<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ARGOSY GAMING COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 37-1304247
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
AND ITS GUARANTOR SUBSIDIARIES
ILLINOIS ALTON GAMING COMPANY 37-1261292
LOUISIANA ARGOSY OF LOUISIANA, INC. 72-1265121
LOUISIANA CATFISH QUEEN PARTNERSHIP IN COMMENDAM 72-1274791
INDIANA THE INDIANA GAMING COMPANY 37-1314871
IOWA IOWA GAMING COMPANY 37-1329487
LOUISIANA JAZZ ENTERPRISES, INC. 72-1214771
MISSOURI THE MISSOURI GAMING COMPANY 37-1311505
(State or other jurisdiction of (Exact name of Registrant as specified (I.R.S. Employer
incorporation or organization) in its charter) Identification No.)
</TABLE>
219 PIASA STREET
ALTON, ILLINOIS 62002
(618) 474-7500
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
JAMES B. PERRY
CHIEF EXECUTIVE OFFICER
219 PIASA STREET
ALTON, ILLINOIS 62002
(618) 474-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPY TO:
R. CABELL MORRIS, JR.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 558-5600
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
10.750% Senior Subordinated
Notes Due 2009.................... $200,000,000 100% $200,000,000 $55,600
Guarantee of the 10.750% Senior
Subordinated Notes Due 2009....... $200,000,000 None(2) None(2) None(2)
</TABLE>
(1) Estimated in accordance with Rule 457 under the Securities Act of 1993, as
amended, solely for purpose of computing the registration fee.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee is
payable for the Guarantee.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THE EXCHANGE NOTES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THE EXCHANGE NOTES, AND IT IS NOT SEEKING AN OFFER TO BUY THE
EXCHANGE NOTES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
DATED JULY 23, 1999
$200,000,000
[LOGO]
OFFER TO EXCHANGE
OUR 10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ANY AND ALL OF OUR OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999, UNLESS EXTENDED.
We are offering to exchange our 10 3/4% Senior Subordinated Notes due 2009
which have been registered under the Securities Act of 1933, as amended, for any
and all of our outstanding 10 3/4% Senior Subordinated Notes due 2009 issued on
June 3, 1999.
THE EXCHANGE NOTES
- The terms of the registered exchange notes to be issued are substantially
identical to the terms of the outstanding notes that we issued on June 3,
1999, except for transfer restrictions, registration rights and liquidated
damages provisions relating to the outstanding notes which will not apply
to the exchange notes.
- Interest on the exchange notes accrues at the rate of 10 3/4% per year,
payable in cash every six months on June 1 and December 1, with the first
interest payment on December 1, 1999.
- We may redeem any of the exchange notes beginning on June 1, 2004. The
initial redemption price is 105.375% of their principal amount plus
accrued interest. In addition before June 1, 2002, we may redeem up to 35%
of the exchange notes at a redemption price of 110.750% of their principal
amount plus accrued interest using proceeds from a public offering of our
capital stock.
- The exchange notes will rank equally with all of our other unsecured
senior subordinated indebtedness and will be junior to our senior
indebtedness. The exchange notes are guaranteed on a senior subordinated
basis by substantially all of our wholly-owned subsidiaries.
- We intend to list the exchange notes on the New York Stock Exchange.
MATERIAL TERMS OF THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended.
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged for an equal principal amount of exchange notes which
are registered under the Securities Act of 1933.
- Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
- The exchange offer is not subject to any minimum tender condition, but is
subject to the terms of the registration rights agreement that we entered
into on June 3, 1999 with the placement agents for the outstanding notes
and the guarantor subsidiaries.
- We will not receive any proceeds from the exchange offer. We will pay the
expenses of the exchange offer.
