holders of Notes, within 15 days after it files them with the SEC,
copies of their annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rule or regulation prescribe) which the Company and the Guarantors are required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company or the Guarantors may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
or otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the SEC, this Indenture shall require the Company and the Guarantors to continue
to file with the SEC and provide the Trustee and Holders with, without cost to
each holder, (a) within 90 days after the end of each fiscal year, annual
reports on Form 10-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form); and (c) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form); provided
that the Company and the Guarantors shall not be so obligated to file such
reports with the SEC if the SEC does not permit such filings. The Company and
the Guarantors shall in all cases, without cost to each recipient, provide
copies of such information to the holders of the Notes and shall make available
such information to prospective purchasers and to securities analysts and
broker-dealers upon their written request. In addition, the Company and the
Guarantors have agreed that, for so long as any Notes remain outstanding, they
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
(b) Not later than 15 days after the date of filing any quarterly or
annual report, the Company shall deliver to the Trustee an Officers' Certificate
stating that each Restricted Payment made in the prior fiscal quarter was
permitted and setting forth the basis upon which the calculations required by
Section 4.07 were computed, which calculations may be based upon the Company's
latest available financial statements at the time of such Restricted Payment.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on
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account of the principal of or interest, if any, on the Notes is prohibited or
if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than (1) dividends or
distributions by the Company payable in Equity Interests (other than
Disqualified Stock) of the Company or (2) dividends or distributions by a
Restricted Subsidiary of the Company, provided that to the extent that a portion
of such dividend or distribution is paid to a holder other than the Company or a
Restricted Subsidiary, such portion of such dividend or distribution is not
greater than such holder's pro rata aggregate common equity interest in such
Restricted Subsidiary; (ii) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Company; (iii) purchase, redeem or
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otherwise acquire or retire for value any Subordinated Indebtedness of the
Company or any of its Restricted Subsidiaries prior to the scheduled dates for
payment of principal and interest in accordance with the original documentation
for such Subordinated Indebtedness or, if refinanced, the documentation relating
to such refinancing or (iv) make any Restricted Investment or any Contingent
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof;
(b) for any Restricted Payment the Company would, at
the time of such Restricted Payment and after giving pro forma effect thereto as
if such Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to clauses (a), (b) or (c) under the first paragraph of
Section 4.09 hereof; and
(c) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Company and its
Restricted Subsidiaries after the Issuance Date (including Restricted Payments
permitted by the next succeeding paragraph, other than clauses (2), (3), (7),
(9), (10) and (12), is less than the sum of (X) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
fiscal quarter that first begins after the Issuance Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available (or, in the case such Consolidated Net Income for such
period is a deficit, minus 100% of such deficit), plus (Y) 100% of the aggregate
net cash proceeds received by the Company since the Issuance Date from the issue
or sale of Equity Interests or debt securities of the Company that have been
converted into such Equity Interests of the Company (other than Equity Interests
or convertible debt securities of the Company sold to a Restricted Subsidiary of
the Company and other than Disqualified Stock or debt securities that have been
converted into Disqualified Stock), plus (Z) to the extent not otherwise
included in the Company's Consolidated Net Income, 100% of the cash dividends or
distributions or the amount of the cash principal and interest payments received
since the Issuance Date by the Company or any Restricted Subsidiary from any
Unrestricted Subsidiary or in respect of any Restricted Investment (other than
dividends or distributions to pay obligations of such Unrestricted Subsidiary
such as income taxes), provided that such calculation will be made (i) without
duplication for any actual Restricted Investment paid in respect of any
Contingent Restricted Investment previously made, and (ii) such that any
Contingent Restricted Investment terminated or released will no longer be deemed
to be an outstanding Restricted Payment to the extent so terminated or released.
The foregoing provisions will not prohibit the
following Restricted Payments:
(1) the payment of any dividend within 60 days after
the date of declaration thereof, if at the date of declaration such payment
would have complied with the provisions of this Indenture;
(2) the redemption, repurchase, retirement, defeasance
or other acquisition of any Equity Interests of the Company or any Restricted
Subsidiary in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of Equity
Interests of the Company (other than any Disqualified Stock);
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(3) the redemption, repurchase, retirement or other
acquisition of any Subordinated Indebtedness of the Company or any Restricted
Subsidiary in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of
Subordinated Indebtedness of the Company or Equity Interests of the Company
(other than Disqualified Stock), provided that (x) the principal amount of such
Subordinated Indebtedness shall not exceed the principal amount of the
Subordinated Indebtedness so redeemed, repurchased, retired or otherwise
acquired (plus the amount of reasonable expenses incurred and any premium in
connection therewith), (y) the Subordinated Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Subordinated Indebtedness being redeemed, repurchased, retired
or otherwise acquired, and (z) such Subordinated Indebtedness is subordinate in
right of payment to the Notes and any Note Guarantee on terms at least as
favorable to the holders of the Notes as those contained in the documentation
governing the Subordinated Indebtedness being redeemed, repurchased, retired or
otherwise acquired;
(4) a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of any Equity Interests
of the Company held by any employee or director of the Company or any Subsidiary
pursuant to any management equity plan or stock option plan, provided that the
Restricted Payments made under this clause (4) does not exceed $5.0 million in
the aggregate in any one fiscal year;
(5) any redemption or purchase by the Company or any
Restricted Subsidiary of Equity Interests of the Company required by a Gaming
Authority in order to preserve a material Gaming License, provided that so long
as such efforts do not jeopardize any material Gaming License, the Company or
such Restricted Subsidiary shall have diligently tried to find a third-party
purchaser for such Equity Interests and no third-party purchaser acceptable to
the applicable Gaming Authority was willing to purchase such Equity Interests
within a time period acceptable to such Gaming Authority;
(6) (i) Restricted Investments or Contingent
Restricted Investments of up to $50 million in the aggregate outstanding at any
one time in Grand Controlled Entities or Gaming Support Businesses plus (ii)
Restricted Investments or Contingent Restricted Investments in Grand Controlled
Entities or Gaming Support Businesses, provided that the Company has, at the
time of making such Restricted Investment or Contingent Restricted Investment, a
Consolidated Net Debt to Cash Flow Ratio of not more than 3.0 to 1 on a pro
forma basis giving effect to the Restricted Investment;
(7) Restricted Investments or Contingent Restricted
Investments to the extent that such Restricted Investment or the payment under
such Contingent Restricted Investment is made using Equity Interests of the
Company (other than Disqualified Stock);
(8) Restricted Investments in Stratosphere; provided
that the aggregate payments do not exceed the aggregate payments provided for
under the Stratosphere Agreements in existence on the Issuance Date;
(9) Restricted Investments to purchase, retire or
otherwise acquire all or part of any outstanding Equity Interests in
Stratosphere Corporation that the Company or a Restricted Subsidiary does not
own all of the beneficial equity interest thereof;
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(10) Restricted Investments in, or a lease or
sublease to, any Unrestricted Subsidiary consisting of Substantially Undeveloped
Land owned or leased by the Company or a Restricted Subsidiary as of the
Issuance Date;
(11) Contingent Restricted Investments in any Indian
tribe recognized as a sovereign entity for any gaming enterprise as to which the
Company or a Restricted Subsidiary has been officially selected by such Indian
tribe as the manager thereof pursuant to an executed management agreement, if
such Contingent Restricted Investments under this clause does not exceed $10
million in the aggregate;
(12) Restricted Investments in debt securities of the
Mississippi Business Finance Corporation (an agency of the State of Mississippi
chartered to promote the development of business within the State of
Mississippi), provided that the proceeds from such debt securities are invested
in the Company or a Restricted Subsidiary; and
(13) Restricted Payments not otherwise permitted in
an aggregate amount outstanding under this clause (13) not to exceed $20.0
million at any one time;
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (4), (6), (9), (10), (11), (12) and
(13), no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof.
The amount of any Restricted Payment, as of any date,
consisting of a Contingent Restricted Investment shall be the amount of the
maximum obligation (the "Maximum Obligation") under such Contingent Restricted
Investment on such date. The Maximum Obligation of any Contingent Restricted
Investment as of any date shall be:
(i) for Guarantees of Capital Lease Obligations or
purchase money loans for equipment, an amount equal to the then outstanding
principal balance of such Capital Lease Obligation or loan minus 75% of the
depreciated book value of the Equipment so financed;
(ii) for Guarantees of other Indebtedness, an amount
equal to the then outstanding principal balance of such Indebtedness so
Guaranteed minus any cash collateral then securing such Indebtedness; or
(iii) for any other Contingent Restricted Investment,
an amount equal to the dollar amount or value of the Maximum Obligation or
commitment;
provided the Maximum Obligation of any Contingent Restricted Investment shall be
zero so long as the Consolidated Net Debt to Cash Flow Ratio of the Guaranteed
Party is less than 2.5 to 1 for the four consecutive fiscal quarters last
completed for which internal financial statements are then available or the
Fixed Charge Coverage Ratio of the Guaranteed Party is at least 3.5 to 1. If any
Contingent Restricted Investment is released or satisfied, the Maximum
Obligation will be correspondingly reduced.
If the outstanding principal amount guaranteed or the amount obligated or
committed to be invested of any Contingent Restricted Payment increases on any
date, then the Guarantor Party shall be deemed to have made a Contingent
Restricted Investment on such date in the amount of such increase. If the
Maximum Obligation of any Contingent Restricted Payment decreases on any date
(other than solely as a result of any change in the Guaranteed Party's
Consolidated Debt to Cash Flow Ratio or Fixed
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Charge Coverage Ratio), then the corresponding Contingent Restricted Investment
will not be deemed outstanding in the amount of such decrease and the amount of
such Contingent Restricted Investment shall be deemed not to have been made as a
Restricted Payment in the amount of such decrease.
Upon making any Contingent Restricted Investment, the Company
will be deemed to have incurred on such date Deemed Incurred Indebtedness in the
amount of the Maximum Obligation thereunder less any cash segregated and
restricted solely for the satisfaction of such Contingent Restricted Investment.
For purposes of determining the amount of Restricted
Investments outstanding at any time, all Restricted Investments will be valued
at their fair market value at the time such Restricted Investments were made or,
if such Restricted Investments consists of property acquired within 2 years of
the date of investment, at the election of the Company, at historical cost (in
each case as determined in good faith by the Company's Board of Directors), and
no adjustments will be made for subsequent changes in fair market value.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any such Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries (other than in respect of the subordination of such
Indebtedness to the Existing First Mortgage Notes, guarantees thereof, the
Notes, the Note Guarantees or any permitted refinancing thereof, as the case may
be), or
(b) make loans or advances to the Company,
except (in each case) for such encumbrances or
restrictions existing under or by reason of:
(1) contractual encumbrances or restrictions in
effect on the Issuance Date and contractual encumbrances or restrictions
contained in secured Indebtedness permitted to be incurred under this Indenture,
(2) this Indenture, the Notes and any Note
Guarantees,
(3) any instrument governing Indebtedness or Capital
Stock of a Person acquired by, the Company or any Restricted Subsidiary as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired,
(4) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and consistent with
past practices,
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(5) purchase money obligations for property acquired
in the ordinary course of business or Permitted Liens that impose restrictions
of the nature discussed in clause (c) above on the property so acquired or to
which such Lien attaches,
(6) applicable law or any applicable rule or order of
any Gaming Authority, or
(7) any encumbrances or restrictions imposed by any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of the contracts, instruments or
obligations referred to in clauses (1) through (6) above, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of the
Company's Board of Directors, no more restrictive; taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
the dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding, replacement
or refinancing.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with respect
to (collectively, "incur" and correlatively, an "incurrence" of) any
Indebtedness (including Acquired Indebtedness or Deemed Incurred Indebtedness)
or any shares of Disqualified Stock; provided that the Company or any Restricted
Subsidiary may incur:
(a) Indebtedness or shares of Disqualified Stock if the Fixed
Charge Coverage Ratio for the Company and its Restricted Subsidiaries for the
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such incurrence would
have been at least 2.0 to 1.0 determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the Disqualified Stock had been issued, as the
case may be, and application of proceeds had occurred at the beginning of such
four-quarter period;
(b) Subordinated Indebtedness (and related subordinated
guarantees by any Restricted Subsidiary) or Disqualified Stock, in each case
with a Weighted Average Life to Maturity that is longer than the Notes by at
least one year, if the Fixed Charge Coverage Ratio for the Company and its
Restricted Subsidiaries for the most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date of such incurrence would have been at least 1.75 to 1.0 determined on a pro
forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred or the Disqualified Stock
had been issued, as the case may be, and application of proceeds had occurred at
the beginning of such four-quarter period;
(c) Senior Secured Indebtedness if the Consolidated Net
Secured Debt to Cash Flow Ratio for the Company and its Restricted Subsidiaries
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been less than 2.5 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom) as if the
additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, and application of proceeds had occurred at the
beginning of such four-quarter period;
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(d) any Indebtedness in an aggregate principal amount
not to exceed $50.0 million at any one time outstanding under this clause (d);
(e) Existing Indebtedness;
(f) Indebtedness represented by the Notes or a Note
Guarantee;
(g) Indebtedness (the "Refinancing Indebtedness")
issued in exchange for, or the proceeds of which are used to extend, refinance,
renew, replace, or refund Indebtedness incurred pursuant to clauses (a), (b),
(c), (e), (f), (k), (l) or this clause (g), provided that (1) the principal
amount of such Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness so extended, refinanced, renewed, replaced, substituted or refunded
(plus the amount of reasonable expenses incurred and any premium paid in
connection therewith), (2) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and (3) if the Indebtedness being refinanced is
subordinated, the Refinancing Indebtedness shall be subordinate in right and
priority of payment to the Notes and any Note Guarantee on terms at least as
favorable to the holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded;
(h) intercompany Indebtedness between or among the
Company and any Restricted Subsidiary, including any Subordinated Indebtedness
owed to the Mississippi Business Finance Corporation, provided that the Company
or Restricted Subsidiary holds the corresponding Indebtedness of the Mississippi
Business Finance Corporation;
(i) Hedging Obligations that are incurred (1) for the
purpose of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to be
outstanding or (2) for the purpose of fixing or hedging currency exchange rate
risk with respect to any currency exchanges;
(j) Indebtedness represented by Capital Lease
Obligations or purchase money obligations or Non-Recourse Financing, in each
case incurred for the purpose of financing or refinancing all or any part of the
purchase or lease of personal or real property or equipment used in the business
of the Company or such Restricted Subsidiary and acquired after the date of this
Indenture;
(k) Acquired Indebtedness or Disqualified Stock of
any Person (other than an Unrestricted Subsidiary) that becomes, or which merged
into, a Restricted Subsidiary after the date of this Indenture, which Acquired
Indebtedness was outstanding at the time such Person becomes, or which merged
into, a Restricted Subsidiary, provided (1) that such Acquired Indebtedness was
not incurred in contemplation of such Person becoming a Restricted Subsidiary,
and (2) none of the Company or any other Restricted Subsidiary is required to
guarantee or become liable for the repayment of such Acquired Indebtedness; and
(l) Deemed Incurred Indebtedness permitted pursuant
to clause (11) of the second paragraph of Section 4.07 hereof.
This Indenture shall provide that the Company shall
not permit any of its Unrestricted Subsidiaries to incur any Indebtedness
(including Acquired Indebtedness) or issue any shares of Disqualified Stock,
other than Permitted Unrestricted Subsidiary Indebtedness; provided that if any
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such Unrestricted Subsidiary ceases to be an Unrestricted Subsidiary and becomes
a Restricted Subsidiary, such event shall be deemed to constitute the incurrence
of the Indebtedness in such Subsidiary by a Restricted Subsidiary.
For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of permitted Indebtedness described above, the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this Section 4.09. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness shall
not be deemed to be an incurrence of Indebtedness for purposes of this Section
4.09.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless
(w) no Default or Event of Default exists or is continuing immediately prior to
or after giving effect to such Asset Sale, (x) the Company, or its Restricted
Subsidiaries, as the case may be, receives consideration at the time of such
Asset Sale at least equal to the fair market value (as determined in good faith
by the Company) of the assets sold or otherwise disposed of and (y) at least 90%
of the consideration therefor received by the Company, or such Restricted
Subsidiary, as the case may be, is in the form of cash or Cash Equivalents;
provided that the amount of (A) any liabilities (as shown on the Company's, or
such Restricted Subsidiary's, as the case may be, most recent balance sheet or
in the notes thereto) of the Company, or any Restricted Subsidiary, as the case
may be (other than liabilities that are by their terms expressly subordinated to
the Notes or any Note Guarantee), that are assumed by the transferee of any such
assets and (B) any notes or other obligations received by the Company, or any
Restricted Subsidiary, as the case may be, from such transferee that are
converted by the Company, or such Restricted Subsidiary, as the case may be,
into cash (to the extent of the cash received) within 90 days following the
closing of such Asset Sale, shall be deemed to be cash only for purposes of
satisfying clause (y) of this paragraph and for no other purpose.
Within 270 days after the Company's or any Restricted
Subsidiary's receipt of the Net Proceeds of any Asset Sale, the Company or such
Restricted Subsidiary may apply the Net Proceeds from such Asset Sale to either
(i) permanently reduce Indebtedness that is not subordinated to the Notes or
redeem or retire Notes or (ii) or to the investment in any one or more business,
capital expenditure or other tangible asset of the Company or any Restricted
Subsidiary, in each case, engaged, used or useful in the Principal Business or
to an Investment in a Grand Managed Entity if such Investment is permitted by
Section 4.07 hereof, with no concurrent obligation to make an offer to purchase
any Notes. Pending the final application of any such Net Proceeds, the Company
or such Restricted Subsidiary may temporarily reduce Indebtedness under a
revolving credit facility, if any, or otherwise such Net Proceeds in Cash
Equivalents. Any Net Proceeds from the Asset Sale that are not invested as
provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Company shall make an offer to all holders of Notes (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
this Indenture. The Company shall commence an Asset Sale Offer with respect to
Excess Proceeds within 30 days after the date that Excess Proceeds exceeds $10.0
million by mailing the notice required pursuant to the terms of this Indenture.
To the extent that the aggregate amount of
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Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased in the manner described under Section 3.02 hereof. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into any contract, agreement, understanding, loan, advance or guarantee with, or
for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and
(b) the Company delivers to the Trustee (i) with respect to
any Affiliate Transaction involving aggregate payments in excess of $5.0
million, a resolution adopted by a majority of the disinterested nonemployee
directors of the Board of Directors approving such Affiliate Transaction and set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (a) above and (ii) with respect to any Affiliate
Transaction that is a loan transaction involving a principal amount in excess of
$20.0 million or any other type of Affiliate Transaction involving aggregate
payments in excess of $20.0 million, an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point of view issued by
an Independent Financial Advisor.
The restrictions contained in this Section 4.11 shall not
apply to the following: (1) transactions between or among the Company and/or any
of its Restricted Subsidiaries; (2) Restricted Payments permitted by the
provisions of Section 4.07 hereof; or (3) the transactions pursuant to the
Stratosphere Agreements.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
suffer to exist any Lien that secures obligations under any Indebtedness, except
Permitted Liens, on any asset owned as of the Issuance Date or thereafter
acquired by the Company or such Restricted Subsidiary, or any income or profits
therefrom, or assign or convey any right to receive income therefrom.
SECTION 4.13. LINE OF BUSINESS.
For so long as any Notes are outstanding, the Company shall
not, and shall not permit any of its Restricted Subsidiaries to, engage in any
business or activity other than the Principal Business.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective
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organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company
shall make an offer to purchase all or any part (equal to $1,000 or an integral
multiple thereof) of the Notes pursuant to the offer described below (the
"Change of Control Offer") at a price in cash (the "Change of Control Payment")
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase. Within 30 days
following any Change of Control, the Company shall mail a notice to each holder
with the following information: (1) a Change of Control Offer is being made
pursuant to Section 4.15 hereof, and that all Notes properly tendered pursuant
to such Change of Control Offer will be accepted for payment; (2) the purchase
price and the purchase date, which will be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, except as may be otherwise
required by applicable law (the "Change of Control Payment Date"); (3) any Note
not properly tendered will remain outstanding and continue to accrue interest;
(4) unless the Company defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest after the Change of Control Payment Date; (5) holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the paying agent
specified in the notice at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of Control
Payment Date; (6) holders will be entitled to withdraw their tendered Notes and
their election to require the Company to purchase the Notes, provided that the
paying agent receives, not later than the close of business on the last day of
the Offer Period (as defined below), a telegram, telex, facsimile transmission
or letter setting forth the name of the holder, the principal amount of Notes
tendered for purchase, and a statement that such holder is withdrawing his
tendered Notes and his election to have such Notes purchased; and (7) that
holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Offer Period with respect to a Change of Control
Offer shall mean the period of 20 Business Days following the commencement of
such offer and no longer, except, to the extent that a longer period is required
by applicable law.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to a Repurchase Offer.
(b) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
paying agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that such Notes or portions thereof have
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been tendered to and purchased by the Company. The Paying Agent shall promptly
mail to each holder of Notes the Change of Control Payment for such Notes, and
the Trustee shall promptly authenticate and mail to each holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any,
provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
SECTION 4.16. INSURANCE.
Until the Notes have been paid in full, the Company shall, and
shall cause its Restricted Subsidiaries to, maintain insurance with responsible
carriers against such risks and in such amounts as is customarily carried by
similar businesses with such deductibles, retentions, self insured amounts and
coinsurance provisions as are customarily carried by similar businesses of
similar size, including, without limitation, property and casualty.
SECTION 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARY.
The Company may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary, provided that:
(i) at the time of designation, the Investment by the Company
and any of its Restricted Subsidiaries in such Subsidiary shall be deemed a
Restricted Investment (to the extent not previously included as a Restricted
Investment) made on the date of such designation in the amount of the greater of
(1) the net book value of such Investment or (2) the fair market value of such
Investment as determined in good faith by the Board of Directors and any
contingent obligation or commitment to make an Investment in such Restricted
Subsidiary or any Guarantee of the Indebtedness of such Restricted Subsidiary
shall be deemed a Contingent Restricted Investment made on such date;
(ii) at the time of designation, no Default or Event of
Default has occurred and is continuing or results immediately after such
designation or as a result of any Restricted Investment in such Subsidiary;
(iii) at the time of designation, such Subsidiary has no
Indebtedness other than Permitted Unrestricted Subsidiary Indebtedness of such
Subsidiary or a Note Guarantee; and
(iv) such Subsidiary does not own any Equity Interests in a
Restricted Subsidiary.