------------------------
NONE OF THE SECURITIES AND EXCHANGE COMMISSION, THE ILLINOIS GAMING BOARD,
THE INDIANA GAMING COMMISSION, THE IOWA RACING AND GAMING COMMISSION, THE
LOUISIANA GAMING CONTROL BOARD OR THE MISSOURI GAMING COMMISSION OR ANY OTHER
STATE REGULATORY BODY HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES OFFERED IN THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDER FOR
EXCHANGE FROM, HOLDERS OF OUTSTANDING NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
------------------------
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Where You Can Find More Information................................................... ii
Special Note Regarding Forward-Looking Statements..................................... iii
Summary............................................................................... 1
Risk Factors.......................................................................... 16
The Exchange Offer.................................................................... 26
Capitalization........................................................................ 35
Selected Historical Consolidated Financial Data....................................... 36
Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 38
The Company........................................................................... 47
Lawrenceburg Casino Partnership Agreement............................................. 55
Regulatory Matters.................................................................... 57
Management............................................................................ 74
Principal Stockholders................................................................ 76
Description of Our Other Indebtedness................................................. 78
Description of the Exchange Notes..................................................... 80
Material Federal Tax Considerations................................................... 127
Plan of Distribution.................................................................. 131
Legal Matters......................................................................... 131
Experts............................................................................... 131
Index to Financial Statements......................................................... F-1
</TABLE>
i
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WHERE YOU CAN FIND MORE INFORMATION
We filed a registration statement with the SEC under the Securities Act to
register the exchange notes to be issued in this exchange offer. As allowed by
the SEC's rules, this prospectus does not contain all of the information that
you can find in the registration statement and its exhibits. As a result,
statements made in this prospectus concerning the contents of a contract,
agreement or other document are not necessarily complete. If we have filed any
contract, agreement or other document as an exhibit to the registration
statement, you should read the exhibit for a more complete understanding of the
document or matter involved.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. You can also obtain copies of these materials
from the public reference section of the SEC at 45 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The SEC also maintains a web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC (http: www.sec.gov).
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update and supercede this prospectus. We have
filed the following documents with the SEC and they are incorporated in this
prospectus by reference:
(1) our Annual Report on Form 10-K for the year ended December 31, 1998;
(2) our Quarterly Report on Form 10-Q for the period ended March 31, 1999;
(3) our Current Reports on Form 8-K dated May 5, 1999, May 18, 1999 and June
8, 1999; and
(4) all documents subsequently filed by us with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the termination of this offering.
You may request a free copy of these filings (other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing) or any of the documents referred to in this prospectus by writing to or
telephoning us at the following address:
G. Dan Marshall
Director of Investor Relations
Argosy Gaming Company
219 Piasa Street
Alton, Illinois 62002
(618) 474-7500
The indenture governing the outstanding notes will also govern the exchange
notes. The outstanding notes and the exchange notes, together, are a single
series of debt securities. The indenture requires us to provide quarterly and
annual financial reports to holders of the exchange notes.
You should not assume that the information in this prospectus is accurate as
of any date other than the date of this prospectus, or the respective dates of
those documents we incorporate herein by reference, regardless of when you
received this prospectus. You should rely only on the information incorporated
by reference or provided in the registration statement. We have not authorized
anyone else to provide you with different information. The exchange offer is
being made to, and we will accept surrender for exchange from, holders of
outstanding notes only in jurisdictions where the exchange offer is permitted.
ii
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements." All statements
regarding our expected financial position, business, strategies and financing
plans under the headings "Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "The Company" and
elsewhere in this prospectus are forward-looking statements. The words
"believes," "estimates," "plans," "intends," "expects," "may," "will," "should,"
"seeks," "pro forma" or "anticipates," or other variations thereof (including
their use in the negative) identify forward-looking statements. Although we
believe that our expectations are reasonable based on our plans, beliefs and
assumptions, our expectations may prove to be incorrect. Important factors that
could cause actual results to be materially different include the following
factors:
- general economic conditions in our markets;
- increased competition in our markets, including the legalization of gaming
in states adjacent to our operations;
- our dependence on our Lawrenceburg, Indiana casino;
- our substantial leverage; and
- changes in laws or regulations, joint venture relations or decisions of
courts, regulators and governmental bodies.
For information with respect to these and other factors that could cause
actual results to differ from the expectations stated in the forward-looking
statements, see the text under the caption "Risk Factors." Potential investors
in the exchange notes are urged to consider these factors carefully in
evaluating the forward-looking statements contained or incorporated by reference
in this prospectus.
All subsequent written and oral forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety by
our cautionary statements. The forward-looking statements included or
incorporated in this prospectus are made only as of the date of this prospectus,
or as of the date of the document incorporated by reference. We do not intend,
and undertake no obligation, to update these forward-looking statements.
iii
<PAGE>
SUMMARY
EXCEPT WHERE OTHERWISE NOTED, THE WORDS, "WE," "US," "OUR" AND SIMILAR
TERMS, AS WELL AS REFERENCES TO "ARGOSY" OR THE "COMPANY" REFER TO ARGOSY GAMING
COMPANY AND ALL OF ITS SUBSIDIARIES. WITH RESPECT TO THE DISCUSSION OF THE TERMS
OF THE EXCHANGE NOTES ON THE COVER PAGE AND IN THE SECTION ENTITLED "SUMMARY OF
THE EXCHANGE OFFER" "WE," "OUR," AND "US" REFER ONLY TO ARGOSY GAMING COMPANY
AND NOT TO ANY OF ITS SUBSIDIARIES. THE FOLLOWING SUMMARY CONTAINS BASIC
INFORMATION ABOUT THIS EXCHANGE OFFER. IT LIKELY DOES NOT CONTAIN ALL THE
INFORMATION THAT IS IMPORTANT TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THIS
EXCHANGE OFFER, WE ENCOURAGE YOU TO READ THIS ENTIRE PROSPECTUS AND THE
DOCUMENTS WE HAVE REFERRED TO YOU.
THE COMPANY
We are a leading owner and operator of five riverboat casinos located in
emerging gaming markets of the central United States. We pioneered riverboat
gaming in St. Louis, Kansas City, Baton Rouge and Sioux City by opening the
first casino in each of those markets. Our newest riverboat casino serves the
Cincinnati market from Lawrenceburg, Indiana and is the largest revenue
producing riverboat in the United States gaming industry. We operate the
Lawrenceburg casino through a joint-venture subsidiary of which we currently own
a 57.5% interest.
The following summarizes our casino properties:
<TABLE>
<CAPTION>
PRINCIPAL METROPOLITAN 1998 NET APPROXIMATE GAMING
CASINO NAME MARKETS SERVED REVENUES POSITIONS
- -------------------------- ------------------------------- -------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Argosy Casino Lawrenceburg Cincinnati-Dayton-Columbus, $ 284,721 2,600
Ohio
Alton Belle Casino St. Louis, Missouri 72,064 900
Argosy Casino of Greater Kansas City, Missouri 76,960 1,400
Kansas City
Belle of Baton Rouge Baton Rouge, Louisiana 49,054 1,000
Casino
Belle of Sioux City Casino Sioux City, Iowa 23,526 600
</TABLE>
Since mid-1997, we have been implementing a strategic plan designed to
transform us from a company focused on developing casino properties to one
focused on achieving superior operational performance. Our strategy emphasizes
increasing revenues and profits through expanding direct marketing programs,
investing in state-of-the-art gaming products, such as new slot machines and
player tracking systems, and improving cost controls. To achieve these goals we
have strengthened our executive management team with the addition of a new chief
executive officer and new vice presidents of operations and sales and marketing
and several other key operating executives each with significant casino industry
experience.