An Unrestricted Subsidiary shall cease to be an Unrestricted
Subsidiary and shall become a Restricted Subsidiary if either (i) at any time
while it is a Subsidiary of the Company (1) such Subsidiary acquires any assets
from the Company or any Restricted Subsidiary other than as permitted by the
provisions of this Indenture, including the provisions described under Sections
4.07 and 4.10 hereof; (2) such Subsidiary has any Indebtedness other than
Permitted Unrestricted Subsidiary Indebtedness; and (3) such Subsidiary owns any
Equity Interests in a Restricted Subsidiary of the Company; or (ii) the Company
designates such Unrestricted Subsidiary to be a Restricted Subsidiary and no
Default or Event of Default occurs or is continuing immediately after such
designation. If the Company designates any Unrestricted Subsidiary to be a
Restricted Subsidiary and no Default or Event of Default occurs or is continuing
immediately after such designation, then any Restricted Investments previously
made in such Unrestricted Subsidiary and any outstanding Contingent Restricted
Investments
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or Deemed Incurred Indebtedness shall no longer be deemed outstanding and shall
be deemed not to have been made under the Sections 4.07 and 4.09.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
Any Restricted Subsidiary that has been designated as an
Unrestricted Subsidiary pursuant to the terms of the Existing First Mortgage
Indenture shall be deemed to be an Unrestricted Subsidiary under this Indenture
as of the date hereof.
SECTION 4.18. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or the Guarantors, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, any Note Guarantee
or the Note Indenture, as applicable, or for any claim based on, in respect of,
or by reason of such obligations or their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes and the Note Guarantees.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
SECTION 4.19. ADDITIONAL NOTE GUARANTEES.
The Company shall cause each Restricted Subsidiary, now
existing or hereafter formed or acquired, to (i) execute and deliver to the
Trustee a supplemental indenture reasonably satisfactory to the Trustee inform
substantially in the form of Exhibit F hereto pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's obligations
under the Notes on the terms set forth in this Indenture and (ii) deliver to the
Trustee an opinion of counsel that, subject to customary assumptions and
exclusions, such supplemental indenture has been duly executed and delivered by
such Restricted Subsidiary. The Note Guarantee shall be released if the Company
or its Restricted Subsidiaries cease to own any Equity Interests in such
Restricted Subsidiary or if such Restricted Subsidiary becomes an Unrestricted
Subsidiary in accordance with the terms of this Indenture.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into or wind
up into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions to, any Person
unless:
(i) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made is a corporation organized or existing under the
laws of the United States, any state thereof, the District of Columbia, or any
territory thereof,
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(ii) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
assumes all the obligations of the Company under this Indenture and all
outstanding Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee under the Notes and
this Indenture;
(iii) immediately after such transaction no Default or Event
of Default exists;
(iv) the Company or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made, will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to any of clauses (a),
(b) or (c) set forth in the first paragraph of Section 4.09 hereof; and
(v) such transactions would not require any holder of Notes to
obtain a gaming license or be qualified under the law of any applicable gaming
jurisdiction, provided that such holder would not have been required to obtain a
gaming license or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transactions.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due and payable, upon
redemption or otherwise, of principal or premium, if any, on any Note or under
any Note Guarantee;
(b) the Company defaults for 30 days or more in the payment when due
of interest on, or Liquidated Damages with respect to, any Note or under any
Note Guarantee;
(c) failure by the Company or any Guarantor to offer to purchase, or
to purchase the Notes when required under an offer made pursuant to this
Indenture;
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(d) the Company or any Guarantor fails to comply with the provisions
described under Sections 4.07, 4.09, 4.10 and 4.15 hereof;
(e) the Company or any Guarantor fails for 60 days after receipt of
written notice to comply with any of its other agreements in the Indenture or
the Notes;
(f) a default occurs under any mortgage, indenture or instrument under
which there is issued or by which there is secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such Indebtedness or Guarantee now exists or is created
after the Issuance Date, which default (a) is caused by a failure to pay when
due principal of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity or would constitute a default in the payment of such issue of
Indebtedness at final maturity of such issue and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which a Payment Default then exists or with respect to
which the maturity thereof has been so accelerated or that has not been paid at
maturity, aggregates $15.0 million or more;
(g) the Company or any of its Restricted Subsidiaries fails to pay
final judgments aggregating in excess of $15.0 million, which final judgments
remain unpaid, undischarged and unstayed for a period of more than 60 days;
(h) the Company, any Guarantor or any of their Subsidiaries materially
breaches any representation or warranty set forth in any Note Guarantee or the
Company or any Guarantor defaults in the performance of any covenant set forth
in any Note Guarantee which continues for 60 days after notice thereof, or the
Company, any Guarantor or any of their Subsidiaries repudiates of its
obligations under, or any judgment or decree by a court or governmental agency
of competent jurisdiction declaring the unenforceability of, any Note Guarantee
for any reason that would materially impair the benefits to the Trustee or the
holders of the Notes thereunder;
(i) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries and such judgment or judgments aggregating
$15.0 million remain unpaid, undischarged and unstayed for a period of more than
60 days, provided that the aggregate of all such undischarged judgments exceeds
$15 million;
(j) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
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(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due;
or
(k) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(l) the revocation, termination, suspension or other cessation of
effectiveness of any Gaming License occurs which results in the cessation or
suspension of gaming operations at any Existing Casino that results in
Consolidated Cash Flow at the end of any four consecutive fiscal quarters being
less than 80% of the Consolidated Cash Flow for the four consecutive fiscal
quarters prior to such revocation, termination, suspension or other cessation of
effectiveness of such Gaming License;
(m) except as permitted by this Indenture, any Note Guarantee is held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee; or
(n) prior to the approval of the Mississippi Gaming Commission of the
Guarantee of the Series B Notes by the Mississippi Licensees and any restriction
on the transfer of the equity securities of the Mississippi Licensees pursuant
to this Indenture, the transfer of equity securities of any Mississippi
Licensees.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clause (j) or (k) of Section 6.01 hereof occurs and is continuing,
the Trustee or the holders of at least 25% in principal amount of the then
outstanding Notes may declare the principal, premium, if any, interest and
Liquidated Damages and any other monetary obligations on all the Notes to be due
and payable immediately. Notwithstanding the foregoing, in the case of an Event
of Default arising from certain events of bankruptcy or insolvency, with respect
to the Company or any Guarantor, all outstanding Notes shall become due and
payable without further action or notice. Holders of the Notes may not enforce
this Indenture or the Notes except as provided in this Indenture. Subject to
certain limitations, holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from holders of Notes notice of any continuing Default
or
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Event of Default (except a Default or Event relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. In addition, the Trustee shall have no obligation to accelerate the
Notes if in the best judgment of the Trustee acceleration is not in the best
interest of the holders of the Notes.
The holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of interest on, premium or Liquidated Damages, if any, or
the principal of, any Note held by a non-consenting holder.
The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Note Indenture, and the Company is
required, within five Business Days, upon becoming aware of any Default or Event
of Default or any default under any document, instrument or agreement
representing Indebtedness of the Company, to deliver to the Trustee a statement
specifying such Default or Event of Default.
In the case of any Event of Default occurring on or after the
First Optional Redemption Date for Notes of any series by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention and for the purpose of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to the optional redemption provisions of this Indenture, an
equivalent premium shall also become and be immediately due and payable on Notes
of such series to the extent permitted by law. If an Event of Default occurs
prior to the First Optional Redemption Date for Notes of any series, by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention and for the purpose of avoiding the prohibition on
redemption of the Notes prior to the First Optional Redemption Date, then the
implied call premium as set forth below shall also become immediately due and
payable on Notes of such series to the extent permitted by law.
YEAR PERCENTAGE
1997...............................................113.50%
1998...............................................111.25%
1999...............................................109.00%
2000...............................................106.75%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer
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to purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian 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 to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
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 or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If 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 its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) 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 liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
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(iii) 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 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon 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 require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(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 that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(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 or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
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SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. 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 promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
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The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the Company
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
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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
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
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 Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, 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. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest and Liquidated Damages on such Notes when such payments are
due solely out of the trust created pursuant to the Note Indenture, (ii) the
Company's and any Guarantor's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and the Company's and any Guarantor's obligations
in connection therewith and (iv) the Legal Defeasance provisions of the Note
Indenture. Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this
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Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages due on the outstanding Notes on the stated maturity date or
on the applicable redemption date, as the case may be, of such principal,
premium, if any, or interest or Liquidated Damages on the outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the Trustee confirming that, subject to customary assumptions and exclusions,
(A) the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling or (B) since the Issuance Date of the
Note Indenture, there has been a change in the applicable U.S. federal income
tax law, in either case to the effect that, and based thereon such opinion of
counsel in the United States shall confirm that, subject to customary
assumptions and exclusions, the holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Legal Defeasance and will be subject to U.S. federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions and
exclusions, the holders of the outstanding Notes will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of such Covenant
Defeasance and will be subject to such tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of such
deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Note Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
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(vi) the Company shall have delivered to the Trustee an opinion of
counsel in the United States to the effect that, as of the date of such opinion
and subject to customary assumptions and exclusions following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
under any applicable United States, state law and that the Trustee has a
perfected security interest in such trust funds for the ratable benefit of the
holders of Notes;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of defeating, hindering, delaying or defrauding any creditors of the Company or
others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel in the United States (which opinion of
counsel may be subject to customary assumptions and exclusions) each stating
that all conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with
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respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency,
(b) to comply with the covenant relating to mergers,
consolidations and sales of assets,
(c) to provide for uncertificated Notes in addition to or in place
of certificated Notes,
(d) to provide for the assumption of the Company's or any
Guarantor's obligations to holders of the Notes in the case of a merger or
consolidation,
(e) to make any change that would provide any additional
rights or benefits to the holders of the Notes (including providing for
additional Note Guarantees pursuant to the Note Indenture), or
(f) that does not adversely affect the legal rights under the Note
Indenture of any such holder, to comply with requirements of the SEC in order to
effect or maintain the qualification of the Note Indenture under the Trust
Indenture Act.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the
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Company and the Guarantors in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to make
any further appropriate agreements and stipulations that may be therein
contained, but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the Trustee
may amend or supplement this Indenture, the Note Guarantees and the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Notes (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of
the principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture , the Note Guarantees or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes). Without the consent of
at least 66 2/3% of the outstanding principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for such Notes), regardless of whether such Notes were issued in
one or more series, the Company may not amend, alter or waive the provisions
with respect to Section 4.15 hereof. Section 2.08 hereof shall determine which
Notes are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt
by the Trustee of the documents described in Section 7.02 hereof, the Trustee
shall join with the Company in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture directly affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise,
in which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under this
Section 9.02 to approve the particular form of any proposed amendment 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 of Notes 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 amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption of
the Notes (other than provisions relating to Section 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration;
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest or Liquidated Damages on the Notes;
(g) make any change in the foregoing amendment and waiver
provisions; or
(h) release any Guarantor from any of its obligations under its
Note Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture until
the Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
7.01 hereof) shall be fully protected in relying upon, in addition to the
documents required by Section 11.04 hereof, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10.
NOTE GUARANTEES
SECTION 10.01. GUARANTEE.
Subject to this Article 10 and subject to receipt of requisite
approvals from the Mississippi Gaming Commission with respect to the issuance
of Note Guarantees by the Mississippi Licenses with respect to the Series B
Notes, each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note 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 Notes or the obligations of the
Company hereunder or thereunder, that: (a) the principal of and interest on
the Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the Notes, if any, if lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever reason,
the Guarantors shall be jointly and severally obligated to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not
a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Guarantors, any amount paid by either to the Trustee or such Holder,
this Note Guarantee, to the extent theretofore discharged, shall be reinstated
in full force and effect.
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Each Guarantor agrees that it shall 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 the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Note Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
SECTION 10.02. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Note Guarantee and this
Article 10 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 10, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 10.03. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 10.01,
each Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President, one of its Vice Presidents or its Chief Financial Officer.
Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 10.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Note Guarantee is endorsed, the Note
Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.19 hereof, the Company shall cause such
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Subsidiaries to execute supplemental indentures to this Indenture and Note
Guarantees in accordance with Section 4.19 hereof and this Article 10, to the
extent applicable.
SECTION 10.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Except for the sale of a Guarantor by way of merger or
consolidation, this provides no Guarantor shall consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person) another Person,
whether or not affiliated with such Guarantor, unless: (i) subject to the
provisions of the following paragraph and certain other provisions of this
Indenture, the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture in form reasonably satisfactory to the
Trustee pursuant to which such Person shall unconditionally guarantee, on a
senior basis, all of such Guarantor's obligations under such Guarantor's Note
Guarantee and this Indenture on the terms set forth herein; (ii) immediately
after giving effect to such transaction, no Default or Event of Default exists;
(iii) such transaction will not result in the loss or suspension or material
impairment of any material Gaming License; and (iv) such transactions would not
require any holder of the Notes to obtain a gaming license or be qualified
under the laws of any applicable gaming jurisdiction, provided that such holder
would not have been required to obtain a gaming license or be qualified under
the laws of any applicable gaming jurisdiction in the absence of such
transactions.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
SECTION 10.05. RELEASES FOLLOWING SALE OF ASSETS.
In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor or the sale of a Guarantor, by
way of merger, consolidation or otherwise, (ii) a Restricted Subsidiary
becoming an Unrestricted Subsidiary pursuant to terms of this Indenture or
(iii) or a sale or other disposition of all of the Capital Stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the Capital Stock
of such Guarantor or the Restricted Subsidiary becomes an Unrestricted
Subsidiary pursuant to the terms of this Indenture) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) shall be released and
relieved of any obligations under its Note Guarantee; provided that (x)
immediately after giving effect to such transaction, no Default or
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Event of Default shall have occurred and be continuing or would occur as a
consequence thereof and (y) the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of this Indenture and
provided further that any Mississippi Licensee and any corporation acquiring
the property of a Mississippi Licensee (in the event of a sale or other
disposition of all or substantially all of the assets of such Mississippi
Licensee) shall not be released as provided in this sentence unless prior to
the event described in clauses (i), (ii) or (iii) above the approval of the
Mississippi Gaming Commission of the Guarantee of the Series B Notes by the
Mississippi Licensees and any restriction on the transfer of the equity
securities of the Mississippi Licensees pursuant to the Indenture has been
received.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 10.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address
If to the Company and/or any Guarantor:
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Telecopier No.: 612-449-9353
Attention: Timothy J. Cope
With a copy to:
Maslon Edelman Borman & Brand
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Telecopier No: 612-672-8377
Attention: Russell F. Lederman
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If to the Trustee:
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101-1860
Telecopier No.: 612-229-6415
Attention: Frank Leslie
The Company, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices
or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04. 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:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
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SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she 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 satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or such Guarantor under
the Notes, the Note Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
REGARD TO THE CHOICE OF LAW RULES THEREOF SUBJECT TO CERTAIN REQUIREMENTS UNDER
THE MISSISSIPPI GAMING LAWS.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
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SECTION 11.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture, in the Notes or the
Note Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
73
<PAGE> 81
SIGNATURES
Dated as of October 16, 1997
GRAND CASINOS, INC.
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS RESORTS, INC.
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC.--GULFPORT
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC.--BILOXI
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS BILOXI THEATER, INC.
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
MILLE LACS GAMING CORPORATION
BY: /s/ Timothy J. Cope
-------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
<PAGE> 82
GRAND CASINOS OF LOUISIANA, INC.--TUNICA--BILOXI
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC.--COUSHATTA
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCA ACQUISITION SUBSIDIARY, INC.
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL DEVELOPMENT CORP.
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, INC.
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, INC.
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
<PAGE> 83
GRAND CASINOS NEVADA I, INC.
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, LLC
BY: /s/ Timothy J. Cope
--------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, LLC
BY: /s/ Timothy J. Cope
---------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
FIRSTAR BANK OF MINNESOTA, N.A.
BY: /s/ Frank P. Leslie III
---------------------------------------
Name: Frank P. Leslie III
Title: Vice President
<PAGE> 84
EXHIBIT A
(Face of Note)
CUSIP 385269 AB 1
9% [Series A] [Series B] Senior Notes due 2004
No. 1 $115,000,000
GRAND CASINOS, INC.
promises to pay to Cede & Co.
or registered assigns,
the principal sum of One Hundred Fifteen Million
Dollars on October 15, 2004.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
DATED: OCTOBER 16, 1997
GRAND CASINOS, INC.
BY:
----------------------------------
Name:
Title:
(SEAL)
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
FIRSTAR BANK OF MINNESOTA, N.A.,
as Trustee
By:
------------------------------------
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<PAGE> 85
(Back of Note)
9% [Series A] [Series B] Senior Notes due 2004
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
CLAUSE 2 OF THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (2) AGREES THAT IT WILL NOT, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES
AT THE TIME OF TRANSFER OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED>
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<PAGE> 86
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Grand Casinos, Inc., a Minnesota corporation
(or any successor appointed under the Indenture, the "Company"),
promises to pay interest on the principal amount of this Note at 9% per annum
from October 16, 1997 until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi- annually on
April 15 and October 15 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and
if this Note is authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date; provided, further, that the
first Interest Payment Date shall be April 15, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of
a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons
who are registered Holders of Notes at the close of business on the April 15 or
October 15 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Firstar Bank
of Minnesota, N.A., the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
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<PAGE> 87
4. INDENTURE. The Company issued the Notes under
an Indenture dated as of October 16, 1997 (as amended from time to
time, the "Indenture") between the Company, the Guarantors and the Trustee.
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Note conflicts
with the express provisions of the Indenture, the provisions of the Indenture
shall govern and be controlling. The Notes are senior unsecured obligations of
the Company limited to $115,000,000 million in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as described below, the Notes are not
redeemable at the Company's option prior to the date set forth on such Note
(the "First Optional Redemption Date"). The First Optional Redemption Date for
the Notes being offered in the Offering shall be October 15, 2001. From and
after such First Optional Redemption Date, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on October 15 of the
years indicated below:
YEAR PERCENTAGE
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.250%
2003 and thereafter . . . . . . . . . . . . . . . . . . . 100.000%
(b) In addition, at any time prior to the First Optional
Redemption Date, the Company may, at its option, redeem the Notes, in whole or
in part, at the redemption price equal to 100% of the principal amount thereof
plus the applicable Make-Whole Premium.
(c) Notwithstanding any other provision hereof, if any
Gaming Authority requires that a holder or beneficial owner of the Notes must
be licensed, qualified or found suitable under any applicable gaming laws in
order to maintain any gaming license or franchise of the Company or any
Restricted Subsidiary under any applicable gaming laws, and the holder or
beneficial owner fails to apply for a license, qualification or finding of
suitability within 30 days after being requested to do so by the Gaming
Authority (or such lesser period that may be required by such Gaming Authority)
or if such holder or beneficial owner is not so licensed, qualified or found
suitable, the Company shall have the right, at its option, (i) to require such
holder or beneficial owner to dispose of such holder's or beneficial owner's
Notes within 30 days of such failure to comply with such requirement in a
timely manner or upon receipt of a demand for such divestiture by the
applicable Gaming Authority (or such earlier date as may be required by the
applicable Gaming Authority) or (ii) to call for redemption of the Notes of
such holder or beneficial owner at a redemption price equal to the lesser of
the principal amount thereof, the price at which such holder or beneficial
owner acquired the Notes or the fair market value thereof, together with, in
either case, accrued and unpaid interest and Liquidated Damages, if any, to the
earlier of the date of redemption or, the date of the finding of unsuitability
by such Gaming Authority, which may be less than 30 days following the notice
of redemption if so ordered by such Gaming Authority. In connection with any
such redemption, and except as may be required by a Gaming Authority, the
Company shall comply with the procedures contained in the Notes for redemptions
of the Notes. Under this Indenture, the Company is not required to pay or
reimburse
A-4
<PAGE> 88
any holder of the Notes or beneficial owner who is required to apply for such
license, qualification or finding of suitability for the costs or fees of the
licensure or investigation for such qualification or finding of suitability.
Such expenses will, therefore, be the obligation of such holder or beneficial
owner.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase (in either case, the "Change of Control Payment").
Within 10 days following any Change of Control, the Company shall mail a notice
to each Holder setting forth the procedures governing the Change of Control
Offer as required by the Indenture.