Our initiatives have had the greatest impact at our four western casinos in
Alton, Kansas City, Baton Rouge and Sioux City. For the year ended December 31,
1998, net revenues at the western casinos combined increased 8% to $222 million,
while EBITDA (earnings before interest, taxes, depreciation and amortization)
increased 44% to $34 million. The trend continued in the first quarter of 1999
with net revenues at the western casinos increasing 5% to $59 million and EBITDA
growing 60% to $11 million as compared to the first quarter of 1998. At
Lawrenceburg, 1998 net revenues grew to $285 million while EBITDA increased to
$106 million, due primarily to the casino becoming fully operational with the
completion of its hotel and permanent pavilion. First quarter net revenues in
1999 at Lawrenceburg increased 31% to $78 million while EBITDA grew 38% to $29
million as compared to the first quarter of 1998. Overall, we reported record
results in 1998 with a 47% increase in net revenues to $507 million and a 137%
increase in EBITDA to $121 million. In the first quarter of 1999, our net
revenues increased 19% to $137 million while EBITDA grew 47% to $35 million.
1
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BUSINESS STRATEGY
By capitalizing on the extensive gaming industry experience of our
management team, we have developed a strategy to maximize the performance of our
operating assets and improve financial results. We continue to implement changes
at each of our properties to improve our competitive position, increase gaming
revenues and enhance profitability. The key elements of our business strategy
include: (1) utilizing direct marketing to encourage repeat business and foster
customer loyalty; (2) enhancing the gaming product at our casinos by investing
in state-of-the-art gaming equipment; (3) renovating our properties to create
more exciting gaming environments; and (4) increasing our financial flexibility
to enable us to pursue future business opportunities.
- REDIRECT MARKETING EFFORTS TOWARDS DIRECT MARKETING. We have changed our
marketing focus from mass marketing to direct and relationship marketing
to encourage repeat business and foster customer loyalty. At each of our
properties we use sophisticated player tracking systems to identify and
reward premium players and our most loyal customers. Based on a player's
gaming activity, we create targeted promotions including exclusive direct
mail offers and "member's only" concerts, parties, tournaments,
sweepstakes and special entertainment events.
- INVEST IN NEW GAMING EQUIPMENT. Historically, we used available capital to
develop new casinos while we deferred capital improvement projects and
gaming product upgrades at our existing facilities. Because slot machines
represent approximately 80% of our revenues, we began a program in 1998 to
systematically upgrade our gaming product with state-of-the-art slot
machines. We believe that regularly replacing slot machines with the most
popular products creates a more exciting gaming experience and increases
profitability. We invested in over 800 new slot machines in 1998. At our
western casinos, the upgraded machines increased the average daily revenue
over the older machines they replaced. At Lawrenceburg, additional new
slot product helped us take advantage of increased market demand. Going
forward we expect to replace an average of 15-20% of our gaming equipment
annually.
- RENOVATE OUR RIVERBOAT AND DOCKSIDE ENTERTAINMENT FACILITIES. To maintain
a fresh and exciting gaming experience for our customers, we have
developed a prudent capital investment plan to systematically renovate our
casino and entertainment facilities. By late-1999 we will complete a $12
million project at Alton that will replace the existing entertainment
pavilion with a newly-renovated barge that was originally used as the
Lawrenceburg temporary landing facility and an additional new barge. The
Alton renovation will significantly enhance the facility's restaurant and
entertainment amenities. In June 1999, we completed a $5 million
renovation and retheming of our Baton Rouge riverboat. The renovation of
the Baton Rouge riverboat's third deck features approximately 200 of the
newest and most popular video poker machines and gaming product upgrades
to target the video poker market. We are also considering expanding our
operations at Sioux City by replacing the existing support facility with
the three-level facility currently used in Alton.
- INCREASE FINANCIAL FLEXIBILITY. The issuance of the outstanding notes was
part of an overall refinancing plan designed to reduce borrowing costs,
extend debt maturities and increase our overall financial flexibility.
Future borrowing availability will enable us to complete the refurbishment
and upgrading of our facilities, fund a potential purchase of the minority
interests in our Lawrenceburg casino and pursue other strategic
opportunities.