(b) If the Company or any Restricted Subsidiary
consummates any Asset Sales, within five days of each date on which the
aggregate amount of Excess Proceeds exceeds $5 million, the Company shall
commence an offer to all Holders of Notes (as "Asset Sale Offer") pursuant to
Section 3.09 of this Indenture to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to the date fixed
for the closing of such offer, in accordance with the procedures set forth in
the Indenture. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related purchase
date and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in this Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
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<PAGE> 89
10. PERSONS DEEMED OWNERS. The registered Holder of a
Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes. Without the consent of any Holder of a
Note, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to comply with the
covenant relating to mergers, consolidations and sales of assets to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or Guarantor's obligations to
Holders of the Notes in case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of the
Notes (including providing for additional Note Guarantees pursuant to the
Indenture) or that does not adversely affect the legal rights under the
Indenture of any such Holder, to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Event of Defaults include:
(i) default in payment when due and payable, upon redemption or otherwise, of
principal or premium, if any, on any Note or under any Note Guarantee; (ii)
default for 30 days or more in the payment when due of interest on, or
Liquidated Damages with respect to, any Note or under any Note Guarantee; (iii)
failure by the Company or any Guarantor to offer to purchase, or to purchase
the Notes when required under an offer made pursuant to the Indenture; (iv)
failure by the Company or any Guarantor to comply with the Sections 4.07, 4.09,
4.10 or 4.15 of the Indenture; (v) failure by the Company or any Guarantor for
60 days after receipt of written notice to comply with any of its other
agreements in the Indenture, or the Notes; (vi) default under any mortgage,
indenture or instrument under which there is issued or by which there is
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries (other than Indebtedness owed to
the Company or a Restricted Subsidiary), whether such Indebtedness or Guarantee
now exists or is created after the Issuance Date, which default (a) is caused
by a failure to pay when due principal of or premium, if any, or interest on
such Indebtedness prior to the expiration of the grace period provided in such
Indebtedness (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity or would constitute a default in the
payment of such issue of Indebtedness at final maturity of such issue and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which a Payment Default
then exists or with respect to which the maturity thereof has been so
accelerated or that has not been paid at maturity, aggregates $15.0 million or
more; (vii) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $15.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more than 60
days; (viii) material breach by the Company, any Guarantor or any of their
Subsidiaries of any representation or warranty set forth in any Note Guarantee
or default by the Company or any Guarantor in the performance of any covenant
set forth in any Note Guarantee which continues for 60 days after notice
thereof, or the repudiation by the Company, any Guarantor or any of their
Subsidiaries of its obligations under, or any judgment or decree by a court or
governmental agency of competent jurisdiction declaring the unenforceability
of, any Note Guarantee for any reason that would materially impair the benefits
to the Trustee or the holders of the Notes thereunder; (ix) certain events of
bankruptcy or insolvency with respect to the Company or any Guarantor that is a
Significant Subsidiary of the Company or any group of Guarantors that together
would constitute a
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<PAGE> 90
Significant Subsidiary of the Company; (x) revocation, termination, suspension
or other cessation of effectiveness of any Gaming License which results in the
cessation or suspension of gaming operations at any Existing Casino that
results in Consolidated Cash Flow at the end of any four consecutive fiscal
quarters being less than 80% of the Consolidated Cash Flow for the four
consecutive fiscal quarters prior to such revocation, termination, suspension
or other cessation of effectiveness of such Gaming License or (xi) prior to the
approval of the Mississippi Gaming Commission of the Offering of the Guarantee
of the Series B Notes by the Mississippi Licensees and any restriction on the
transfer of the equity securities of the Mississippi Licenses pursuant to this
Indenture, the transfer of equity securities of any Mississippi Licensee.
If any Event of Default (other than by reason of bankruptcy or
insolvency) occurs and is continuing, the Trustee or the holders of at least
25% in principal amount of the then outstanding Notes may declare the
principal, premium, if any, interest and Liquidated Damages and any other
monetary obligations on all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company or any
Guarantor, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Note Indenture or
the Notes except as provided in the Note Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. In addition, the Trustee shall have no obligation to accelerate the
Notes if in the best judgment of the Trustee acceleration is not in the best
interest of the holders of the Notes. The Company is required to deliver to
the Trustee annually a statement regarding compliance with the Indenture, and
the Company is required upon becoming aware of any Default or Event of Default,
to deliver to the Trustee a statement specifying such Default or Event of
Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. No director, officer,
employee, incorporator or stockholder of the Company or the Guarantors, as
such, shall have any liability for any obligations of the Company or the
Guarantors under the Notes, any Note Guarantee or the Indenture, as applicable,
or for any claim based on, in respect of, or by reason of such obligations or
their creation. Each holder of the Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Note Guarantees. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the SEC that such a waiver is against public policy.
15. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. ABBREVIATIONS. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
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17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of October 16, 1997, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
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<PAGE> 92
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota
55305 Attention: Timothy J. Cope
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<PAGE> 93
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
________________________________________________________________________________
Date:_____________
Your Signature:_____________________
(Sign exactly as your name appears
on the face of this Note)
SIGNATURE GUARANTEE
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<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date: __________ Your Signature: __________________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No:____________________________
Signature Guarantee
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<PAGE> 95
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(1)
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase following such authorized officer
in Principal Amount in Principal Amount decrease (or of Trustee or Note
Date of Exchange of this Global Note of this Global Note increase) Custodian
- ---------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------
(1) This should be included only if the Note is issued in global form.
A-12
<PAGE> 96
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Firstar Bank of Minnesota, N.A.
101 East 5th Street
St. Paul, Minnesota 55101-1860
Re: 9% Senior Notes due 2004
Reference is hereby made to the Indenture, dated as of October 16,
1997 (the "Indenture"), between Grand Casinos, Inc., as issuer (the "Company"),
the Guarantors thereto and Firstar Bank of Minnesota, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in this Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE\
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of this Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no
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directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act. Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of this Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in this Indenture and the Securities Act.
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4. [ ] Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in this Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in this Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
this Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of this Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in this
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i)
The Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule 144,
Rule 903 or Rule 904 and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in this Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
------------------------------------
[Insert Name of Transferor]
By:
---------------------------------
Name:
Title:
Dated:
---------------------
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<PAGE> 99
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ______), or
(ii) [ ] Regulation S Global Note (CUSIP _______), or
(iii) [ ] IAI Global Note (CUSIP _______); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP _______), or
(iii) [ ] IAI Global Note (CUSIP _______); or
(iv) [ ] Unrestricted Global Note (CUSIP ______); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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<PAGE> 100
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Firstar Bank of Minnesota
101 East 5th Street
St. Paul, Minnesota 55101-1860
Re: 9% Senior Notes due 2004
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of October 16, 1997
(the "Indenture"), between Grand Casinos, Inc., as issuer (the "Company"), the
Guarantors thereto and Firstar Bank of Minnesota, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
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<PAGE> 101
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, and in compliance with any applicable blue
sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
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<PAGE> 102
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By: _______________________________
Name:
Title:
Dated: _________________
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<PAGE> 103
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Firstar Bank of Minnesota
101 East 5th Street
St. Paul, Minnesota 55101-1860
Re: 9% Senior Notes due 2004
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of October 16, 1997
(the "Indenture"), between Grand Casinos, Inc., as issuer (the "Company"), the
Guarantors thereto and Firstar Bank of Minnesota, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest
therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which
we are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and
to the Company a signed letter substantially
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<PAGE> 104
in the form of this letter and, if such transfer is in respect of a principal
amount of Notes, at the time of transfer of less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Notes, and
we and any accounts for which we are acting are each able to bear the economic
risk of our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
________________________________________
[Insert Name of Accredited Investor]
By: ____________________________
Name:
Title:
Dated: ___________________
D-2
<PAGE> 105
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
Subject to Article 10 of the Indenture, and subject to the receipt of
requisite approvals from the Mississippi Gaming Commission with respect to the
issuance of Note Guarantees by the Mississippi Licensees with respect to the
Series B Notes, each Guarantor listed on the signature lines set forth below
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and made available for delivery by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Notes and the Obligations of the Company
under the Notes or under the Indenture, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly
paid in full when due, subject to any applicable grace period, whether at
maturity, by acceleration, redemption or otherwise, and interest on overdue
principal, premium, if any, (to the extent permitted by law) interest on any
interest, if any, and Liquidated Damages, if any, on the Notes and all other
payment Obligations of the Company to the Holders or the Trustee under the
Indenture or under the Notes will be promptly paid in full and performed, all
in accordance with the terms thereof; and (b) in case of any extension of time
of payment or renewal of any Notes or any of such other payment Obligations,
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when so due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately.
The obligations of the Guarantors to the Holders and to the Trustee
pursuant to this Note Guarantee and the Indenture are expressly set forth in
Article 10 of the Indenture, and reference is hereby made to such Indenture for
the precise terms of this Note Guarantee. The terms of Article 10 of the
Indenture is incorporated herein by reference. This Note Guarantee is subject
to release as and to the extent provided in Section 10.05 of the Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Guarantor and its respective successors and
assigns to the extent set forth in the Indenture until full and final payment
of all of the Company's Obligations under the Notes and the Indenture and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a guarantee of payment and
not a guarantee of collection.
This Note Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Note upon which this Note Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized signatories.
For purposes hereof, each Guarantor's liability shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under the
Notes and the Indenture and (ii) the amount, if any, which would not have (A)
rendered such Guarantor "insolvent" (as such term is defined in the United
States Bankruptcy Code and in the Debtor and Creditor Law of the State of New
York) or (B) left such Guarantor with unreasonably small capital at the time
its Note Guarantee of the Notes was entered into; provided that, it will be a
presumption in any lawsuit or other proceeding in which a
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<PAGE> 106
Guarantor is a party that the amount guaranteed pursuant to the Note Guarantee
is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of such Guarantor, or debtor in possession or
trustee in bankruptcy of such Guarantor, otherwise proves in such a lawsuit that
the aggregate liability of the Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors and any other rights such Guarantor may have, contractual or
otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture dated October 16, 1997, among Grand Casinos, Inc., each of the
Guarantors listed below and Firstar Bank of Minnesota, N.A., as trustee, unless
otherwise indicated.
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<PAGE> 107
Grand Casinos Resorts, Inc.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
Grand Casinos of Mississippi,
Inc.--Gulfport
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
Grand Casinos of Mississippi,
Inc.--Biloxi
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
Grand Casinos Biloxi Theater, Inc.
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
Mille Lacs Gaming Corporation
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
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<PAGE> 108
Grand Casinos of Louisiana,
Inc.--Tunica--Biloxi
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
Grand Casinos of Louisiana,
Inc.--Coushatta
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GCA Acquisition Subsidiary, Inc.
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL Development Corp.
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL Resorts I, Inc.
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG Resorts I, Inc.
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
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<PAGE> 109
Grand Casinos Nevada I, Inc.
By: _________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
BL Resorts I, LLC
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG Resorts I, LLC
By: __________________________________
Name: Timothy J. Cope
Title: Chief Financial Officer
F-5
<PAGE> 110
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Grand Casinos, Inc. (or its permitted successor), a Minnesota
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and Firstar Bank of Minnesota, N.A., as
trustee under the Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of October 16, 1997 providing for the
issuance of an aggregate principal amount of up to $115,000,000 of 9% Senior
Notes due 2004 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. Subject to compliance with applicable
gaming laws, the Guaranteeing Subsidiary hereby agrees as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and
assigns, irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of the Company hereunder
or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal
of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and
thereof; and
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<PAGE> 111
(ii) in case of any extension of time of payment or renewal
of any Notes or any of such other obligations, that same
will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or
any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to
pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of
the Notes or the Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the
Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or
defense of a guarantor.
(c) The following is hereby waived: 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, protest, notice and
all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in
the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court or other
wise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall 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.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from
any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Guarantee.
F-2
<PAGE> 112
(i) Pursuant to Section 10.02 of the Indenture, after
giving effect to any maximum amount and any other contingent
and fixed liabilities that are relevant under any applicable
Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under
Article 10 of the Indenture shall result in the obligations of
such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees
that the Note Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with
such Guarantor unless:
(i) subject to Section 10.04 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other
than a Guarantor) assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such
Person shall unconditionally guarantee, on a senior basis, all
of the Guarantor's obligations, under such Guarantor's Note
Guarantee and the Indenture on the terms set forth herein or
therein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default exists;
(iii) such transaction will not result in the loss or
suspension or material impairment of any material Gaming
License; and
(iv) such transactions would not require any holder of
the Notes to obtain a gaming license or be qualified under the
laws of any applicable gaming jurisdiction, provided that such
holder would not have been required to obtain a gaming license
or be qualified under the laws of any applicable gaming
jurisdiction in the absence of such transactions.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in
form to the Trustee, of the Note Guarantee endorsed upon the Notes
and the due and punctual performance of all of the covenants and
conditions of the Indenture to be performed by the Guarantor, such
successor Person shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a
Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Note Guarantees theretofore
and thereafter
F-3
<PAGE> 113
issued in accordance with the terms of the Indenture as though all
of such Note Guarantees had been issued at the date of the execution
hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the
Indenture or in any of the Notes shall prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor,
or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
5. Releases.
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor or the sale of a
Guarantor, by way of merger, consolidation or otherwise, (ii) a
Restricted Subsidiary becoming an Unrestricted Subsidiary pursuant
to the terms of the Indenture or (iii) a sale or other disposition
of all to the Capital Stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the Capital Stock of such
Guarantor or the Restricted Subsidiary becomes an Unrestricted
Subsidiary pursuant to the terms of the Indenture) or the
corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under
its Note Guarantee; provided that (x) immediately after giving
effect to such transaction no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof
and (y) the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the
Indenture and provided further that any Mississippi Licensee and any
corporation acquiring the property of a Mississippi Licensee (in the
event of a sale or other disposition of all or substantially all of
the assets of such Mississippi Licensee) shall not be released as
provided in this sentence unless prior to the event described in
clauses (i), (ii) or (iii) above the approval of the Mississippi
Gaming Commission of this Offering of Notes has been received.
(b) Any Guarantor not released from its obligations under its
Note Guarantee shall remain liable for the full amount of principal
of and interest on the Notes and for the other obligations of any
Guarantor under the Indenture as provided in Article 10 of the
Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary,
as such, shall have any liability for any obligations of the Company or any
Guaranteeing Subsidiary under the Notes, any Note Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT REGARD
TO THE CHOICE OF LAW RULES THEREOF SUBJECT TO CERTAIN REQUIREMENTS UNDER THE
MISSISSIPPI GAMING LAWS.
F-4
<PAGE> 114
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10 THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
F-5
<PAGE> 115
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[Guaranteeing Subsidiary]
By: ________________________________
Name:
Title:
[COMPANY]
By: ________________________________
Name:
Title:
[EXISTING GUARANTORS]
By: ________________________________
Name:
Title
[TRUSTEE]
as Trustee
By: ________________________________
Name:
Title:
<PAGE> 116
SCHEDULE I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of the
Issue Date:
1. GRAND CASINOS RESORTS, INC.
2. GRAND CASINOS OF MISSISSIPPI, INC.--GULFPORT
3. GRAND CASINOS OF MISSISSIPPI, INC.--BILOXI
4. GRAND CASINOS BILOXI THEATER, INC.
5. MILLE LACS GAMING CORPORATION
6. GRAND CASINOS OF LOUISIANA, INC.--TUNICA--BILOXI
7. GRAND CASINOS OF LOUISIANA, INC.--COUSHATTA
8. GCA ACQUISITION SUBSIDIARY, INC.
9. BL DEVELOPMENT CORP.
10. BL RESORTS I, INC.
11. GCG RESORTS I, INC.
12. GRAND CASINOS NEVADA I, INC.
13. BL RESORTS I, LLC
14. GCG Resorts I, LLC
<PAGE> 1
EXHIBIT 4.3
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as October 16, 1997
by and among
GRAND CASINOS, INC.
GRAND CASINOS RESORTS, INC.
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
GRAND CASINOS BILOXI THEATER, INC.
MILLE LACS GAMING CORPORATION
GRAND CASINOS OF LOUISIANA, INC. - TUNICA--BILOXI
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
BL DEVELOPMENT CORP.
BL RESORTS I, INC.
GCG RESORTS I, INC.
GRAND CASINOS NEVADA I, INC.
BL RESORTS I, LLC
GCG RESORTS I, LLC
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of October 16, 1997, by and among Grand Casinos, Inc., a Minnesota
corporation (the "Company"), each of the entities listed on Schedule A hereto,
(each a "Guarantor" and collectively the "Guarantors"), and Donaldson, Lufkin &
Jenrette Securities Corporation (the "Initial Purchaser") who has agreed to
purchase the Company's 9% Series A Senior Notes due 2004 (the "Series A Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated October 13,
1997, (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchaser. In order to induce the Initial Purchaser to purchase
the Series A Notes, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 3 of
the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them the Indenture, dated October
16, 1997, between the Company and Firstar Bank of Minnesota, N.A., as Trustee,
relating to the Series A Notes and the Series B Notes (the "Indenture").
The parties hereby agree as follows:
SECTION
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the
Indenture.
Closing Date : The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) the
maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the period required pursuant to Section 3(b) hereof and (iii) the delivery by
the Company to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
tendered by Holders thereof pursuant to the Exchange Offer.
<PAGE> 3
Effectiveness Deadline: As defined in Sections 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal
amount of Series A Notes that are tendered by such Holders in connection with
such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Series A Notes to certain "qualified institutional buyers,
" as such term is defined in Rule 144A under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Notes: The Series A Notes and the Series B Notes.
Prospectus: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
<PAGE> 4
Restricted Broker-Dealer: Any Broker-Dealer that holds Series B Notes
that were acquired in the Exchange Offer in exchange for Series A Notes that
such Broker-Dealer acquired for its own account as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its affiliates).
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 9% Series B Senior Notes due 2004 to be
issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which
such Note has been disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Note is disposed of by a Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein)
or (d) the date on which such Note is distributed to the public pursuant to
Rule 144 under the Act.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
1. Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date (the "Exchange Offer Filing Date"), but in
no event later than 30 days after the Closing Date (such 30th day being the
"Filing Deadline"), (ii) use its best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but
in no event later than 120 days after the Closing Date (such 120th day being
the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be necessary in order to cause it to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes to be made under the
<PAGE> 5
Blue Sky laws of such jurisdictions as are necessary to permit Consummation of
the Exchange Offer, (iv) make all requisite filings with gaming authorities and
obtain all requisite gaming approvals, and (v) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit resales of Series B
Notes by Broker-Dealers that tendered into the Exchange Offer for Series A
Notes that such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) as contemplated by
Section 3(c) below.
2. The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event
shall such period be less than 20 Business Days. The Company and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities and gaming laws. No securities other than the Series B
Notes shall be included in the Exchange Offer Registration Statement. The
Company and the Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
3. The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Broker-Dealer who holds Transfer Restricted
Securities that were acquired for the account of such Broker-Dealer as a result
of market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company or any Affiliate of
the Company), may exchange such Transfer Restricted Securities pursuant to the
Exchange Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any Series B Notes received by such Broker-Dealer in the Exchange Offer
and that the Prospectus contained in the Exchange Offer Registration Statement
may be used to satisfy such prospectus delivery requirement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter
(available July 2, 1993).
To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker- Dealers, the
Company and the Guarantors agree to use their respective best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) hereof and in
<PAGE> 6
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the date on which the Exchange Offer is Consummated, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold pursuant thereto. The
Company and the Guarantors shall promptly provide sufficient copies of the
latest version of such Prospectus to such Broker-Dealers promptly upon request,
and in no event later than one day after such request, at any time during such
period.
SECTION 4. SHELF REGISTRATION
1. Shelf Registration. If (i) the Exchange Offer is not
permitted by applicable law (after the Company and the Guarantors have complied
with the procedures set forth in Section 6(a)(i) below) or (ii) if any Holder
of Transfer Restricted Securities shall notify the Company within 20 Business
Days following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors, subject to compliance with
applicable laws, shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i)
the date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "Filing Deadline"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "Shelf Registration Statement")), relating to
all Transfer Restricted Securities; and
(y) make all requisite gaming filings and receive all requisite gaming
approvals; and
(z) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 120 days after the
Filing Deadline (such 90th day the "Effectiveness Deadline").
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law, then
the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above; provided that, in such event, the
Company shall remain obligated to meet the Effectiveness Deadline set forth in
clause (y).
The Company and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent
<PAGE> 7
necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from
time to time, for a period of at least two years (as extended pursuant to
Section 6(c)(ii)) following the date on which such Shelf Registration Statement
first becomes effective under the Act, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto.
2. Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
<PAGE> 8
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Exchange Offer Registration Statement is first declared effective by the
Commission or (iv) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter cease to be effective or fail
to be usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then the Company and
the Guarantors hereby jointly and severally agree to pay to each Holder of
Transfer Restricted Securities affected thereby Liquidated Damages in an amount
equal to $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
Liquidated Damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay Liquidated Damages for more
than one Registration Default at any given time. Notwithstanding anything to
the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the
Exchange Offer
<PAGE> 9
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the Liquidated Damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture,
on each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer
Restricted Security shall survive until such time as all such obligations with
respect to such Transfer Restricted Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
1. Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and shall comply
with all of the following provisions:
7. If, following the date hereof there has been
announced a change in Commission policy with respect to exchange
offers such as the Exchange Offer, that in the reasonable opinion of
counsel to the Company raises a substantial question as to whether the
Exchange Offer is permitted by applicable federal law, the Company and
the Guarantors hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Company and the Guarantors hereby agree to
pursue the issuance of such a decision to the Commission staff level.
In connection with the foregoing, the Company and the Guarantors
hereby agree to take all such other actions as may be requested by the
Commission or otherwise required in connection with the issuance of
such decision, including without limitation (A) participating in
telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff.
<PAGE> 10
8. As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker Dealer) shall furnish,
upon the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company and the
Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of
the Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. Each
Holder using the Exchange Offer to participate in a distribution of
the Series B Notes hereby acknowledges and agrees that, if the resales
are of Series B Notes obtained by such Holder in exchange for Series A
Notes acquired directly from the Company or an Affiliate thereof, it
(1) could not, under Commission policy as in effect on the date of
this Agreement, rely on the position of the Commission enunciated in
Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including, if applicable,
any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements
of the Act in connection with a secondary resale transaction and that
such a secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
9. Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Company and
the Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and, if applicable,
any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that neither the Company nor any Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information
and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and
has no arrangement or understanding with any Person to participate in
the distribution of the Series B Notes received in the Exchange Offer
and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above, if applicable.
1. Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all
the provisions of Section 6(c) below and
<PAGE> 11
shall use their respective best efforts to effect such registration to permit
the sale of the Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Guarantors will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.
2. General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Company
and the Guarantors shall:
10. use their respective best efforts to comply with all
applicable gaming laws, make all requisite filings under applicable
gaming laws and receive all requisite approvals for any related
offerings.
11. use their respective best efforts to keep such
Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3
or 4 of this Agreement, as applicable. Upon the occurrence of any
event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement,
the Company and the Guarantors shall file promptly an appropriate
amendment to such Registration Statement curing such defect, and, if
Commission review is required, use their respective best efforts to
cause such amendment to be declared effective as soon as practicable.
12. prepare and file with the Commission such amendments
and post-effective amendments to the applicable Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case
may be; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
13. advise the selling Holders promptly and, if requested
by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to any applicable Registration
Statement or any post-effective amendment thereto, when the same has
become effective, (B) of any request by the Commission for amendments
to the Registration Statement or
<PAGE> 12
amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement under the Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions
to or changes in the Registration Statement in order to make the
statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company and the
Guarantors shall use their respective best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
14. subject to Section 6(c)(ii), if any fact or event
contemplated by Section 6(c)(iv)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
15. upon request, furnish to the Initial Purchaser and
each selling Holder named in any Registration Statement or Prospectus
in connection with such sale, if any, before filing with the
Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review
and comment of such Holders in connection with such sale, if any, for
a period of at least five Business Days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which the selling
Holders of the Transfer Restricted Securities covered by such
Registration Statement in connection with such sale, if any, shall
reasonably object within five Business Days after the receipt thereof.
A selling Holder shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a
material misstatement or omission or fails to comply with the
applicable requirements of the Act;
<PAGE> 13
16. upon request, promptly prior to the filing of any
document that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to the
selling Holders in connection with such sale, if any, make the
Company's and the Guarantors' representatives available for discussion
of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof
as such selling Holders may reasonably request;
17. make available at reasonable times for inspection by
the selling Holders participating in any disposition pursuant to such
Registration Statement and any attorney or accountant retained by such
selling Holders, all financial and other records, pertinent corporate
documents of the Company and the Guarantors and cause the Company's
and the Guarantors' officers, directors and employees to supply all
information reasonably requested by any such selling Holder, attorney
or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness.
18. if requested by any selling Holders in connection
with such sale, if any, promptly include in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders may reasonably
request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
19. upon request, furnish to each selling Holder in
connection with such sale, if any, without charge, at least one copy
of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
20. deliver to each selling Holder, without charge, as
many copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such Persons reasonably may
request; the Company and the Guarantors hereby consent to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
21. upon the request of any selling Holder and subject to
receipt of requisite gaming approvals, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of the Transfer
Restricted
<PAGE> 14
Securities pursuant to any applicable Registration Statement contemplated by
this Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities in connection with any sale or resale pursuant to any
applicable Registration Statement and in such connection, the Company and the
Guarantors shall:
(A) upon request of any selling Holder, furnish (or in
the case of paragraphs (2) and (3), use its best efforts to cause
to be furnished) to each selling Holder, upon the effectiveness of
the Shelf Registration Statement or upon Consummation of the
Exchange Offer, as the case may be:
(1) (1) a certificate, dated such date, signed
on behalf of the Company and each Guarantor by (x) the
President or any Vice President and (y) a principal financial
or accounting officer of the Company and such Guarantor,
confirming, as of the date thereof, the matters set forth in
paragraphs (a) through (c) of Section 9 of the Purchase
Agreement and such other similar matters as the selling
Holders may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer, or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors covering matters similar to those
set forth in paragraph (e) of Section 9 of the Purchase
Agreement and such other matter as the selling Holders may
reasonably request, and in any event including a statement to
the effect that such counsel has participated in conferences
with officers and other representatives of the Company and the
Guarantors, representatives of the independent public accounts
for the Company and the Guarantors, at which conferences the
contents of the Registration Statement and the related
Prospectus and related matters were discussed and, although
such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of
the statements contained therein, and have not made any
independent check or verification thereof during the course of
such participation (relying as to materiality to a large
extent upon the statements of officers and other
representatives of the Company and the Guarantors), no facts
came to such counsel's attention that caused such counsel to
believe that any Registration Statement or the related
Prospectus contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or
that the Registration Statement or the related Prospectus, as
of its date and the date thereof, contained an untrue
statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it
being understood that such counsel expresses no belief with
respect to the financial statements and notes thereto,
schedules, financial forecasts, notes and assumptions thereto
and other financial and statistical data included in any
Registration Statement or the related Prospectus.; and
<PAGE> 15
(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the case
may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 9(j) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may
be reasonably requested by the selling Holders to evidence
compliance with clause (A) above and with any customary conditions
contained in the any agreement entered into by the Company and the
Guarantors pursuant to this clause (xii);
22. prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided, however, that neither
the Company nor any Guarantor shall be required to register or qualify
as a foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
23. issue, upon the request of any Holder of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement and subject to compliance with applicable gaming laws,
Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such
Holder; such Series B Notes to be registered in the name of such
Holder or in the name of the purchaser(s) of such Series B Notes, as
the case may be; in return, the Series A Notes held by such Holder
shall be surrendered to the Company for cancellation;
24. in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
25. use their respective best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or
<PAGE> 16
approved by such other governmental agencies or authorities as
may be necessary to enable the seller or sellers thereof to consummate
the disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xii) above;
26. provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with
the Depository Trust Company;
27. otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission,
and make generally available to its security holders with regard to
any applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term
is defined in paragraph (c) of Rule 158 under the Act);
28. upon request, make appropriate officers of the
Company available to the selling Holders for meetings with
prospective purchasers of the Transfer Restricted Securities and
prepare and present to potential investors customary "road show"
material in a manner consistent with other new issuances of other
securities similar to the Transfer Restricted Securities;
29. cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration
Statement required by this Agreement and, in connection therewith,
cooperate with the Trustee and the Holders to effect such changes to
the Indenture as may be required for such Indenture to be so qualified
in accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to
be so qualified in a timely manner; and
30. provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements
of Section 13 or Section 15(d) of the Exchange Act.
1. Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred
to in Section 6(c)(ii) or any notice from the Company of the existence of any
fact of the kind described in Section 6(c)(iv)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder's has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(v) hereof, or (ii) such Holder
is advised in writing by the Company that the use of the Prospectus may
<PAGE> 17
be resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus (in each case, the
"Recommencement Date"). Each Holder receiving a Suspension Notice hereby
agrees that it will either (i) destroy any Prospectuses, other than permanent
file copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (ii) deliver to the Company
(at the Company's expense) all copies, other than permanent file copies, then
in such Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice.
The time period regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended by a number of
days equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 31. REGISTRATION EXPENSES
1. All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company, the Guarantors and the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing the Series B Notes on a national securities exchange
or automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
2. In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the purchasers and the Holders of Transfer Restricted Securities
being tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 32. INDEMNIFICATION
<PAGE> 18
1. The Company and the Guarantors agree, jointly and severally,
to indemnify and hold harmless (i) each Holder and (ii) each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), from
and against any and all losses, claims, damages, liabilities, judgments,
(including without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, preliminary prospectus
or Prospectus (or any amendment or supplement thereto) provided by the Company
to any holder or any prospective purchaser of Series B Notes, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by an untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to any of the Holders
furnished in writing to the Company by any of the Holders.
2. Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and the
Guarantors, and their respective directors and officers, and each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) the Company, or the Guarantors to the same extent as the
foregoing indemnity from the Company and the Guarantors to each of the
Indemnified Holders, but only with reference to information relating to such
Indemnified Holder furnished in writing to the Company by such Indemnified
Holder expressly for use in any Registration Statement. In no event shall any
Indemnified Holder be liable or responsible for any amount in excess of the
amount by which the total amount received by such Indemnified Holder with
respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Indemnified Holder
for such Transfer Restricted Securities and (ii) the amount of any damages that
such Indemnified Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
3. In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), an Indemnified Holder shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Indemnified
<PAGE> 19
Holder). Any indemnified party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Indemnified Holders, in the case of
the parties indemnified pursuant to Section 8(a), and by the Company, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any
and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
4. To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Holders, on the other
hand, from their sale of Transfer Restricted Securities or (ii) if the
allocation provided by clause 8(d)(i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
and the Guarantors, on the one hand, and of the Indemnified Holder, on the
other hand,
<PAGE> 20
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the
Guarantors, on the one hand, and of the Indemnified Holder, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or such
Guarantor, on the one hand, or by the Indemnified Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and judgments referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 8(a), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Holder or its related Indemnified Holders shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of its Transfer
Restricted Securities pursuant to a Registration Statement exceeds the sum of
(A) the amount paid by such Holder for such Transfer Restricted Securities plus
(B) the amount of any damages which such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each of the Holders hereunder and not joint.
SECTION 33. RULE 144A
The Company and each Guarantor hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor is not subject to Section 13 or
15(d) of the Securities Exchange Act, to make available, upon request of any
Holder of Transfer Restricted Securities, to any Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
<PAGE> 21
SECTION 34. MISCELLANEOUS
1. Remedies. The Company and the Guarantors acknowledge and
agree that any failure by the Company and/or the Guarantors to comply with
their respective obligations under Sections 3 and 4 hereof may result in
material irreparable injury to the Initial Purchaser or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchaser or any Holder may obtain such relief as may be required
to specifically enforce the Company's and the Guarantors' obligations under
Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would
be adequate.
2. No Inconsistent Agreements. Neither the Company nor any
Guarantor will, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any Guarantor has previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to
the holders of the Company's and the Guarantors' securities under any agreement
in effect on the date hereof.
3. Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case
of Section 5 hereof and this Section 10(c)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities
and (ii) in the case of all other provisions hereof, the Company has obtained
the written consent of Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities (excluding Transfer Restricted
Securities held by the Company of its Affiliates). Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect directly or
indirectly the rights of other Holders whose securities are not being tendered
pursuant to such Exchange Offer may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
4. Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
<PAGE> 22
5. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:
35. if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
36. if to the Company or the Guarantors:
Grand Casinos, Inc.
130 Cheshire Lane
Minneapolis, MN 55305
Telecopier No.: (612) 449-9353
Attention: Timothy J. Cope
With a copy to:
Maslon Edelman Borman & Brand LLP
3300 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4140
Telecopier No.:(612) 672-8397
Attention: Russell F. Lederman
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation, (in the form attached hereto as Exhibit A) and
shall be addressed to: Attention: Louise Guernari (Compliance Department), 277
Park Avenue, New York, New York 10172.
1. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Indenture. If any transferee of any Holder
shall acquire Transfer Restricted Securities in any manner, whether by
operation of law or otherwise, such Transfer Restricted Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Transfer Restricted
<PAGE> 23
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
2. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
3. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF SUBJECT TO APPLICABLE GAMING LAWS.
5. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
6. Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
GRAND CASINOS, INC.
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS RESORTS, INC.
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF MISSISSIPPI, INC.-- BILOXI
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS BILOXI THEATER, INC.
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
<PAGE> 25
MILLE LACS GAMING CORPORATION
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. - TUNICA --BILOXI
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCA ACQUISITION SUBSIDIARY, INC.
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL DEVELOPMENT CORP.
By: /s/ Timothy J. Cope
--------------------------------------------
Name: Timothy J. Cope
<PAGE> 26
Title: Chief Financial Officer
BL RESORTS I, INC.
By: /s/ Timothy J. Cope
------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCC RESORTS I, INC.
By: /s/ Timothy J. Cope
------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GRAND CASINOS NEVADA I, INC.
By: /s/ Timothy J. Cope
------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
BL RESORTS I, LLC
By: /s/ Timothy J. Cope
------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
GCG RESORTS I, LLC
By: /s/ Timothy J. Cope
------------------------------------------
Name: Timothy J. Cope
Title: Chief Financial Officer
<PAGE> 27
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Tyler Wolfram
--------------------------------------------
Name: Tyler Wolfram
Title: Vice President
<PAGE> 28
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guernari (Compliance Department)
Fax: (212) 892-7272
From: Grand Casinos, Inc.
$115,000,000 Senior Notes due 2004
Date:___, 199_
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed [an A/B Exchange Registration
Statement/a Shelf Registration Statement] with the Securities and Exchange
Commission. We currently expect this registration statement to be declared
effective within __ business days of the date hereof.
<PAGE> 29
SCHEDULE A
Grand Casinos Resorts, Inc.
Grand Casinos of Mississippi, Inc. - Gulfport
Grand Casinos of Mississippi, Inc. - Biloxi
Grand Casinos Biloxi Theater, Inc.
Mille Lacs Gaming Corporation
Grand Casinos of Louisiana, Inc. - Tunica --Biloxi
Grand Casinos of Louisiana, Inc. - Coushatta
BL Development Corp.
BL Resorts I, Inc.
GCG Resorts I, Inc.
Grand Casinos Nevada I, Inc.
BL Resorts I, LLC
GCG Resorts I, LLC
<PAGE> 1
[MASLON EDELMAN BORMAN & BRAND, LLP LETTERHEAD]
October 29, 1997
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
Ladies and Gentlemen:
We have acted on behalf of Grand Casinos, Inc., a Minnesota
corporation (the "Company") in connection with the preparation of a Registration
Statement on Form S-4 (the "Registration Statement"), filed by the Company
with the Securities and Exchange Commission on October 29, 1997 relating
to an offer to exchange (the "Exchange Offer") all of the Company's 9% Series A
Senior Notes due 2004 for the Company's 9% Series B Senior Notes due 2004
(the "New Notes").
Upon examination of such corporate documents and records as we have
deemed necessary or advisable for the purposes hereof and including and in
reliance upon certain certificates by the Company, it is our opinion that:
1. The Company and each corporate Guarantor is a validly existing
corporation in good standing under the laws of the State of Minnesota.
2. The New Notes have been duly authorized, and when properly
exchanged in accordance with the terms of the Exchange Offer, will be validly
issued and fully paid.
3. Upon issuance in accordance with the Exchange Offer, the New
Notes will be binding obligations of the Company, and the guarantees of the New
Notes by the Guarantors will be a binding obligation of each Guarantor, subject
to and limited by the effect of (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereinafter
in effect relating to or affecting creditors' rights, (ii) general principles
of equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing (whether considered at law or in equity) and (iii)
federal or state securities laws or regulations or public policy that may
limit rights to indemnification.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the references to our firm under the heading "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ Maslon Edelman Borman & Brand,
a Limited Liability Partnership
<PAGE> 1
EXHIBIT 10.1
GRAND CASINOS, INC.
$115,000,000 9% SERIES A SENIOR NOTES DUE 2004
PAYMENT OF PRINCIPAL AND INTEREST UNCONDITIONALLY
GUARANTEED BY
GRAND CASINOS RESORTS, INC.
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
GRAND CASINOS BILOXI THEATER, INC.
MILLE LACS GAMING CORPORATION
GRAND CASINOS OF LOUISIANA, INC. - TUNICA--BILOXI
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
GCA ACQUISITION SUBSIDIARY, INC.
BL DEVELOPMENT CORP.
BL RESORTS I, INC.
GCG RESORTS I, INC.
GRAND CASINOS NEVADA I, INC.
BL RESORTS I, LLC
GCG RESORTS I, LLC
Purchase Agreement
October 9, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE> 2
$115,000,000
9% Series A Senior Notes due 2004
of Grand Casinos, Inc.
PURCHASE AGREEMENT
October 9, 1997
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue
New York, New York 10005
Dear Sirs:
Grand Casinos, Inc., a Minnesota corporation (the "Company"),
proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser") an aggregate of $115,000,000 in principal
amount of its 9% Series A Senior Notes due 2004 (the "Series A Notes"), subject
to the terms and conditions set forth herein. The Series A Notes are to be
issued pursuant to the provisions of an indenture (the "Indenture"), to be
dated as of the Closing Date (as defined below), among the Company, the
Guarantors (as defined below) and Firstar Bank of Minnesota, N.A., as trustee
(the "Trustee"). The Series A Notes and the Series B Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be unconditionally guaranteed, jointly and severally
(each a "Note Guarantee" and together, the "Note Guarantees") by each of the
entities listed on Schedule A, hereto (each, a "Guarantor" and collectively the
"Guarantors") subject to receipt of required gaming regulatory approvals for
the Series B Notes. "Gaming Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States or foreign government, any state, province or
any city or other political subdivision, whether now or hereafter existing, or
any officer or official thereof, including without limitation, the Mississippi
Gaming Commission, the National Indian Gaming Commission and any other agency
with authority to regulate any gaming operation (or proposed gaming operation)
owned, managed or operated by the Company or any of it Subsidiaries.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
1. OFFERING MEMORANDUM. The Series A Notes will be
offered and sold to the Initial Purchaser pursuant to one or more exemptions
from the registration requirements under the Securities Act of 1933, as amended
(the "Act"). The Company and the Guarantors have prepared a preliminary
offering memorandum, dated October 8, 1997 (the "Preliminary Offering
Memorandum") and a final offering memorandum, dated October 9, 1997 (the
"Offering Memorandum"), relating to the Series A Notes and the Note Guarantees.
Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Series A Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
1
<PAGE> 3
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN CLAUSE 2
OF THE NEXT SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT)(A "QIB"), (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE SECURITIES ACT (AN "IAI")) THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, an aggregate principal amount of $115,000,000 of
Series A Notes at a purchase price equal to 97.25% of the principal amount
thereof (the "Purchase Price").
3. TERMS OF OFFERING. The Initial Purchaser has advised
the Company that the Initial Purchaser will make offers (the "Exempt Resales")
of the Series A Notes purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to persons whom the
Initial Purchaser reasonably believes to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBs") (such persons being referred to
herein as the "Eligible Purchasers"). The Initial Purchaser will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without
notice.
Holders (including subsequent transferees) of the Series A
Notes will have the registration rights set forth in the registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date
(as defined), in substantially the form of Exhibit A hereto, for so long as
such Series A
2
<PAGE> 4
Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Company's 9% Series B Senior Notes due
2004 (the "Series B Notes"), to be offered in exchange for the Series A Notes
(such offer to exchange being referred to as the "Exchange Offer") and the Note
Guarantees thereof and (ii) a shelf registration statement pursuant to Rule 415
under the Act (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, the "Registration Statements") relating
to the resale by certain holders of the Series A Notes and to use their
respective best efforts to cause such Registration Statements to be declared
and remain effective and usable for the periods specified in the Registration
Rights Agreement and to consummate the Exchange Offer. This Agreement, the
Indenture, the Notes, the Note Guarantees and the Registration Rights Agreement
are hereinafter sometimes referred to collectively as the "Operative
Documents."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price
for, the Series A Notes shall be made at the offices of Latham & Watkins at 885
Third Avenue, New York, New York 10022, or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on October 16, 1997 or at such other time as shall be agreed
upon by the Initial Purchaser and the Company. The time and date of such
delivery and the payment are herein called the "Closing Date."
(b) One or more of the Series A Notes in definitive
global form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to
the aggregate principal amount of the Series A Notes (collectively, the "Global
Note"), shall be delivered by the Company to the Initial Purchaser (or as the
Initial Purchaser directs) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchaser of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchaser for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each
of the Company and the Guarantors hereby agrees with the Initial Purchaser as
follows:
(a) To advise the Initial Purchaser promptly and,
if requested by the Initial Purchaser, confirm such advice in writing, (i) of
the issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any Series A Notes for
offering or sale in any jurisdiction designated by the Initial Purchaser
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory authority
for such purpose and (ii) of the happening of any event during the period
referred to in Section 5(c) below that makes any statement of a material fact
made in the Preliminary Offering Memorandum or the Offering Memorandum untrue
or that requires any material additions to or changes in the Preliminary
Offering Memorandum or the Offering Memorandum in order to make the statements
therein not misleading. The Company shall use its best efforts to prevent the
issuance of any stop order or order suspending the qualification or exemption
of any Series A Notes under any state securities or Blue Sky laws and, if at
any time any state securities commission or other federal or state regulatory
authority shall issue an order suspending the qualification or exemption of any
Series A Notes under any state securities or Blue Sky laws, the Company shall
use its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchaser and those
persons identified by the Initial Purchaser to the Company as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchaser may reasonably
request. Subject to the Initial Purchaser's compliance with its
representations and warranties and agreements set forth in Section 7 hereof,
the Company consents to the use of the Preliminary Offering
3
<PAGE> 5
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchaser in connection with
Exempt Resales.
(c) During such period as in the opinion of
counsel for the Initial Purchaser an Offering Memorandum is required by law to
be delivered in connection with Exempt Resales by the Initial Purchaser and in
connection with market-making activities of the Initial Purchaser for so long
as any Series A Notes are outstanding, (i) not to make any amendment or
supplement to the Offering Memorandum of which the Initial Purchaser shall not
previously have been advised or to which the Initial Purchaser shall reasonably
object after being so advised and (ii) to prepare promptly upon the Initial
Purchaser's reasonable request, any amendment or supplement to the Offering
Memorandum which may be necessary or advisable in connection with such Exempt
Resales or such market-making activities.
(d) If, during the period referred to in Section
5(c) above, any event shall occur or condition shall exist as a result of
which, in the opinion of counsel to the Initial Purchaser, it becomes necessary
to amend or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion of
counsel to the Initial Purchaser, it is necessary to amend or supplement the
Offering Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of
the circumstances when it is so delivered, be misleading, or so that such
Offering Memorandum will comply with applicable law, and to furnish to the
Initial Purchaser and such other persons as the Initial Purchaser may designate
such number of copies thereof as the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Series A Notes
pursuant to Exempt Resales as contemplated hereby, to cooperate with the
Initial Purchaser and counsel to the Initial Purchaser in connection with the
registration or qualification of the Series A Notes for offer and sale to the
Initial Purchaser and pursuant to Exempt Resales under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchaser may reasonably request
and to continue such qualification in effect so long as required for Exempt
Resales and to file such consents to service of process or other documents as
may be necessary in order to effect such registration or qualification;
provided, however, that neither the Company nor any Guarantor shall be required
in connection therewith to register or qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other
than as to matters and transactions relating to the Preliminary Offering
Memorandum, the Offering Memorandum or Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) So long as the Notes are outstanding, (i) to
mail and make generally available as soon as practicable after the end of each
fiscal year to the record holders of the Notes a financial report of the
Company and its Subsidiaries on a consolidated basis (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial reports
to include a consolidated balance sheet, a consolidated statement of
operations, a consolidated statement of cash flows and a consolidated statement
of shareholders' equity as of the end of and for such fiscal year, together
with comparable information as of the end of and for the preceding year,
certified by the Company's independent public accountants and (ii) to mail and
make generally available as soon as practicable after the end of each quarterly
period (except for the last quarterly period of each fiscal year) to such
holders, a consolidated balance sheet, a consolidated statement of operations
and a consolidated statement of cash flows (and similar financial reports of
all unconsolidated subsidiaries, if any) as of the end of and for such period,
and for the period from the beginning of such year to the close of such
quarterly period, together with comparable information for the corresponding
periods of the preceding year.
(g) So long as the Notes are outstanding, to
furnish to the Initial Purchaser as soon as available copies of all reports or
other communications furnished by the Company or any of the Guarantors to its
security holders or furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company or any of
the Guarantors is listed and such other publicly available information
concerning the Company and/or its subsidiaries as the Initial Purchaser may
reasonably request.