CASINO PROPERTIES
ARGOSY CASINO LAWRENCEBURG
The Lawrenceburg casino is located on the Ohio River in Lawrenceburg,
Indiana approximately 15 miles west of Cincinnati and is the closest casino to
the Cincinnati metropolitan area. The casino
2
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principally draws customers from the major metropolitan areas of Cincinnati,
Dayton and Columbus, Ohio and, to a lesser extent, Indianapolis, Indiana and
Lexington, Kentucky. Casinos operating in the Cincinnati market generated $428
million of gaming revenues in 1998, a 58% increase from 1997. The Lawrenceburg
casino's 1998 gaming revenues grew 107% to $265 million, representing
approximately 62% of total gaming revenues reported by the two riverboat casinos
operating in the Cincinnati market. For the first quarter of 1999, casino
revenues at the Lawrenceburg casino grew 32% to $73 million compared to the
first quarter of 1998. We operate the Lawrenceburg casino through a
joint-venture subsidiary of which we own a 57.5% interest.
The Lawrenceburg casino is one of the largest riverboats in the United
States with 74,300 square feet of gaming space on three levels with
approximately 2,000 slot machines and 104 table games. The vessel can
accommodate 4,400 passengers and crew; however, to enhance our customers'
comfort and enjoyment, we operate at a self-imposed capacity of 3,600
passengers. The complex also includes a 300 room hotel, which was completed in
June 1998, a 120,000 square foot land-based entertainment pavilion and support
facility featuring a 350 seat buffet restaurant, two specialty restaurants, an
entertainment lounge and a 1,750 space parking garage. We recently converted a
portion of the casino into an exclusive area for high-stakes customers.
ALTON BELLE CASINO
The Alton Belle Casino is located on the Mississippi River in Alton,
Illinois approximately 20 miles northeast of downtown St. Louis. The casino
draws its customers largely from the northern and eastern regions of the greater
St. Louis metropolitan area, as well as portions of central and southern
Illinois. Casinos operating in the St. Louis market generated $538 million of
gaming revenues in 1998, a 15% increase from 1997. The Alton Belle Casino's 1998
gaming revenues grew 10% to $68 million, representing approximately 13% of total
gaming revenues reported by the six riverboat and dockside casinos operating in
the St. Louis market. For the first quarter of 1999, casino revenues at the
Alton Belle Casino grew 6% to $18 million compared to the first quarter of 1998.
As an Illinois licensee, the Alton Belle Casino is not subject to Missouri's
$500 loss limit and therefore has a competitive advantage in attracting high-end
customers over competitors operating under Missouri licenses.
The Alton Belle Casino consists of a riverboat with 22,800 square feet of
gaming space, approximately 700 slot machines and 32 table games and a 37,000
square foot, three-level floating entertainment pavilion, which features a
sports/entertainment lounge, buffet and table service restaurant facilities and
conference facilities. By late-1999 we will replace our existing entertainment
pavilion with a newly-renovated barge that was originally used as the
Lawrenceburg temporary landing facility and an additional new barge. This $12
million project will feature larger and improved food and beverage venues and a
new main showroom.
ARGOSY CASINO OF GREATER KANSAS CITY
The Argosy Casino of Greater Kansas City is located on the Missouri River in
Riverside, Missouri on a 55-acre site approximately five miles from downtown
Kansas City. The casino primarily attracts customers who reside in the northern
and western regions of the Kansas City metropolitan market. Casinos operating in
the Kansas City market generated $458 million of gaming revenues in 1998, a 10%
increase from 1997. The Kansas City casino's 1998 gaming revenues grew 17% to
$72 million, representing approximately 16% of Kansas City total gaming revenues
reported by the dockside casinos operating in the Kansas City market. For the
first quarter of 1999, casino revenues at the Kansas City casino grew 5% to $19
million compared to the first quarter of 1998.