4
<PAGE> 6
(h) So long as any of the Series A Notes remain
outstanding and during any period in which the Company and the Guarantors are
not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to make available to any holder of Series A Notes
in connection with any sale thereof and any prospective purchaser of such
Series A Notes from such holder, the information ("Rule 144A Information")
required by Rule 144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated
in this Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of the obligations of
the Company and the Guarantors under this Agreement, including: (i) the fees,
disbursements and expenses of counsel to the Company and the Guarantors and
accountants of the Company and the Guarantors in connection with the sale and
delivery of the Series A Notes to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the
Offering Memorandum and all amendments and supplements to any of the foregoing
(including financial statements) specified in Section 5(b) and 5(c) prior to or
during the period specified in Section 5(c), including the mailing and
delivering of copies thereof to the Initial Purchaser and persons designated by
it in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Series A Notes to the Initial Purchaser and
pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with
the offering, purchase, sale or delivery of the Series A Notes, (iv) all
expenses in connection with the registration or qualification of the Series A
Notes and the Note Guarantees for offer and sale under the securities or Blue
Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and fees and disbursements of counsel for the
Initial Purchaser in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Series A Notes and the Note Guarantees, (vi) all expenses and listing fees
in connection with the application for quotation of the Series A Notes in The
Portal Market of the National Association of Securities Dealers, Inc. ("NASD"),
(vii) the fees and expenses of the Trustee and the Trustee's counsel in
connection with the Indenture, the Notes and the Note Guarantees, (viii) the
costs and charges of any transfer agent, registrar and/or depositary (including
DTC), (ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses of the Exchange Offer and any Registration Statement, as
set forth in the Registration Rights Agreement, and (xi) and all other costs
and expenses incident to the performance of the obligations of the Company and
the Guarantors hereunder for which provision is not otherwise made in this
Section.
(j) To use its best efforts to effect the
inclusion of the Series A Notes in The Portal Market and to maintain the
listing of the Series A Notes on The Portal Market for so long as the Series A
Notes are outstanding.
(k) To use its best efforts to obtain the
approval of DTC for "book-entry" transfer of the Notes, and to comply with all
of its agreements set forth in the representation letters of the Company and
the Guarantors to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(l) During the period beginning on the date
hereof and continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise transfer or dispose of any debt securities of the
Company or any Guarantor or any warrants, rights or options to purchase or
otherwise acquire debt securities of the Company or any Guarantor substantially
similar to the Notes and the Note Guarantees (other than (i) the Notes and the
Note Guarantees and (ii) commercial paper issued in the ordinary course of
business), without the prior written consent of the Initial Purchaser.
(m) Not to sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Act) that would be integrated with the sale of the Series A Notes to the
Initial Purchaser or pursuant to Exempt Resales in a manner that would require
the registration of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively
resist any attempts to claim, the
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<PAGE> 7
benefit of any usury laws against the holders of any Notes.
(o) Subject to compliance with applicable gaming
laws, to cause the Exchange Offer to be made in the appropriate form to permit
Series B Notes and guarantees thereof by the Guarantors registered pursuant to
the Act to be offered in exchange for the Series A Notes and the Note
Guarantees and to comply with all applicable federal and state securities laws
in connection with the Exchange Offer.
(p) To comply with all of its agreements set
forth in the Registration Rights Agreement.
(q) To use its best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
it prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Series A Notes and the Note Guarantees.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE GUARANTORS. As of the date hereof, each of the Company and the
Guarantors represents and warrants to, and agrees with, the Initial Purchaser
that:
(a) The Preliminary Offering Memorandum and the
Offering Memorandum do not, and any supplement or amendment to them will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties contained in this paragraph (a)
shall not apply to statements in or omissions from the Preliminary Offering
Memorandum or the Offering Memorandum (or any supplement or amendment thereto)
based upon information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use therein. No stop
order preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) The Company and each of its significant
subsidiaries (as defined in Rule 1-02 of Regulation S-X promulgated under the
Act) (the "Significant Subsidiaries") is a duly incorporated and validly
existing corporation in good standing under the laws of its jurisdiction of
incorporation, has the requisite corporate power and authority to own, lease
and operate its properties and to conduct its business as it is currently being
conducted and described in the Offering Memorandum, and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction where the
ownership, leasing or operation of property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect, singly or in the aggregate, on the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and the Subsidiaries (a
"Material Adverse Effect").
(c) All the outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights; the
capitalization of the Company is as set forth in the Offering Memorandum under
the caption "Capitalization."
(d) Each of the Company and the Guarantors has
all requisite corporate power and authority to execute and deliver this
Agreement, the Notes, the Note Guarantees, the Indenture and the Registration
Rights Agreement, as applicable, and to perform its obligations under this
Agreement, the Indenture and the Registration Rights Agreement, as applicable,
and to authorize, issue, sell and deliver the Notes and the Note Guarantees as
contemplated by this Agreement, as applicable.
(e) This Agreement has been duly authorized and
validly executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms (assuming the due execution and delivery hereof by
the other parties hereto), subject to (i) applicable bankruptcy, insolvency,
fraudulent
6
<PAGE> 8
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, (ii) general principles of equity (regardless of
whether enforcement is sought at law or in equity), and (iii) the receipt of
all requisite approvals under applicable gaming laws with respect to the
issuance of the Series B Notes and restrictions on transfer of, and agreements
not to encumber, the equity securities of the Company's Mississippi Gaming
Licensees and except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws and public policy considerations
underlying such laws.
(f) The Indenture has been duly authorized by
each of the Company and the Guarantors and, on the Closing Date, subject to the
terms and conditions of this Agreement (and assuming the due authorization,
execution and delivery thereof by the Trustee), will have been duly executed
and delivered by each of the Company and the Guarantors and will conform in all
material respects to the description thereof in the Offering Memorandum. When
the Indenture has been duly executed and delivered, the Indenture will be a
valid and legally binding agreement of each of the Company and the Guarantors,
enforceable against each of the Company and the Guarantors in accordance with
its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, (ii) general principles of equity (regardless of
whether enforcement is sought at law or in equity) and (iii) the receipt of all
requisite approvals under applicable gaming laws with respect to the issuance
of the Series B Notes and restrictions on transfer of, and agreements not to
encumber, the equity securities of the Company's Mississippi Gaming Licensees.
On the Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "TIA" or"Trust
Indenture Act"), and the rules and regulations of the Commission applicable to
an indenture which is qualified thereunder.
(g) The Series A Notes have been duly authorized
and, on the Closing Date, will have been validly executed and delivered by the
Company. When the Series A Notes have been issued, executed and authenticated
in accordance with the provisions of the Indenture and delivered to and paid
for by the Initial Purchaser in accordance with the terms of this Agreement,
the Series A Notes will be entitled to the benefits of the Indenture and will
be valid and binding obligations of the Company, enforceable in accordance with
their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability. On the Closing
Date, the Series A Notes will conform as to legal matters to the description
thereof contained in the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will
have been duly authorized by the Company. Subject to receipt of requisite
approvals under applicable gaming laws, when the Series B Notes are issued,
executed and authenticated in accordance with the terms of the Exchange Offer
and the Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles
of general applicability.
(i) The Note Guarantee to be endorsed on the
Series A Notes by each Guarantor has been duly authorized by such Guarantor
and, on the Closing Date, will have been duly executed and delivered by each
such Guarantor. When the Series A Notes have been issued, executed and
authenticated in accordance with the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of this Agreement, the Note
Guarantee of each Guarantor endorsed thereon will be entitled to the benefits
of the Indenture and will be the valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Note Guarantees to be endorsed on the Series A Notes will conform as to
legal matters to the description thereof contained in the Offering Memorandum.
(j) The Note Guarantee to be endorsed on the Series B Notes by each
7
<PAGE> 9
Guarantor has been duly authorized by such Guarantor and, when issued, will
have been duly executed and delivered by each such Guarantor. Subject to
receipt of requisite approvals under applicable gaming laws, when the Series B
Notes have been issued, executed and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, the Note Guarantee of each Guarantor
endorsed thereon will be entitled to the benefits of the Indenture and will be
the valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. When the Series B Notes are issued, authenticated and
delivered, the Note Guarantees to be endorsed on the Series B Notes will
conform as to legal matters to the description thereof in the Offering
Memorandum.
(k) The Registration Rights Agreement has been
duly authorized by the Company and each of the Guarantors and, on the Closing
Date, will have been duly executed and delivered by the Company and each of the
Guarantors. Subject to receipt of requisite approvals under applicable gaming
laws with respect to the issuance of the Series B Notes, when the Registration
Rights Agreement has been duly executed and delivered, the Registration Rights
Agreement will be a valid and binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each Guarantor in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies may
be limited by equitable principles of general applicability. On the Closing
Date, the Registration Rights Agreement will conform as to legal matters to the
description thereof in the Offering Memorandum.
(l) The entities listed on Schedule B hereto (the
"Subsidiaries") are the only subsidiaries, direct or indirect, of the Company.
All of the issued and outstanding shares of capital stock of, or other
ownership interests in, each Subsidiary have been duly and validly authorized
and issued. Except as provided in the Offering Memorandum and except for R&W
Investments of Lake Charles, Inc. which is 40% owned by the Company, all of the
shares of capital stock of, or other ownership interests in, each Subsidiary
are owned directly or through Subsidiaries, by the Company. The authorized,
issued and outstanding capital stock of the Company as of June 29, 1997 is as
set forth in the Offering Memorandum under the caption "Capitalization" and all
shares of capital stock of the Subsidiaries are fully paid and nonassessable,
and are owned free and clear of any security interest, mortgage, pledge, claim,
lien or encumbrance (each, a "Lien"), other than any Lien securing the
obligations under (i) the Company's 10 1/8% First Mortgage Notes due 2003 (the
"Existing 10 1/8% Notes"), (ii) new capital leases reflected in the Company's
consolidated financial statements at and for the year ended December 29, 1996
and the period ended June 29, 1997, (iii) the Biloxi Theater Subsidiary's
existing credit facility (the "Biloxi Theater Loan"), (iv) the existing
mortgage on the Gulfport property located north of the highway or (v)
indebtedness reflected in the Company's consolidated financial statements at
and for the year ended December 29, 1996 and the period ended June 29, 1997.
Except as described in this clause (l), there are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of sale
or Liens related to or entitling any person to purchase or otherwise to acquire
any shares of the capital stock of, or other ownership interest in, any
Subsidiary.
(m) None of the Company nor any of the
Subsidiaries is in violation of its respective charter or bylaws or in default
in the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or other contract, lease or other instrument to which
the Company, or any of the Subsidiaries is a party or by which any of them is
bound, or to which any of the property or assets of the Company or any of the
Subsidiaries is subject, which violation or default would have a Material
Adverse Effect. There exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument, which default would have a Material Adverse Effect.
(n) The execution and delivery of the Operative
Documents, the issuance and sale of the Notes and the Note Guarantees, the
performance of this Agreement, the Indenture and the Registration Rights
Agreement, compliance by the Company and the Guarantors with the provisions
hereof and thereof and of the Notes and the Note Guarantees, the consummation
of the transactions
8
<PAGE> 10
contemplated hereby and thereby, in each case, as applicable, will not (i)
conflict with or result in a breach or violation of any of the respective
charters or bylaws of the Company or any of the Subsidiaries or any material
franchise or license of the Company or any Subsidiary or any of the terms or
provisions of, or (ii) constitute a default or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the obligation
to create or impose) a Lien with respect to, any bond, note, debenture or other
evidence of indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which it or any of them is bound, or to which any properties of the
Company or any of the Subsidiaries is or may be subject, or (iii) contravene
any order of any court or governmental agency (including, without limitation,
any Gaming Authority) or body having jurisdiction over the Company or any of
the Subsidiaries or any of their respective properties, or (iv) subject to
receipt of requisite approvals under applicable gaming laws with respect to the
issuance of the Series B Notes and with respect to any restriction on the
transfer of, or agreements not to transfer, the equity securities of a
Mississippi Licensee, violate or conflict with any statute, rule or regulation
or administrative or court decree applicable to the Company or any of the
Subsidiaries, or any of their respective properties, in the case of clauses
(i), (ii), (iii) and (iv) which conflict, breach, violation, default or
contravention, singly or in the aggregate with each other conflict, breach,
violation, default or contravention, would have a Material Adverse Effect or
would materially and adversely affect the consummation of the transactions
contemplated by this Agreement, the Indenture or the Registration Rights
Agreement or the transactions contemplated hereby or thereby.
(o) Except as described in the Offering
Memorandum, there is no action, suit or proceeding before or by any court or
governmental agency (including, without limitation, any Gaming Authority) or
body, domestic or foreign, pending against or affecting the Company or any of
the Subsidiaries, or any of their respective properties, that is required to be
disclosed in the Offering Memorandum, or that might result in a Material
Adverse Effect or that might materially and adversely affect the consummation
of the transactions contemplated by this Agreement, and to the best knowledge
of the Company, no such proceedings are contemplated or threatened.
(p) To the best knowledge of the Company, other
than the requisite approvals required under applicable gaming laws with respect
to the issuance of the Note Guarantees with respect to the Series B Notes and
restrictions on transfer of the equity securities of the Subsidiaries, no
action has been taken and no statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency (including, without
limitation, any Gaming Authority) or body that prevents the issuance of the
Notes or the Note Guarantees, prevents or suspends the use of any preliminary
offering memorandum or suspends the sale of the Notes or the Note Guarantees in
any jurisdiction referred to in Section 5(e) hereof; no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction has been issued with respect to the Company or any of the
Subsidiaries that would prevent or suspend the issuance or sale of the Notes or
the Note Guarantees or the use of any preliminary offering memorandum in any
jurisdiction referred to in Section 5(e) hereof; no action, suit or proceeding
is pending against or, to the best knowledge of the Company, threatened against
or affecting the Company or any of the Subsidiaries before any court or
arbitrator or any governmental body, agency (including, without limitation, any
Gaming Authority) or official, domestic or foreign, that, if adversely
determined, would materially interfere with or adversely affect the issuance of
the Notes or the Note Guarantees or in any manner draw into question the
validity of the Operative Documents; and every request of the Commission or any
securities authority or agency of any jurisdiction for additional information
(to be included in the Offering Memorandum or otherwise) has been complied with
or waived by the Commission or such securities authority or agency, as
applicable.
(q) In the ordinary course of its business, the
Company conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and the Subsidiaries, in the
course of which it identifies and evaluates associated costs and liabilities.
Except as described in the Offering Memorandum and, to the best knowledge of
the Company, the Company and the Subsidiaries are in compliance with all
applicable existing federal, state, local and foreign laws and regulations
relating to protection of human health or the environment or imposing liability
or standards of conduct concerning any Hazardous Material ("Environmental
Laws"), except where the failure to comply with Environmental Laws would not
have a Material Adverse Effect. The term "Hazardous Material" means (a) any
"hazardous substance" as defined by the Comprehensive
9
<PAGE> 11
Environmental Response, Compensation and Liability Act of 1980, as amended, (b)
any "hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (c) any petroleum or petroleum product, (d) any polychlorinated
biphenyl and (e) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the meaning of
any other Environmental Law. There is no alleged liability, or to the best
knowledge and information of the Company and the Guarantors, potential
liability (including, without limitation, alleged or potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) of the
Company or the Subsidiaries arising out of, based on or resulting from, (i) the
presence or release into the environment of any Hazardous Material at any
location at which the Company or the Subsidiaries has previously conducted or
is currently conducting any business (whether or not now owned by the Company
or the Subsidiaries) or has previously owned or currently owns any property or
(ii) any violation or alleged violation of any Environmental Law, in either
case (x) which alleged or potential liability is required to be disclosed in
the Offering Memorandum, other than as disclosed therein, or (y) which alleged
or potential liability would have a Material Adverse Effect.
(r) No Gaming Authority has issued any order or
decree or is otherwise impairing, restricting or prohibiting (i) a payment of
dividends by the Guarantors to the Company or (ii) the continuation of the
business of the Guarantors as is presently being conducted or contemplated.
(s) Neither the Company nor any Subsidiary is
involved in any material labor dispute nor, to the knowledge of the Company, is
any material dispute threatened that, if such dispute were to occur, would have
a Material Adverse Effect.
(t) To the best knowledge of the Company, neither
the Company nor any of the Subsidiaries has violated any federal, state or
local law relating to discrimination in the hiring, promotion or pay of
employees or to any applicable wage or hour laws, nor any provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or the
rules and regulations promulgated thereunder, nor has the Company or any of the
Subsidiaries engaged in any unfair labor practice, which in each case might
result in a Material Adverse Effect. There is (i) no significant unfair labor
practice complaint pending against the Company or any of the Subsidiaries or,
to the best knowledge of the Company, threatened against any of them before the
National Labor Relations Board or any state or local labor relations board, and
no significant grievance or significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Company or any of the Subsidiaries or, to the best
knowledge of the Company, threatened against any of them, (ii) no significant
strike, labor dispute, slowdown or stoppage pending against the Company or any
of the Subsidiaries or, to the best knowledge of the Company, threatened
against the Company or any of the Subsidiaries and (iii) no union
representation question existing with respect to the employees of the Company
or any of the Subsidiaries and no union organizing activities are taking place,
except (with respect to any matter specified in clause (i), (ii) or (iii)
above) such as could not have a Material Adverse Effect.
(u) Except for such imperfections of title that
would not result in a Material Adverse Effect, the Company and each of the
Subsidiaries has good and marketable title in all of their respective
properties, free and clear of all Liens (except Liens for taxes not yet due and
payable or Liens securing obligations under (i) the Existing 10 1/8% Notes and
related guarantees prior to the Closing Date, (ii) new capital leases reflected
in the Company's consolidated financial statements at and for the year ended
December 29, 1996 and the period ended June 29, 1997, (iii) the Biloxi Theater
Loan, (iv) the existing mortgage on the Gulfport property located north of the
highway, (v) ground leases with respect to the Polo Plaza project in Las Vegas,
Nevada and (vi) indebtedness reflected in the Company's consolidated financial
statements at and for the year ended December 29, 1996 and the period ended
June 29, 1997.
(v) To the best of the Company's knowledge, the
firms of accountants that have certified or shall certify the applicable
financial statements and supporting schedules of the Company, the Subsidiaries
and Stratosphere Corporation filed or to be filed with the Commission as part
of the Offering Memorandum are independent public accountants, as required by
the Act and the Exchange Act. The consolidated historical and pro forma
financial statements, together with related
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<PAGE> 12
schedules and notes, set forth in the Offering Memorandum comply as to form in
all material respects with the requirements of the Act. Such historical
financial statements fairly present the financial position of the Company, the
Subsidiaries and Stratosphere Corporation at the respective dates indicated and
the results of operations and cash flows for the respective periods indicated,
in accordance with generally accepted accounting principles in the United
States ("GAAP") consistently applied throughout such periods. Such pro forma
financial statements have been prepared on a basis consistent with such
historical statements, except for the pro forma adjustments specified therein,
and give effect to assumptions made on a reasonable basis and present fairly
the historical and proposed transactions contemplated by the Offering
Memorandum and this Agreement. The other financial and statistical information
and data included in the Offering Memorandum, historical and pro forma, are, in
all material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and the
Subsidiaries.
(w) Subsequent to the respective dates as of
which information with respect to the Company and the Subsidiaries is given in
the Offering Memorandum and up to the Closing Date, (i) neither the Company nor
any of the Subsidiaries has incurred any liabilities or obligations (except
pursuant to this Agreement, the Registration Rights Agreement and the
Indenture), direct or contingent, that are material, individually or in the
aggregate, to the Company or any Subsidiary, nor entered into any transaction
not in the ordinary course of business and there has not been any material
adverse change, or any development that may reasonably be expected to involve a
material adverse change, singly or in the aggregate, in the properties,
business, results of operations, condition (financial or otherwise) or affairs
of the Company or any Subsidiary (each, a "Material Adverse Change") and (ii)
to the best knowledge of the Company, there has been no change in the gaming
laws, regulations or administrative practices of any Gaming Authority that
would have a Material Adverse Effect.
(x) All tax returns required to be filed by the
Company or any of the Subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and
other charges due or claimed to be due from such entities have been paid, other
than those being contested in good faith and for which adequate reserves have
been provided or those currently payable without penalty or interest.
(y) Other than the requisite approvals required
under applicable gaming laws with respect to the issuance of the Note
Guarantees with respect to the Series B Notes and restrictions on transfer of,
and agreements not to encumber, the equity securities of the Subsidiaries, and
the filing of offering materials and federal registration statements with the
Mississippi Gaming Commission, and informational filings to be made with the
Nevada State Gaming Control Board no authorization, approval or consent or
order of, or filing with, any court or governmental body or agency (including,
without limitation, any Gaming Authority) is necessary in connection with the
transactions contemplated by this Agreement, the Indenture, the Registration
Rights Agreement or the Offering Memorandum, except such as may be required by
state securities or Blue Sky laws or regulations. No consents or waivers from
any person under any bond, debenture, note, indenture, mortgage, deed of trust
or other agreement or instrument are required to consummate the transactions
contemplated by this Agreement, the Indenture, the Registration Rights
Agreement or the Offering Memorandum.
(z) The Company and each of the Subsidiaries has
complied with all of the provisions of Florida H.B. 1771, codified as Section
517.075 of the Florida statutes, and all regulations promulgated thereunder
relating to issuers doing business with the Government of Cuba or with any
person or any affiliate located in Cuba.
(aa) (i) Except as specifically disclosed in
the Offering Memorandum with respect to registrations, findings of suitability
and gaming licenses, each of the Company and the Subsidiaries has all
certificates, consents, exemptions, orders, permits, licenses, authorizations
or other approvals of and from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals (each, an
"Authorization"), necessary or required to own, lease, license and use its
properties and assets and to engage in the business currently conducted by it
or contemplated, except as such is described in the
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<PAGE> 13
Offering Memorandum or to the extent that the failure to obtain or file would
not have a Material Adverse Effect, (ii) all such Authorizations are valid and
in full force and effect and (iii) the Company and the Subsidiaries are in
compliance in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory authorities
and governing bodies having jurisdiction with respect thereto, except for such
failure to comply which in the aggregate would not have a Material Adverse
Effect. No event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination by the issuer thereof or that results in
any other material impairment of the rights of the holder of any such
Authorizations. Such Authorizations contain no restrictions that are
materially burdensome to the Company or any of the Subsidiaries in light of
their respective businesses, and the Company and the Guarantors have no reason
to believe that any governmental body or agency is considering limiting,
suspending or revoking any such Authorization. None of the Company or the
Guarantors nor any of their respective senior managements has any reasonable
basis to believe that any Authorization necessary in the future to conduct the
business of the Company or any Subsidiary as described in the Offering
Memorandum will not be granted upon application, or any Gaming Authority or any
other governmental agency is investigating the Company or any Subsidiary or any
of their officers, directors, key employees, security holders or affiliated
companies, other than in ordinary course administrative review or in review of
pending applications or an ordinary course review of the transactions
contemplated hereby other than such investigations for minor regulatory
violations which are not expected to result in a Material Adverse Effect. All
leases to which the Company or any Subsidiary is a party are valid and binding
and no default by the Company or any Subsidiary has occurred and is continuing
thereunder. The Company and the Subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee with
such exceptions as do not materially interfere with the use made by the Company
or such Subsidiary. The properties of the Company and the Subsidiaries are in
sufficient repair for the conduct of their respective businesses as currently
conducted or contemplated (ordinary wear and tear excepted) and are suitable
for their uses.
(bb) Neither the Company nor any of the
Subsidiaries is (a) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(cc) No holder of any security of the Company or
any of the Guarantors has or will have waived any right to require the
registration of such security by virtue of any transaction contemplated by this
Agreement, the Indenture, the Registration Rights Agreement or the Offering
Memorandum.
(dd) There are no contracts, agreements or
understandings between the Company or any of the Subsidiaries and any person
that would give rise to a valid claim against the Company, the Subsidiaries or
the Initial Purchaser for a brokerage commission, finder's fee or like payment
in connection with the issuance, purchase and sale of the Notes or the Note
Guarantees.
(ee) The Company and the Subsidiaries possess all
patents, patent rights, licenses, inventions, copyrights, know- how (including
trade secrets and other unpatented and/or unpatented proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names (collectively, "Intellectual Property") presently employed by any
of them in connection with the businesses now operated by them, and none of the
Company or any Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to the foregoing, except
in each case to the extent such failure to possess or the extent such receipt
would not have a Material Adverse Effect. The use of such Intellectual
Property in connection with the business and operations of the Company and the
Subsidiaries does not, to the Company's best knowledge, infringe on the rights
of any person.
(ff) The Company and each Subsidiary maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset
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<PAGE> 14
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(gg) The present fair saleable value of the assets
of each of the Company and the Guarantors exceeds the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of each such person as they
become absolute and matured. The assets of each of the Company and the
Guarantors do not constitute unreasonably small capital to carry out their
businesses as conducted or as proposed to be conducted. Neither the Company
nor the Guarantors intends to, nor does it believe that it will, incur debts
beyond its ability to pay such debts as they mature. Upon the issuance of the
Notes and the Note Guarantees, the present fair saleable value of the assets of
each of the Company and the Guarantors, when considered together, will exceed
the amount that will be required to be paid on or in respect of the existing
debts and other liabilities (including contingent liabilities) of such person
as they become absolute and matured. The assets of each of the Company and the
Guarantors, upon the issuance of the Notes and the Note Guarantees, as
applicable, will not constitute unreasonably small capital to carry out their
businesses as now conducted, including the capital needs of each of the Company
and the Guarantors, taking into account the projected capital requirements and
capital availability of each of the Company and the Guarantors.
(hh) None of the Company, the Guarantors or any
agent thereof acting on the behalf of any of them has taken, and none of them
will take, any action that might cause this Agreement or the issuance or sale
of the Notes or the Note Guarantees to violate Regulation G (12 C.F.R. Part
207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(ii) Neither the Company nor any of the
Subsidiaries has taken, directly or indirectly, any action designed to cause or
to result in, or that has constituted or that might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company or the Guarantors to facilitate the sale or resale of the Notes or
(A) sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, the Notes or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company or the Guarantors.
(jj) The Company and each Subsidiary maintain
insurance covering their properties, operations, personnel and businesses.
Such insurance insures against such losses and risks as are adequate in
accordance with customary industry practice to protect the Company and the
Subsidiaries and their businesses. Neither the Company nor any Subsidiary has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force
on the date hereof and will be outstanding and duly in force on the Closing
Date.
(kk) Each of the Preliminary Offering Memorandum
and the Offering Memorandum, as of its date, contains all the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the Act.
(ll) When the Series A Notes and the Note
Guarantees are issued and delivered pursuant to this Agreement, neither the
Series A Notes nor the Note Guarantees will be of the same class (within the
meaning of Rule 144A under the Act) as any security of the Company or the
Guarantors that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.
(mm) No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the Company,
the Guarantors or any of their respective representatives (other than the
Initial Purchaser, as to whom the Company and the Guarantors make no
representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period
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<PAGE> 15
immediately prior to the date hereof.
(nn) Prior to the effectiveness of any
Registration Statement, the Indenture is not required to be qualified under the
TIA.
(oo) No registration under the Act of the Series A
Notes or the Note Guarantees is required for the sale of the Series A Notes and
the Note Guarantees to the Initial Purchaser as contemplated hereby or for the
Exempt Resales assuming the accuracy of the Initial Purchaser's representations
and warranties and agreements set forth in Section 7 hereof.
(pp) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company or any Guarantor that it is
considering imposing) any condition (financial or otherwise) on the Company's
or any Guarantor's retaining any rating assigned as of the date hereof to the
Company, any Guarantor or any securities of the Company or any Guarantor or
(ii) has indicated to the Company or any Guarantor that it is considering (a)
the downgrading, suspension or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any
rating so assigned or (b) any change in the outlook for any rating of the
Company or any Guarantor.
(qq) Each certificate signed by any officer of the
Company or any Guarantor and delivered to the Initial Purchaser or counsel for
the Initial Purchaser shall be deemed to be a representation and warranty by
the Company or such Guarantor to the Initial Purchaser as to the matters
covered thereby.
The Company acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and the Guarantors and counsel to the
Initial Purchaser will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The Initial Purchaser represents and warrants to, and agrees with, the Company
and the Guarantors:
(a) Such Initial Purchaser is a QIB, with such
knowledge and experience in financial and business matters as is necessary in
order to evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring
the Series A Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Series A Notes in a transaction
that would violate the Act or the securities laws of any state of the United
States or any other applicable jurisdiction and (B) will be reoffering and
reselling the Series A Notes only to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A.
(c) Such Initial Purchaser agrees that no form of
general solicitation or general advertising (within the meaning of Regulation D
under the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in
connection with Exempt Resales, such Initial Purchaser will solicit offers to
buy the Series A Notes only from, and will offer to sell the Series A Notes
only to, Eligible Purchasers. The Initial Purchaser further agrees that it
will offer to sell the Series A Notes only to, and will solicit offers to buy
the Series A Notes only from, Eligible Purchasers that the Initial Purchaser
reasonably believes are QIBs that agree that (x) the Series A Notes purchased
by them may be resold, pledged or otherwise transferred within the time period
referred to under Rule 144(k) (taking into account the provisions of Rule
144(d) under the Act, if applicable) under the Act, as in effect on the date of
the transfer of such Series A Notes, only (I) to the Company or any of its
subsidiaries, (II) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account
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<PAGE> 16
of a QIB in a transaction meeting the requirements of Rule 144A under the Act,
(III) in an offshore transaction (as defined in Rule 902 under the Act) meeting
the requirements of Rule 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an IAI that, prior to such
transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which can be obtained from the Trustee) and, if such
transfer is in respect of an aggregate principal amount of Series A Notes less
than $250,000, an opinion of counsel acceptable to the Company that such
transfer is in compliance with the Act, (VI) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel acceptable to the Company) or (VII) pursuant to an effective
registration statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction and (y) they will deliver to each person to whom such Series A
Notes or an interest therein is transferred a notice substantially to the
effect of the foregoing.
(e) Such Initial Purchaser agrees that it will
not offer, sell or deliver any of the Series A Notes in any jurisdiction
outside the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its own
expense whatever action is required to permit its purchase and resale of the
Series A Notes in such jurisdictions. Such Initial Purchaser understands that
no action has been taken to permit a public offering in any jurisdiction
outside the United States where action would be required for such purpose.
The Initial Purchaser acknowledges that the Company
and the Guarantors and, for purposes of the opinions to be delivered to Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchaser will rely upon the accuracy and
truth of the foregoing representations and the Initial Purchaser hereby
consents to such reliance.
8. Indemnification.
(a) The Company and each Guarantor agree, jointly
and severally, to indemnify and hold harmless the Initial Purchaser, its
directors, its officers and each person, if any, who controls such Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including
any action, that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum (or any
amendment or supplement thereto), the Preliminary Offering Memorandum or any
Rule 144A Information provided by the Company or any Guarantor to any holder or
prospective purchaser of Series A Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Initial Purchaser furnished in
writing to the Company by such Initial Purchaser.
(b) The Initial Purchaser agrees to indemnify and
hold harmless the Company and the Guarantors, and their respective directors
and officers and each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) the Company or the
Guarantors, to the same extent as the foregoing indemnity from the Company and
the Guarantors to the Initial Purchaser but only with reference to information
relating to the Initial Purchaser furnished in writing to the Company by the
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum.
(c) In case any action shall be commenced
involving any person in respect of which indemnity may be sought pursuant to
Section 8(a) or 8(b) (the "indemnified party"), the indemnified party shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party shall assume the
defense of such action, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all fees and expenses
of such counsel, as incurred (except that in the case of any action in respect
of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), the
Initial Purchaser shall not be required to
15
<PAGE> 17
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchaser). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified
parties and all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Initial Purchaser,
in the case of the parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and
expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided
for in this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages, liabilities or judgments referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors, on the one hand, and the Initial Purchaser on
the other hand from the offering of the Series A Notes or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
and the Guarantors, on the one hand, and the Initial Purchaser, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Guarantors, on the one hand and the Initial Purchaser, on the
other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes (before deducting expenses)
received by the Company, and the total discounts and commissions received by
the Initial Purchaser bear to the total price to investors of the Series A
Notes, in each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company and the Guarantors, on the one
hand, and the Initial Purchaser, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Guarantors,
on the one hand, or the Initial Purchaser, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Guarantors, and the Initial
Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata
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<PAGE> 18
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price of the Series A Notes
purchased by it were sold to investors in Exempt Resales exceeds the amount of
any damages which the Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The
obligations of the Initial Purchaser to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the
Company and the Guarantors contained in this Agreement shall be true and
correct on the Closing Date with the same force and effect as if made on and as
of the Closing Date.
(b) On or after the date hereof, (i) there shall
not have occurred any downgrading, suspension or withdrawal of, nor shall any
notice have been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change in,
any rating of the Company or any Guarantor or any securities of the Company or
any Guarantor (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing implications or
under review with an uncertain direction) by any "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Act, (ii) there shall not have occurred any change, nor
shall notice have been given of any potential or intended change, in the
outlook for any rating of the Company or any Guarantor by any such rating
organization and (iii) no such rating organization shall have given notice that
it has assigned (or is considering assigning) a lower rating to the Notes than
that on which the Notes were marketed.
(c) Since the respective dates as of which
information is given in the Offering Memorandum other than as set forth in the
Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there shall not have occurred
any change or any development involving a prospective change in the condition,
financial or otherwise, or the earnings, business, management or operations of
the Company and its Subsidiaries, taken as a whole, (ii) there shall not have
been any change or any development involving a prospective change in the
capital stock or in the long-term debt of the Company or any of its
Subsidiaries and (iii) neither the Company nor any of its Subsidiaries shall
have incurred any liability or obligation, direct or contingent, the effect of
which, in any such case described in clause 9(d)(i), 9(d)(ii) or 9(d)(iii), in
the Initial Purchaser's judgment, is material and adverse and, in the Initial
Purchaser's judgment, makes it impracticable to market the Series A Notes on
the terms and in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchaser shall have received on
the Closing Date a certificate dated the Closing Date, signed by the President
and the Chief Financial Officer of the Company, confirming the matters set
forth in Sections 9(a), 9(b) and 9(c).
(e) On the Closing Date, the Initial Purchaser
shall have received an opinion
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<PAGE> 19
(satisfactory to you and your counsel), dated the Closing Date, of Maslon
Edelman Borman & Brand, LLP, counsel for the Company and the Guarantors, to the
effect that:
(i) (A) each of the Company and the
Subsidiaries, excluding BL Resorts I, LLC and GCG
Resorts I, LLC is a duly incorporated and validly
existing corporation, (B) each of BL Resorts I, LLC
and GCG Resorts I, LLC is a duly organized and
validly existing limited liability company and (C) in
the case of each entity referred to in clauses (A)
and (B), is in good standing under the laws of its
jurisdiction of incorporation, has the requisite
corporate power and authority to own, lease and
operate its properties and to conduct its business as
it is currently being conducted and described in the
Offering Memorandum, and is duly qualified as a
foreign corporation and is in good standing in each
jurisdiction where the ownership, leasing or
operation of property or the conduct of its business
requires such qualification, except where the failure
to be so qualified would not have a Material Adverse
Effect;
(ii) all the outstanding shares of
capital stock of the Company have been duly
authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or
similar rights;
(iii) each of the Company and the
Guarantors has all requisite corporate power and
authority to execute and deliver the Agreement, the
Notes, the Note Guarantees, the Indenture and the
Registration Rights Agreement, as applicable, and to
perform its obligations under this Agreement, the
Indenture and the Registration Rights Agreement, as
applicable, and to authorize, issue, sell and deliver
the Notes and the Note Guarantees as contemplated by
this Agreement, as applicable;
(iv) the Series A Notes have been
duly authorized and, when executed and authenticated
in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this
Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations
of the Company, enforceable in accordance with their
terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies
generally and (ii) to general principles of equity
(regardless of whether enforcement is sought ar law
or in equity);
(v) the Note Guarantees to be endorsed
on the Series A Notes by each of the Guarantors have
been duly authorized and, when the Series A Notes are
executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid
for by the Initial Purchaser in accordance with the
terms of this Agreement, the Note Guarantees endorsed
thereon will be entitled to the benefits of the
Indenture and will be valid and binding obligations
of such Guarantor, enforceable against such Guarantor
in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors'
rights and remedies generally and (ii) to general
principles of equity (regardless of whether
enforcement is sought ar law or in equity);
(vi) the Indenture has been duly
authorized, executed and delivered by the Company and
each of the Guarantors and is a valid and binding
agreement of the Company and each Guarantor,
enforceable against the Company and each Guarantor in
accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors'
rights and remedies generally and (ii) to general
principles of equity (regardless of whether
18
<PAGE> 20
enforcement is sought ar law or in equity);
(vii) this Agreement has been duly
authorized, executed and delivered by the Company and
each of the Guarantors;
(viii) The Registration Rights Agreement
has been duly authorized, executed and delivered by
the Company and each of the Guarantors and is a valid
and binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms, except as (i)
the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and (ii) to
general principles of equity (regardless of whether
enforcement is sought ar law or in equity);
(ix) the Series B Notes have been duly
authorized;
(x) the Note Guarantees to be endorsed
on the Series B Notes have been duly authorized by
each Guarantor;
(xi) the Notes, the Note Guarantees, the
Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions
thereof contained in the Offering Memorandum;
(xii) to the best knowledge of such
counsel, the entities listed on Schedule B hereto are
the only Subsidiaries, direct or indirect, of the
Company. All of the issued and outstanding shares of
capital stock of, or other ownership interests in,
each Subsidiary have been duly and validly authorized
and issued. Except for R&W Investments of Lake
Charles, Inc., which is 40% owned by the Company, all
of the shares of capital stock of, or other ownership
interests in, each Subsidiary are owned, directly or
through Subsidiaries, by the Company. To the best
knowledge of such counsel, all shares of capital
stock of the Subsidiaries are fully paid and
nonassessable, and are owned free and clear of any
Lien, other than any Lien securing the obligations
under the Existing 10 1/8% Notes and the Biloxi
Theater Loan;
(xiii) neither the Company nor any of the
Subsidiaries is (a) an "investment company" or a
company "controlled" by an investment company within
the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate"
thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
(xiv) the descriptions in the Offering
Memorandum of statutes, legal and governmental
proceedings and contracts and other documents are
accurate in all material respects; and such counsel
does not know of any legal or governmental
proceedings required to be disclosed in the Offering
Memorandum which are not described as required or of
any contracts or documents of a character required to
be described in the Offering Memorandum which are not
described as required; it being understood that such
counsel need express no opinion as to the financial
statements, financial notes or schedules or other
financial data included therein;
(xv) to the best knowledge of such
counsel, no action has been taken and no statute,
rule or regulation (excluding any gaming statutes and
regulations) or order has been enacted, adopted or
issued by any governmental agency (excluding any
Gaming Authority) or body that prevents the issuance
of the Notes or the Note Guarantees, prevents or
suspends the use of any preliminary offering
19
<PAGE> 21
memorandum or suspends the sale of the Notes or the
Note Guarantees in any jurisdiction referred to in
Section 5(e) hereof; to the best knowledge of such
counsel, no injunction, restraining order or order of
any nature by a federal or state court of competent
jurisdiction has been issued with respect to the
Company or any of the Guarantors which would prevent
or suspend the issuance or sale of the Notes or the
Note Guarantees or the use of any preliminary
offering memorandum in any jurisdiction referred to
in Section 5(e) hereof; to the best knowledge of such
counsel, no action, suit or proceeding is pending
against or threatened against or affecting the
Company or any of the Guarantors before any court or
arbitrator or any governmental body, agency
(excluding any Gaming Authority) or official,
domestic or foreign, which, if adversely determined,
would materially interfere with or adversely affect
the issuance of the Notes or the Note Guarantees or
in any manner draw into question the validity of this
Agreement, the Indenture, the Notes, the Note
Guarantees or the Registration Rights Agreement; and,
to the best knowledge of such counsel, every request
of any securities authority or agency of any
jurisdiction for additional information (to be
included in the Offering Memorandum or otherwise) has
been complied with or waived by such securities
authority or agency, as applicable;
(xvi) to the best knowledge of such counsel,
no authorization, approval, consent or order of, or
filing with, any court or governmental body or agency
(excluding any Gaming Authority or state securities
commission) is required for the consummation of the
transactions contemplated by this Agreement, the
Indenture, the Registration Rights Agreement or the
Offering Memorandum; no consents or waivers from any
person under any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or
instrument are required to consummate the
transactions contemplated by this Agreement, the
Indenture, the Note Guarantees, the Registration
Rights Agreement or the Offering Memorandum, except
for those consents which have been obtained;
(xvii) the execution and delivery of this
Agreement, the Indenture and the Registration Rights
Agreement, the issuance and the sale of the Notes and
the Note Guarantees, the performance of this
Agreement, the Indenture and Registration Rights
Agreement, compliance by the Company and the
Guarantors with the provisions hereof and thereof and
of the Notes and the Note Guarantees, and the
consummation of the transactions contemplated hereby
and thereby, in each case, as applicable, will not
(i) conflict with or result in a breach or violation
of any of the respective charters or bylaws of the
Company or any of the Guarantors or any material
franchise or license of the Company or any Subsidiary
or any of the terms or provisions of, or (ii)
constitute a default or cause an acceleration of any
obligation under, or result in the imposition or
creation of (or the obligation to create or impose) a
Lien with respect to, any bond, note, debenture or
other evidence of indebtedness or any indenture,
mortgage, deed or trust or other agreement or
instrument to which the Company or any of the
Guarantors is a party or by which it or any of them
is bound, or to which any properties of the Company
or any of the Guarantors is or may be subject, or
(iii) contravene any order or any court or
governmental agency (excluding any Gaming Authority)
or body having jurisdiction over the Company or any
of the Guarantors or any of their properties, or (iv)
violate or conflict with any statute, rule or
regulation or administrative or court decree
applicable to the Company or any of the Guarantors,
or any of their respective properties, in the case of
clauses (i), (ii), (iii) and (iv) which conflict,
breach, violation, default or contravention, singly
or in the aggregate with each other conflict, breach,
violation, default or contravention, would have a
Material Adverse Effect or would materially and
adversely affect the consummation of this Agreement,
the Indenture or the Registration Rights Agreement or
the transactions contemplated hereby or thereby;
20
<PAGE> 22
(xviii) except as specifically disclosed in
the Offering Memorandum, to the best knowledge of
such counsel, each of the Company and the
Subsidiaries has such Authorizations as are necessary
to own, lease and operate its respective properties
and to conduct its business in the manner described
in the Offering Memorandum. Each of the Company and
the Subsidiaries has fulfilled and performed all of
its material obligations with respect to such
Authorizations and no event has occurred which allow,
or after notice or lapse of time would allow
revocation or termination thereof or which results in
any other material impairment of the rights of the
holder of any such Authorization and such
Authorizations contain no restrictions that are
materially burdensome to the Company or any of the
Subsidiaries;
(xix) the Indenture complies as to form in
all material respects with the requirements of the
TIA, and the rules and regulations of the Commission
applicable to an indenture which is qualified
thereunder. It is not necessary in connection with
the offer, sale and delivery of the Series A Notes to
the Initial Purchaser in the manner contemplated by
this Agreement or in connection with the Exempt
Resales to qualify the Indenture under the TIA;
(xx) no registration under the Act of the
Series A Notes is required for the sale of the Series
A Notes to the Initial Purchaser as contemplated by
this Agreement or for the Exempt Resales assuming
that (i) the Initial Purchaser is a QIB, (ii) the
accuracy of, and compliance with, the Initial
Purchaser's representations and agreements contained
in Section 7 of this Agreement, and (iii) the
accuracy of the representations of the Company and
the Guarantors set forth in Sections 5(h) and 6(al),
(am) and (an) of this Agreement; and
(xxi) in addition, such counsel has
participated in conferences with officers and other
representatives of the Company and the Guarantors,
representatives of the Initial Purchaser and the
Initial Purchaser's counsel, representatives of the
independent public accounts for the Company and the
Guarantors, at which conferences the contents of the
Preliminary Offering Memorandum and the Offering
Memorandum and related matters were discussed and,
although such counsel is not passing upon, and does
not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained
therein, and have not made any independent check or
verification thereof during the course of such
participation (relying as to materiality to a large
extent upon the statements of officers and other
representatives of the Company and the Guarantors),
no facts came to such counsel's attention that caused
such counsel to believe that either the Preliminary
Offering Memorandum or the Offering Memorandum
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading or that the Offering
Memorandum, as of its date and the date hereof,
contained an untrue statement of a material fact or
omitted to state a material fact necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading; it being
understood that such counsel expresses no belief with
respect to the financial statements and notes
thereto, schedules, financial forecasts, notes and
assumptions thereto and other financial and
statistical data included in the Preliminary Offering
Memorandum or the Offering Memorandum.
The opinion of Maslon Edelman Borman & Brand, LLP, described
in Section 9(e) above shall be rendered to the Initial Purchaser at the request
of the Company and the Guarantors and shall so state therein.
(f) On the Closing Date, the Initial Purchaser shall have
received an opinion (satisfactory to the Initial Purchaser and the Initial
Purchaser's counsel), dated the Closing Date, of
21
<PAGE> 23
Watkins Ludlam & Stennis P.A., Mississippi counsel to the Company and the
Guarantors, substantially to the effect that:
(i) except (a) as disclosed in the
Offering Memorandum, (b) for consents, approvals,
authorizations, orders and filings that have been
obtained prior to the date of the opinion or for
those required under state securities or Blue Sky
laws or regulations (as to which such state
securities or Blue Sky laws or regulations such
counsel need express no opinion), and (c) for the
periodic and other filings and reporting requirements
to which any of the Company and its Subsidiaries are
subject generally, to the best knowledge of such
counsel, no action has been taken and no statute,
rule or regulation (including, without limitation,
any gaming statutes and regulations) or order has
been enacted, adopted or issued by any Mississippi
governmental agency (including, without limitation,
the Mississippi Gaming Commission) or body which
prevents the issuance of the Series A Notes or the
Note Guarantees with respect to the Series A Notes,
prevents or suspends the use of the Preliminary
Offering Memorandum or suspends the sale of the
Series A Notes or the Note Guarantees with respect to
the Series A Notes; to the best knowledge of such
counsel, no injunction, restraining order or order of
any nature by a court of competent jurisdiction or
the Mississippi Gaming Commission has been issued
with respect to the Company or any of the
Subsidiaries which would prevent or suspend the
issuance or sale of the Series A Notes or the Note
Guarantees with respect to the Series A Notes; to the
best knowledge of such counsel, no action, suit or
proceeding is pending against or threatened against
or affecting the Company or any of the Subsidiaries
before any Mississippi court or arbitrator or any
Mississippi governmental body, agency (including,
without limitation, the Mississippi Gaming
Commission) or official, that, if adversely
determined, would materially interfere with or
adversely affect the issuance of the Series A Notes
or the Note Guarantees with respect to the Series A
Notes or in any manner draw into question the
validity of this Agreement, the Indenture, the Notes,
the Note Guarantees or the Registration Rights
Agreement; provided, however the approval of the
Mississippi Gaming Commission is required for, (a)
the registration, sale and issuance of the Series B
Notes and the Note Guarantees thereof by Grand
Casinos of Mississippi, Inc. - Gulfport, Grand
Casinos of Mississippi, Inc. - Biloxi and BL
Development Corp. (collectively the "Mississippi
Licensees") and (b) any restriction on the transfer
of, or agreements not to encumber, the equity
securities of the Mississippi Licensees, and such
approvals have not been obtained;
(ii) subject to the qualifications as set
forth in paragraph (i) above, with respect to the
Guarantors, no authorization, approval, consent or
order of, or filing with any Mississippi court or
governmental body or agency (including, without
limitation, the Mississippi Gaming Commission) is
required for the consummation of the transactions
contemplated by this Agreement, the Indenture or the
Registration Rights Agreement;
(iii) subject to the qualifications as set
forth in paragraph (i) above, to the best of such
counsel's knowledge, the execution and delivery of
this Agreement, the Indenture and the Registration
Rights Agreement, the issuance and sale of the Notes
and the Note Guarantees, the performance of this
Agreement, the Indenture and the Registration Rights
Agreement, compliance by the Company and the
Guarantors with provisions hereof and thereof and of
the Notes and the Note Guarantees and the
consummation of the transactions contemplated hereby
and thereby, in each case, as applicable, will not
contravene any order of any Mississippi court or
governmental agency (including, without limitation,
the Mississippi Gaming Commission) or body having
jurisdiction over the Guarantors or any of their
properties, or violate or conflict with any
Mississippi statute, rule or regulation or
administrative or court decree applicable to the
Guarantors, or any of their properties;
22
<PAGE> 24
(iv) except as disclosed in the Offering
Memorandum, the Mississippi Gaming Commission has not
issued any order or decree or is otherwise impairing,
restricting or prohibiting (i) a payment of dividends
by the Guarantors to the Company or (ii) the
continuation of the business of the Guarantors as is
presently being conducted or contemplated;
(v) the statements in the Offering
Memorandum under the headings
"Regulation--Mississippi" in the annual report on
Form 10-K included therein to the extent such
statements constitute a summary of Mississippi legal
matters, fairly present the information called for
with respect to Mississippi legal matters and are
correct accurate in all material respects;
(vi) if a court were to disregard the
choice of law provision of the Notes or the Note
Guarantees, the indebtedness represented by the Notes
or the Note Guarantees, as the case may be, would not
be found to be usurious under any applicable
Mississippi law;
(vii) none of the Initial Purchaser, the
Trustee or the holders of the Notes (collectively
referred to as "Participants") is required, solely by
reason of the transactions contemplated by this
Agreement, the Indenture or the Registration Rights
Agreement, to be found suitable or to be licensed by
the Mississippi Gaming Commission; provided, however,
the Mississippi Gaming Commission retains discretion
to require any Participant to file an application for
a finding of suitability and be found suitable in
order to remain a Participant; and
(viii) none of the Participants is
required, solely by reason of the exercise of the
remedies provided for in the Indenture, to be found
suitable or to be licensed by the Mississippi Gaming
Commission except that the Mississippi Gaming
Commission retains discretion to require any
Participant to file an application for a finding of
suitability and be found suitable in order to remain
a Participant.
The opinion of Watkins Ludlam & Stennis shall be rendered to
the Initial Purchaser at the request of the Company and the Guarantors and
shall so state therein. Such opinion shall be subject to standard exceptions,
qualifications and assumptions, including the retained discretion of the
Mississippi Gaming Authorities to require a finding of suitability with respect
to any Participant and the authority of the Mississippi Gaming Authorities to
require rescission of any loan transaction which is inimical to the public
health, safety, morals, good order or general welfare of the people of the
State of Mississippi or would reflect or tend to reflect, discredit upon the
State of Mississippi or the gaming industry.
(g) On the Closing Date, the Initial Purchaser shall have
received an opinion, in form and substance satisfactory to the Initial
Purchaser and the Initial Purchaser's counsel, dated the Closing Date, of
Jacobson, Buffalo, Schoessler & Magnuson, Ltd., Indian counsel to the Company
and the Guarantors with respect to Indian law issues in the form of Exhibit B
attached hereto.
(h) On the Closing Date, the Initial Purchaser shall have
received an opinion, in form and substance satisfactory to the Initial
Purchaser and the Initial Purchaser's counsel, dated the Closing Date, of
Schreck Morris, Nevada counsel to the Company and the Guarantors with respect
to Nevada law issues in the form of Exhibit C attached hereto.
(i) The Initial Purchaser shall have received an opinion,
dated the Closing Date, of Latham & Watkins, counsel to the Initial Purchaser,
in form and substance reasonably satisfactory to the Initial Purchaser.
(j) The Initial Purchaser shall have receive comfort
letters on and as of the date hereof as well as on and as of the Closing Date
(in the latter case constituting an affirmation of the statements set forth in
the former), in form and substance satisfactory to the Initial Purchaser, from
each
23
<PAGE> 25
of Arthur Andersen LLP ("Arthur Andersen"), independent public accountants for
the Company and KPMG Peat Marwick LLP, independent public accountants for the
Company and Stratosphere Corporation, with respect to the financial statements
and certain financial information contained in the Offering Memorandum relating
to the Company and the Subsidiaries. Such letters shall also include a
statement therein that Arthur Andersen has performed the procedures specified
by the American Institute of Certified Accountants for a review of the interim
financial information included in the Offering Memorandum, as described in SAS
No. 71, Interim Financial Information.
(k) The Series A Notes shall have been approved by the
NASD for trading and duly listed in The Portal Market.
(l) Latham & Watkins shall have been furnished with such
documents and opinions, in addition to those set forth above, as it may
reasonably require for the purpose of enabling it to review or pass upon the
matters referred to in this Section 9 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(m) Prior to the Closing Date, the Company and the
Guarantors shall have furnished to the Initial Purchaser such further
information, certificates and documents as the Initial Purchaser may reasonably
request.
(n) The Company and the Guarantors shall have executed
the Registration Rights Agreement, and the Initial Purchaser shall have
received an original copy thereof, duly executed by the Company and the
Guarantors.
(o) At or prior to the Closing Date, each of the Company
and the Guarantors, as applicable, shall have (i) duly and validly executed the
Indenture and all other agreements described in the Offering Memorandum, to the
extent such other agreements are to be entered into on or prior to the Closing
Date, and (ii) entered into all other transactions described in the Offering
Memorandum, to the extent such transactions are to be entered into on or prior
to the Closing Date. At the Closing Date, each agreement and transaction
described in clauses (i) and (ii) shall be in full force and effect and there
shall not be pending or threatened any legal or governmental proceedings with
respect thereto. The Initial Purchaser shall have received true, correct and
complete copies of all documents pertaining thereto and evidence satisfactory
to the Initial Purchaser of the consummation thereof.
(p) Except as specifically disclosed in the Offering
Memorandum, the Company, the Guarantors and their respective subsidiaries shall
have received all material consents, permits, approvals, and the other
authorizations, and made all such material filings and declarations as may be
required from any person pursuant to any law, statute, regulation or rule
(federal, state, local and foreign), or pursuant to any agreement, order or
decree to which any of the Company, the Guarantors or any of their respective
subsidiaries is a party or to which it is subject, in connection with the
transactions contemplated by this Agreement, the Indenture, the Registration
Rights Agreement or the Offering Memorandum.
(q) Except as specifically disclosed in the Offering
Memorandum with respect to gaming licenses, the Company, the Guarantors and
their respective subsidiaries shall have received all required consents,
permits, approvals, and other authorizations, and made all such material
filings and declarations as may be required from any Gaming Authority pursuant
to any gaming laws, statutes, regulations or rules, or pursuant to any
agreement, order or decree to which any of the Company, the Guarantors or its
subsidiaries is a party or to which it is subject, in connection with the
transactions contemplated by this Agreement, the Indenture, the Registration
Rights Agreement and the Offering Memorandum.
(r) None of the officers or directors of the Company,
Grand Casinos Resorts, Inc., a Minnesota corporation, Grand Casinos of
Mississippi, Inc. - Gulfport, a Minnesota corporation, Grand Casinos of
Mississippi, Inc. - Biloxi, a Minnesota corporation, BL Development Corp., a
Minnesota corporation and none of their respective affiliates shall have been
found by the Mississippi Gaming Authorities to not be suitable and no event
shall have occurred that could reasonably be expected to result in such a
finding.
24
<PAGE> 26
(s) The Company shall pay to the Initial Purchaser, in
immediately available funds by wire transfer all expenses and reimbursements of
the Initial Purchaser in connection with the Offering.
(t) Neither the Company nor the Guarantors shall have
failed at or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by
the Company or the Guarantors, as the case may be, at or prior to the Closing
Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the
Closing Date by the Initial Purchaser by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchaser's judgment, is material and adverse and, in the
Initial Purchaser's judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Memorandum,
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company or any
Guarantor on any exchange or in the over-the-counter market, (iv) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in the Initial Purchaser's opinion materially and adversely affects, or
will materially and adversely affect, the business, prospects, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole, (v) the declaration of a banking moratorium by either federal or
New York State authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal
affairs which in the Initial Purchaser's opinion has a material adverse effect
on the financial markets in the United States.
11. MISCELLANEOUS. Notices given pursuant to any
provision of this Agreement shall be addressed as follows: (i) if to the
Company or any Guarantor, to Grand Casinos, Inc., 130 Cheshire Lane,
Minnetonka, Minnesota 55305, Attention: Chief Financial Officer, with a copy
to Maslon Edelman Borman & Brand, LLP, 3300 Norwest Center, Minneapolis,
Minnesota 55402, Attention: Russell F. Lederman Esq., and (ii) if to the
Initial Purchaser, Donaldson, Lufkin & Jenrette Securities Corporation, 277
Park Avenue, New York, New York 10172, Attention: Syndicate Department, or in
any case to such other address as the person to be notified may have requested
in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Guarantors
and the Initial Purchaser set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Series A Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchaser, the officers or directors of the Initial Purchaser, any person
controlling the Initial Purchaser, the Company, any Guarantor, the officers or
directors of the Company or any Guarantor, or any person controlling the
Company or any Guarantor, (ii) acceptance of the Series A Notes and payment for
them hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or
on behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company and each
Guarantor, jointly and severally, agree to reimburse the Initial Purchaser for
all out-of-pocket expenses (including the reasonable fees and disbursements of
counsel) incurred by them. Notwithstanding any termination of this Agreement,
the Company shall be liable for all expenses which it has agreed to pay
pursuant to Section 5(i) hereof. The Company and each Guarantor also agree,
jointly and severally, to reimburse the Initial Purchaser and its officers,
directors and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act for any
and all fees and expenses (including without limitation the fees and expenses
of counsel)
25
<PAGE> 27
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation its rights under this Section 8).
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Guarantors, the Initial Purchaser, the Initial Purchaser's directors and
officers, any controlling persons referred to herein, the directors of the
Company and the Guarantors and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include a purchaser of any of the Series A Notes from
the Initial Purchaser merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
26
<PAGE> 28
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
GRAND CASINOS, INC.
By: /s/ Timothy J. Cope
---------------------------------------------
Name:
Title:
GRAND CASINOS RESORTS, INC.
By: /s/ Timothy J. Cope
---------------------------------------------
Name:
Title:
GRAND CASINOS OF MISSISSIPPI, INC. - GULFPORT
By: /s/ Timothy J. Cope
---------------------------------------------
Name:
Title:
GRAND CASINOS OF MISSISSIPPI, INC. - BILOXI
By: /s/ Timothy J. Cope
---------------------------------------------
Name:
Title:
GRAND CASINOS BILOXI THEATER, INC.
By: /s/ Timothy J. Cope
---------------------------------------------
Name:
Title:
MILLE LACS GAMING CORPORATION
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
GRAND CASINOS OF LOUISIANA, INC. - TUNICA--BILOXI
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
27
<PAGE> 29
GRAND CASINOS OF LOUISIANA, INC. - COUSHATTA
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
GCA ACQUISITION SUBSIDIARY, INC.
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
BL DEVELOPMENT CORP.
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
BL RESORTS I, INC.
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
GCG RESORTS I, INC.
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
28
<PAGE> 30
GRAND CASINOS NEVADA I, INC.
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
BL RESORTS I, LLC
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
GCG RESORTS I, LLC
By: /s/ Timothy J. Cope
----------------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:/s/ Tyler Wolfram
------------------------
Name:
Title:
29
<PAGE> 31
SCHEDULE A
GUARANTORS
Grand Casinos Resorts, Inc.
Grand Casinos of Mississippi, Inc. - Gulfport
Grand Casinos of Mississippi, Inc. - Biloxi
Grand Casinos Biloxi Theater, Inc.
Mille Lacs Gaming Corporation
Grand Casinos of Louisiana, Inc. - Tunica--Biloxi
Grand Casinos of Louisiana, Inc. - Coushatta
GCA Acquisition Subsidiary, Inc.
BL Development Corp.
BL Resorts I, Inc.
GCG Resorts I, Inc.
Grand Casinos Nevada I, Inc.
BL Resorts I, LLC
GCG Resorts I, LLC
A-1
<PAGE> 32
SCHEDULE B
SUBSIDIARIES OF GRAND CASINOS, INC.
1. Grand Casinos Resorts, Inc.
(i) Grand Casinos of Mississippi, Inc.--Gulfport
(ii) Grand Casinos of Mississippi, Inc.--Biloxi
(iii) Grand Casinos & Resorts of Canada, Inc.
(iv) Riverside Entertainment Corporation
(v) Grand Casinos Biloxi Theater, Inc.
(vi) Grand Casinos Mississippi Development, Inc.
2. Grand Resorts de Mexico, S.A. de C.V.
3. Grand Casinos Ontario, Inc.
4. BL Development Corp.
(i) BL Utility Corp.
5. Grand Casinos Nevada I, Inc.
6. GCA Acquisition Subsidiary, Inc.
a. Riverfront Renaissance Corp.
b. Dells Development Corp.
c. North Mississippi Gaming Company
d. Mississippi Delta Gaming Company
e. Gaming Corporation of America--Bay St. Louis, Inc.
f. Golden Nickel Casinos, Inc.
7. Mille Lacs Gaming Corporation
8. Grand Casinos of Louisiana, Inc.--Tunica-Biloxi
9. Grand Casinos of Louisiana, Inc.--Coushatta
(i) Magnum Investments of Lake Charles, Inc.
(1) R&W Investments of Lake Charles, Inc.
10. Grand Casinos Pechanga, Inc.
11. Grand Casinos of Washington, Inc.
12. Grand Media & Electronic Distributing, Inc.
13. Grand Media Buying, Inc.
14. BL Resorts I, Inc.
15. GCG Resorts I, Inc.
16. BL Resorts I, LLC
17. GCG Resorts I, LLC
B-1
<PAGE> 33
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
A-1
<PAGE> 34
EXHIBIT B
FORM OF OPINION OF JACOBSON, BUFFALO, SCHOESSLER & MAGNUSON, LTD.
B-1
<PAGE> 35
EXHIBIT C
FORM OF OPINION OF SCHRECK MORRIS
C-1
<PAGE> 1
EXHIBIT 11
GRAND CASINOS, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS FISCAL YEARS ENDED
ENDED ENDED --------------------------------------------------------------
6/29/97 6/30/96 12/29/96 12/31/95 1/1/95 1/2/94 1/3/93
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Pretax Income 53,583 59,657 (83,223) 110,485 44,526 28,250 4,539
Plus - fixed charges as follows:
Interest Expense 22,617 10,566 32,767 26,187 14,140 10,636 165
Capitalized Interest 3,722 13,100 16,065 19,480 3,652 5,214 0
Loss in unconsolidated Affiliates 200 3,839 22,252 408 985 214 0
---------------------------------------------------------------------------------------
80,122 87,162 (12,139) 156,560 63,303 44,314 4,704
=======================================================================================
Fixed Charges:
Interest Expense 22,617 10,566 32,767 26,187 14,140 10,636 165
Capitalized Interest 3,722 13,100 16,065 19,480 3,652 5,214 0
Amortization of debt expense and
discount or premium relating
to any indebtedness 1,577 1,112 2,790 6,035 2,126 1,668 0
---------------------------------------------------------------------------------------
27,916 24,778 51,622 51,702 19,918 17,518 165
=======================================================================================
Ratio of Earnings to Fixed Charges 2.8701 3.5177 (0.2352) 3.0281 3.1782 2.5296 28.5091
=======================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
Registration Statement.
/s/ Arthur Andersen LLP
Minneapolis, MN
October 24, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated March 26, 1997 and to all references to our Firm included in or
made a part of this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Las Vegas, Nevada
October 24, 1997
<PAGE> 1
EXHIBIT 23.4
Independent Auditor's Consent
The Board of Directors
Grand Casinos, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, MN
October 24, 1997
<PAGE> 1
EXHIBIT 23.5
Independent Auditor's Consent
The Board of Directors
Stratosphere Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Las Vegas, Nevada
October 24, 1997
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
-----------------------------
FIRSTAR BANK OF MINNESOTA, N.A.
(Exact name of Trustee as specified in its charter)
A National Banking Association 41-0122055
(State of incorporation if (IRS Employer Identification No.)
not a national bank)
101 East Fifth Street
Corporate Trust Department
St Paul, Minnesota 55101
(Address of principal executive offices) (Zip Code)
FIRSTAR BANK OF MINNESOTA, N.A.
101 East Fifth Street
St. Paul, Minnesota 55101
(612) 229-2600
(Exact name, address and telephone number of agent for service)
-----------------------------
Grand Casinos, Inc.
(Exact name of obligor as specified in its charter)
Minnesota 41-1689535
(State of incorporation or (IRS Employer Identification No.)
other jurisdiction)
Grand Casinos, Inc.
130 Cheshire Lane
Minnetonka, Minnesota 55305
(612) 574-4000
(Address of principal executive offices) (Zip Code)
-----------------------------
9% Series B Senior Notes due 2004
(Title of Indenture securities)
<PAGE> 2
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, DC
Federal Deposit Insurance Corporation
Washington, DC
The Board of Governors of the Federal Reserve System
Washington, DC
(b) The Trustee is authorized to exercise corporate trust powers.
GENERAL
Item 2. Affiliations with Obligor and Underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's knowledge the
obligor is not in default under any Indenture for which the Trustee acts as
Trustee.
Item 16. List of Exhibits. Listed below are all the exhibits filed as a part of
this statement of eligibility and qualification. Exhibits 1-7 are
incorporated by reference from filing 333-37723.
Exhibit 1. Copy of Articles of Association of the trustee now in
effect.
Exhibit 2. a. A copy of the certificate of the Comptroller of
Currency dated June 1, 1965, authorizing Firstar
Bank of Minnesota, N. A. to act as fiduciary.
b. A copy of the certificate of authority of the
trustee to commence business issued June 9,
1903, by the Comptroller of the Currency to
<PAGE> 3
Firstar Bank of Minnesota, N.A.
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued by the Federal Reserve
Board.
Exhibit 4. Copy of the By-Laws of the trustee as now in effect.
Exhibit 5. Copy of each Indenture referred to in Item 4.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the requirements of
its supervising or examining authority.
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, a national banking association organized and existing under the laws of
the United States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Saint Paul and State of Minnesota on the 27th day of October, 1997.
FIRSTAR BANK OF MINNESOTA, N.A.
[SEAL]
/s/ FRANK P. LESLIE III
-------------------------------------------
Frank P. Leslie III
Vice President
<PAGE> 1
LETTER OF TRANSMITTAL
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 p.m., NEW YORK CITY TIME, ON _______, 1997 (AS SUCH DATE MAY
BE EXTENDED, THE "EXPIRATION DATE").
GRAND CASINOS, INC.
Series A Senior Notes Due 2004
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
IF YOU DESIRE TO ACCEPT THE EXCHANGE OFFER, THIS LETTER OF TRANSMITTAL SHOULD BE
COMPLETED, SIGNED, AND SUBMITTED TO:
FIRSTAR BANK OF MINNESOTA, N.A.
Exchange Agent
101 East Fifth Street
St. Paul, Minnesota 55101-1860
Attention: Corporate Trust Administration
Telecopier No. (612) 229-6415
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned hereby acknowledges receipt of the prospectus dated
________, 1997 (the "Prospectus") Grand Casinos, Inc., a Minnesota corporation (
the "Company"), and this Letter of Transmittal (the "Letter of Transmittal")
that together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its Series B Senior Notes due 2004 (the "New
Notes") for each $1,000 in principal amount of its outstanding Series A Senior
Notes due 2004 (the "Old Notes"). The Old Notes and New Notes are collectively
referred to as the "Notes." Capitalized terms used but not defined herein have
the meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Old Notes described in Box 1 below
(the "Tendered Old Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. If the undersigned is not the
beneficial owner of all the Tendered Old Notes (such beneficial owner(s) other
than the undersigned being called herein the "Beneficial Owners"), the
undersigned represents that it has received from each Beneficial Owner a duly
completed and executed form of "Instruction to Registered Holder from Beneficial
Owner" accompanying this
1
<PAGE> 2
Letter of Transmittal (the "Instruction to Registered Holder"), instructing the
undersigned to take the action described in this Letter of Transmittal.
Subject to, and effective upon, the acceptance for exchange of the
Tendered Old Notes, the undersigned hereby exchanges, assigns, and transfers to,
or upon the order of, the Company all right, title, and interest in, to, and
under the Tendered Old Notes.
Unless otherwise indicated under "Special Exchange Instructions" below
(Box 3A), please issue the New Notes exchanged for Tendered Old Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under "Special
Delivery Instructions" below (Box 3B), please send or cause to be sent the
certificates for New Notes (and accompanying documents, as appropriate) to the
undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as the true and lawful agent and attorney in fact of the
undersigned with respect to the Tendered Old Notes, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver the Tendered Old Notes to the Company
or cause ownership of the Tendered Old Notes to be transferred to, or upon the
order of, the Company, on the books of the Registrar for the Old Notes and
deliver all accompanying evidences of transfer and authenticity to, or upon the
order of, the Company upon receipt by the Exchange Agent, as the undersigned's
agent, of the New Notes to which the undersigned is entitled upon the acceptance
by the Company of the Tendered Old Notes pursuant to the Exchange Offer and (ii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of the Tendered Old Notes, all in accordance with the terms of the Exchange
Offer.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "THE EXCHANGE OFFER - Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
The tender of Tendered Old Notes made hereby shall be binding on the
undersigned and all future holders and owners of the Tendered Old Notes, subject
only to withdrawal of such tender on the terms set forth in the Prospectus under
the caption "THE EXCHANGE OFFER - Withdrawal Rights." All authority herein
conferred or agreed to be conferred shall survive the death or incapacity of the
undersigned and any Beneficial Owner(s), and every obligation of the undersigned
or any Beneficial Owners hereunder shall be binding upon the heirs,
representatives, successors, and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Old Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and
2
<PAGE> 3
deliver any additional documents reasonably requested by the Company as
necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the New Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the New Notes, and (iii) the undersigned and each Beneficial
Owner acknowledge that any person participating in the Exchange Offer for the
purpose of distributing the New Notes must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), in connection with a secondary resale transaction of the New Notes
acquired by such person and cannot rely on the position of the Staff of the
Securities and Exchange Commission (the "Commission") set forth in no-action
letters that are discussed in the section of the Prospectus entitled "THE
EXCHANGE OFFER Resales of the New Notes."
The undersigned and each Beneficial Owner understands that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 of Regulation S-K of the Commission.
3
<PAGE> 4
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
DESCRIPTION OF OLD NOTES TENDERED
(Attach additional signed pages, if necessary)
<TABLE>
<CAPTION>
Name(s) and address(es) of Registered Old Amount
Note Holder(s), exactly as name(s) Certificate Principal Aggregate
appear(s) on Old Note Certificate(s) Number(s) and Amount Principal
(Please fill in, if blank) Series of Old Represented Amount
Notes by Certificate(s) Tendered*
<S> <C> <C> <C>
______________ _______________ _____________
______________ _______________ _____________
______________ _______________ _____________
Total
______________ _______________ _____________
</TABLE>
BOX 2
BENEFICIAL OWNER(S)
State of Principal Principal Amount of
Residence of Each Beneficial Tendered Old Notes Held
Owner of Tendered Old Notes for Account of Beneficial Owner
_______________________________ ____________________________________
_______________________________ ____________________________________
_______________________________ ____________________________________
_______________________________ ____________________________________
4
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
BOX 3A BOX 3B
SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if New Notes for the Old To be completed ONLY if the New Notes exchanged
Notes or Old Notes (if any) represented by Old Note for the Old Notes and untendered Old Notes are to be
Certificates delivered to the Exchange Agent herewith, sent to someone other than the undersigned, or to the
to the extent not tendered, are to be issued in the undersigned at an address other than that shown above.
name of someone other than the undersigned.
Issue New Note(s) and any untendered Old Notes to: Issue New Note(s) and any untendered Old Notes to:
Names(s): Names(s):
- ------------------------------------------- -------------------------------------------
(please print) (please print)
Address: Address:
- ------------------------------------------- -------------------------------------------
- ------------------------------------------- -------------------------------------------
- ------------------------------------------- -------------------------------------------
(include Zip Code) (include Zip Code)
Tax Identification or Tax Identification or
Social Security No.: Social Security No.:
- ------------------------------------------- -------------------------------------------
</TABLE>
BOX 4
USE OF GUARANTEED DELIVERY
/ / CHECK HERE ONLY IF OLD NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY. See Instruction 2. If this box is checked, please
provide the following information:
Name(s) of Registered Holder(s):_______________________________________________
_______________________________________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Institution which Guaranteed Delivery: ________________________________
5
<PAGE> 6
BOX 5
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-7
<TABLE>
<S><C>
X ____________________________________________ Signature Guarantee
(If required by Instruction 5)
X ____________________________________________
(Signatures of Registered Holder(s) Authorized Signature
or Authorized Signatory)
X _______________________________________________
Note: The above lines must be signed by the
registered holder(s) of Old Notes as their
Name(s) appear(s) on the Old Notes or by person(s) Name: ___________________________________________
authorized to become registered holder(s) by a (please print)
properly completed bond power from the registered
holder(s) and other documents required by the Title:___________________________________________
Purchase Agreements (all of which must be transmitted
with this Letter of Transmittal). If signature is Name of Firm:____________________________________
by a trustee, executor, administrator, guardian, (Must be an Eligible institution
attorney-in-fact, officer, or other person acting in a (as defined in Instruction 2)
fiduciary or representative capacity, such person must
set forth his or her full title below. See Instruction 5. Address: ________________________________________
_________________________________________________
Name(s): __________________________________________ _________________________________________________
(include Zip Code)
__________________________________________
Capacity:__________________________________________ Area Code and Telephone Number:
__________________________________________ _________________________________________________
Street Address: ___________________________________ Dated: __________________________________________
_________________________________________
_________________________________________
(include Zip Code)
_________________________________________
Area Code and Telephone Number:
_________________________________________
Tax Identification or Social Security Number:
_________________________________________
</TABLE>
7
<PAGE> 7
<TABLE>
<S> <C>
PAYOR'S NAME: GRAND CASINOS, INC.
SUBSTITUTE Name (if joint names, list first and circle the name of
the person or entity whose number you enter in Part I
below. See Instructions if your name has changed.)
FORM W-9 ________________________________________________________
Address
Department of the ________________________________________________________
Treasury City, state and ZIP Code
________________________________________________________
Internal Revenue List account number(s) here (optional)
Service
Part 1 - PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION TIN
NUMBER ("TIN") (YOUR SOCIAL SECURITY NUMBER OR
EMPLOYER IDENTIFICATION NUMBER) IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW ____________
Part 2 - Check the box if you are NOT
subject to backup withholding under the provisions of
section 3408(a)(1)(C) of the Internal Revenue Code
because (1) you have not been notified that you are
subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal
Revenue Service has notified you that you are no longer
subject to backup withholding. / /
Payor's Request CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY PART 3 -
for TIN THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CHECK
CORRECT AND COMPLETE. BOX IF
AWAITING
Signature _____________________________ Date ___________ TIN
/ /
</TABLE>
9
<PAGE> 8
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The Tendered
Old Notes, as well as properly completed and duly executed copy of this Letter
of Transmittal, a Substitute Form W-9 (or facsimile thereof), and any other
documents required by this Letter of Transmittal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. THE METHOD OF DELIVERY OF CERTIFICATES FOR OLD
NOTES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
TENDERING ELIGIBLE HOLDER (AS DEFINED IN THE PROSPECTUS) AND DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE ELIGIBLE
HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. Neither the Company nor the
Registrar is under any obligation to notify any tendering Eligible Holder of the
Company's acceptance of Tendered Old Notes prior to the Closing of the Exchange
Offer.
2. GUARANTEED DELIVERY PROCEDURES. Eligible Holders who wish to tender
their Old Notes but whose Old Notes are not immediately available and who cannot
deliver their Old Notes, Letter of Transmittal and any other documents required
by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date
must tender their Old Notes according to the guaranteed delivery procedures set
forth below, including completion of Box 4. Pursuant to such procedures: (i)
such tender must be made by or through a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (an "Eligible Institution") and the Notice of Guaranteed
Delivery must be signed by the Eligible Holder; (ii) prior to the Expiration
Date, the Exchange Agent must have received from the Eligible Holder and the
Eligible Institution a properly completed and duly executed Letter of
Transmittal and a Notice of Guaranteed Delivery (by facsimile transmission,
mail, or hand delivery) setting forth the name and address of the Eligible
Holder, the certificate number or numbers of the Tendered Old Notes, and the
principal amount of Tendered Old Notes, stating that the tender is being made
thereby and guaranteeing that, within four business days after the date of
delivery of the Notice of Guaranteed Delivery, the Tendered Old Notes and any
other inquired documents will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) such properly completed and executed documents
required by this Letter of Transmittal and the Tendered Old Notes in proper form
for transfer must be received by the Exchange Agent within four business days
after the Expiration Date. Any Eligible Holder who wishes to tender Old Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of
Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time,
on the Expiration Date. Failure to complete the guaranteed delivery
10
<PAGE> 9
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
an Eligible Holder who attempted to use the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only an
Eligible Holder in whose name the Old Notes are registered on the books of the
Registrar (a "Registered Holder") (or the legal representative or
attorney-in-fact of such Registered Holder) may execute and deliver this Letter
of Transmittal. Any Beneficial Owner of Old Notes who is not the Registered
Holder must arrange promptly with the Registered Holder to execute and deliver
this Letter of Transmittal on his or her behalf through the execution and
delivery to the Registered Holder of the Instructions to Registered Holder form
accompanying this Letter of Transmittal. If such Beneficial Owner wishes to
tender directly, such Beneficial Owner must, prior to completing and executing
this Letter of Transmittal and tendering Old Notes, make appropriate
arrangements to register ownership of the Old Notes in such Beneficial Owner's
name. Beneficial Owners should be aware that the Letter of registered ownership
may take considerable time.
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000 in principal amount. If less than the entire
principal amount of any Old Note is tendered, the tendering Eligible Holder
should fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of the box entitled "Description of Old Notes
Tendered" (Box 1) above. The entire principal amount of Old Notes delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Old Notes is not tendered, Old
Notes for the principal amount of Old Notes not tendered and New Notes exchanged
for any Old Notes tendered will be sent to the Eligible Holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, promptly after the Old Notes are accepted.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the Registered Holder(s) of the Tendered Old Notes, the signature must
correspond with the name(s) as written on the face of the Tendered Old Notes
without alteration, enlargement, or any change whatsoever.
If any of the Tendered Old Notes are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
Tendered Old Notes are held in different names on several Old Notes, it will be
necessary to complete, sign, and submit as many separate copies of the Letter of
Transmittal documents as there are names in which Tendered Old Notes are held.
If this Letter of Transmittal is signed by the Registered Holder(s) of
Tendered Old Notes tendered and New Notes are to be issued (and any untendered
principal amount of Old Notes is to be reissued) to the Registered Holder(s),
the Registered Holder(s) need not and should not endorse any Tendered Old Notes
nor provide a separate bond power. In any other case, such Registered Holder(s)
must either properly endorse the Old Notes tendered or transmit a properly
completed separate bond power with this Letter of Transmittal, with the
signature(s) on the endorsement or
11
<PAGE> 10
bond power guaranteed by an Eligible Institution along with the other documents
required upon transfer by the Purchase Agreements.
If this Letter of Transmittal is signed by a person other than the
Registered Holder(s) of any Old Notes, the Tendered Old Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name of
the Registered Holder(s) appears on the Old Notes, with the signature on the
endorsement or bond power guaranteed by an Eligible Institution along with the
other documents required upon transfer by the Purchase Agreement.
If this Letter of Transmittal or any Old Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution unless the Tendered Old Notes are tendered (1) by a
Registered Holder who has not completed the box set forth herein entitled
"Special Exchange Instructions" (Box 3A) or the box entitled "Special Delivery
Instructions" (Box 3B) or (ii) by an Eligible Institution.
6. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS. Tendering Eligible
Holders should indicate, in the applicable box or boxes (Box 3A and/or 3B), the
name and address to which the New Notes and/or substitute Old Notes for
principal amounts not tendered or not accepted for exchange are to be issued or
sent, if different from the name and address of the person signing this Letter
of Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to it or its order pursuant to
the Exchange Offer. If, however, New Notes are to be issued to, or Old Notes for
principal amounts not tendered or accepted are to be delivered to, or are to be
registered or issued in the name of, any person other than the person signing
this Letter of Transmittal, or if a transfer tax is imposed for any reason other
than the transfer and sale of Old Notes to the Company or its order pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or on any other person) will be payable by the
tendering Eligible Holder. If satisfactory evidence of payment of such taxes or
exemption from taxes therefrom is not submitted with this Letter of Transmittal,
the amount of transfer taxes will be billed directly to such tendering Eligible
Holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
12
<PAGE> 11
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that an
Eligible Holder of any Old Notes which are accepted for exchange (who does not
otherwise establish an exemption from backup Federal income tax withholding)
must provide the Company (as payor) with its correct taxpayer identification
number ("TIN"), which, in the case of an Eligible Holder who is an individual,
is his or her social security number. If the Company is not provided with the
correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal
Revenue Service.
To prevent backup withholding, each tendering Eligible Holder must
provide such Holder's correct TIN by completing the Substitute Form W-9 set
forth herein, certifying that the TIN provided is correct (or that such Eligible
Holder is awaiting a TIN), and that (i) the Eligible Holder has not been
notified by the Internal Revenue Service that such Eligible Holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(ii) the Internal Revenue Service has notified the Eligible Holder that such
Eligible Holder is no longer subject to backup withholding. (If withholding
results in an over-payment of taxes, a refund may be obtained.) Certain Eligible
Holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of Tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the right to inject any and all
Old Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of the Company or its counsel, be unlawful. The
Company also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Old Notes as to any ineligibility of any
holder who seeks to tender Old Notes in the Exchange Offer. The interpretation
of the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes,
but shall not incur any liability for failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right
to amend, waive, or modify specified conditions in the Exchange Offer in
the case of any Tendered Old Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional,
irregular, or contingent tender of Old Notes or transmittal of this Letter of
Transmittal will be accepted.
12. MUTILATED, LOST, STOLEN, OR DESTROYED OLD NOTES. Any tendering
Eligible Holder whose Old Notes have been mutilated, lost, stolen, or
destroyed should contact the Exchange Agent at the address indicated above for
further instruction.
13
<PAGE> 12
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance and requests for additional copies of the Prospectus may
be directed to the Exchange Agent at the address specified in the Prospectus.
Eligible Holders may also contact their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED OLD NOTES AND ISSUANCE OF NEW NOTES; RETURN
OF OLD NOTES. Subject to the terms and conditions of the Exchange Offer, the
Company will accept for exchange all properly tendered Old Notes as promptly as
practicable after the Expiration Date and will issue New Notes therefor promptly
thereafter. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted tendered Old Notes when, as and if the Company has given written
or oral notice thereof to the Exchange Agent. If any Tendered Old Notes are not
exchanged pursuant to the Exchange Offer for any reason, such unexchanged Old
Notes will be returned, without expense, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Exchange Instructions" or "Special Delivery Instructions".
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "THE EXCHANGE
OFFER - Withdrawal Rights".
14
<PAGE> 13
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF
GRAND CASINOS, INC.
Series A Notes Due 2004
The undersigned hereby acknowledges receipt of the Prospectus dated
_________, 1997 (the "Prospectus") of Grand Casinos, Inc., a Minnesota
corporation (the "Company"), and the accompanying letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer").
This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the Old Notes held
by you for the account of the undersigned.
The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (fill in amount):
$______________ of the Series A Senior Notes Due 2004
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
/ / To TENDER the following Old Notes held by you for the account
of the undersigned (insert principal amount of Old Notes to be
tendered, if any):
$______________ of the Series A Senior Notes Due 2004
/ / NOT to TENDER any Old Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
Beneficial Owner (as defined in the Letter of Transmittal), including but not
limited to the representations that (i) the undersigned's principal residence is
in the state of (fill in state) ______________, (ii) the undersigned is
acquiring the New Notes in the ordinary course of business of the undersigned,
(iii) the undersigned is not participating, does not intend to participate, and
has no arrangement or understanding with any person to participate, in the
distribution of the New Notes, and (iv) the undersigned acknowledges that any
person participating in the Exchange Offer for the purpose of distributing the
New Notes must comply with the registration and prospectus delivery
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<PAGE> 14
requirements of the Securities Act of 1933, as amended, in connection with a
secondary resale transaction of the New Notes acquired by such person and cannot
rely on the position of the Staff of the Securities and Exchange Commission set
forth in no-action letters that are discussed in the section of the Prospectus
entitled "THE EXCHANGE OFFER - Resales of the New Notes"; (b) to agree, on
behalf of the undersigned, to the covenants and agreements to be made on behalf
of or with respect to the undersigned, as set forth in the Letter of
Transmittal; and (c) to take such other action as necessary under the Prospectus
or the Letter of Transmittal to effect the valid tender of such Old Notes.
I-2
<PAGE> 15
SIGN HERE
Name of Beneficial Owner(s):____________________________________________________
Signature(s):___________________________________________________________________
Name(s) (please print): ________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Telephone Number:_______________________________________________________________
Taxpayer Identification or Social Security Number: _____________________________
Date:___________________________________________________________________________
I-3
<PAGE> 16
NOTICE OF GUARANTEED DELIVERY
With Respect to
GRAND CASINOS, INC.
Series A Senior Notes Due 2004
This form must be used by an Eligible Holder of the Series A Senior
Notes Due 2004 (the "Old Notes") of Grand Casinos, Inc. (the "Company") who
wishes to tender Old Notes to the Exchange Agent pursuant to the guaranteed
delivery procedures described in "THE EXCHANGE OFFER - Guaranteed Delivery
Procedures" of the Prospectus dated ________, 1997 (the "Prospectus") and in
Instruction 2 to the Letter of Transmittal. Any Eligible Holder who wishes to
tender Old Notes pursuant to such guaranteed delivery procedures must ensure
that the Exchange Agent receives this Notice of Guaranteed Delivery prior to
5:00 p.m. New York City time on the Expiration Date of the Exchange Offer. Any
Eligible Holder providing this Notice of Guaranteed Delivery must also execute
and deliver a Letter of Transmittal herewith. Capitalized terms not defined
herein have the meanings ascribed to them in the Prospectus or the Letter of
Transmittal.
To: FIRSTAR BANK OF MINNESOTA, N.A., Exchange Agent
101 East Fifth Street
St. Paul, Minnesota 55101-1860
Attention: Corporate Trust Administration
Telecopier No. (612) 229-6415
A DULY COMPLETED AND EXECUTED LETTER OF TRANSMITTAL MUST BE
DELIVERED WITH THIS NOTICE OF GUARANTEED DELIVERY.
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
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<PAGE> 17
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal. The
undersigned hereby tenders the Old Notes listed below:
<TABLE>
<CAPTION>
Certificate Number(s) (if known) Aggregate Aggregate
and Principal Principal
Series of Old Notes Amount Amount
Represented Tendered
<S> <C> <C>
________________________________ _______________________ ______________________
________________________________ _______________________ ______________________
________________________________ _______________________ ______________________
________________________________ _______________________ ______________________
</TABLE>
SIGN HERE
Name of Eligible Holder: _______________________________________________________
Signature(s):___________________________________________________________________
Name(s) (please print):_________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________
Telephone Number:_______________________________________________________________
Date:___________________________________________________________________________
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<PAGE> 18
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or is a commercial bank or trust company having an office or correspondent in
the United States, or is otherwise an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Old Notes tendered hereby in proper
form for transfer and any other required documents, all by 5:00 p.m., New York
City time, on the third business day following the date of delivery of this
Notice of Guaranteed Delivery.
SIGN HERE
Name of Firm:
_____________________________________________
Authorized Signature:
_____________________________________________
Name (please print):
_____________________________________________
Address:
_____________________________________________
_____________________________________________
_____________________________________________
Telephone Number:____________________________
Date:________________________________________
DO NOT SEND NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
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<PAGE> 19
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery, a properly
completed and duly executed Letter of Transmittal, and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m. New York City time on
the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and any other required documents to the Exchange Agent is at the
election and risk of the Eligible Holder, and the delivery will be deemed made
only when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Instead of delivery by mail, it is recommended that the Eligible Holder use an
overnight or hand delivery service. In all cases sufficient time should be
allowed to assure timely delivery. For a description of the guaranteed delivery
procedure, see Instruction 2 of the Letter of Transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever.
If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Old Notes listed, this Notice of Guaranteed
Delivery must be accompanied by appropriate bond powers, signed as the name of
the registered holder(s) appears on the Old Notes.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Eligible Holders may also contact their broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
N-4