The Kansas City casino features 36,000 square feet of gaming space,
approximately 1,100 slot machines and 45 table games. The riverboat casino is
complemented by an 85,000 square foot land-based entertainment facility
featuring specialty and buffet restaurants, a sports/entertainment
3
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lounge and 14,000 square feet of banquet/conference facilities. A 624-space
parking garage and a 1,262-space surface parking area are located adjacent to
the pavilion. In addition to our plans to upgrade older slot machines with newer
and more exciting models, we are considering expanding our current casino
complex. An expansion would allow us to provide patrons with nearly continuous
accessibility through staggered boarding times and increase the number of gaming
positions.
BELLE OF BATON ROUGE
The Belle of Baton Rouge is located on the Mississippi River in Baton Rouge,
Louisiana. The casino draws customers primarily from the Baton Rouge
metropolitan area. Casinos operating in the Baton Rouge market generated $117
million of gaming revenues in 1998, a 3% increase from 1997. This amount does
not include approximately $100 million of revenues generated in fiscal 1998 by
video poker machines operated in bars, restaurants and truck stops throughout
the Baton Rouge market and surrounding areas. The Belle of Baton Rouge's 1998
gaming revenues declined 2% to $47 million, representing 40% of total gaming
revenues reported by the two riverboat casinos operating in Baton Rouge. For the
first quarter of 1999 casino revenues at the Belle of Baton Rouge grew 4% to $13
million compared to the first quarter of 1998.
As a result of a 1996 general referendum, video poker machines are no longer
permitted in non-casino locations in the majority of Baton Rouge area parishes
as of July 1, 1999. Parishes that eliminated non-casino video poker represented
approximately $80 million of the Baton Rouge video poker market. To attract a
portion of the video poker market, we have refurbished our third deck into a
video poker area complete with approximately 200 of the newest and most popular
video poker machines available.
The Belle of Baton Rouge features 28,000 square feet of gaming space,
approximately 750 slot machines and 42 table games. The riverboat casino is
complemented by our adjacent real estate development known as Catfish Town.
Catfish Town includes a 50,000 square foot glass-enclosed atrium,
entertainment/sports lounge, buffet/coffee shop, conference facilities and
approximately 150,000 square feet of retail space that is currently available
for lease. A 733-space parking garage and a 271-space surface parking lot are
located adjacent to Catfish Town.
BELLE OF SIOUX CITY
The Belle of Sioux City is located on the Missouri River in downtown Sioux
City, Iowa. The casino draws customers from the Sioux City metropolitan area and
competes with two Native American casinos that are not required to report gaming
market data. The Sioux City casino's 1998 gaming revenues grew 9% to $23
million. For the first quarter of 1999, casino revenues at the Belle of Sioux
City grew 17% to $6 million compared to the first quarter of 1998. The riverboat
features 12,500 square feet of gaming space, 450 slot machines and 23 table
games. The casino is complemented by adjacent barge facilities featuring buffet
dining facilities, meeting space and administrative support offices. We are
significantly upgrading our Sioux City gaming product so that by the end of 1999
we will have replaced 95% of our electronic gaming devices over a two year
period. In addition, we are considering expanding our operations by replacing
the current support facility with the three-level facility used in Alton. We
operate the Belle of Sioux City through a joint-venture subsidiary, of which we
are the sole general partner and hold a 70% interest.
4
<PAGE>
THE REFINANCINGS
The offering of the outstanding notes was part of a financing plan to
refinance substantially all of our existing indebtedness. Through this plan, we
reduced our debt service costs, extended our debt maturities and increased our
financial flexibility. The series of transactions consisted of the following:
- OUTSTANDING NOTE OFFERING. We issued an aggregate of $200 million
principal amount of the outstanding notes. The net proceeds of the
offering were used to fund a portion of the repurchase of the first
mortgage notes described below.
- CREDIT FACILITY. Concurrently with the issuance of the outstanding notes,
we and all of our wholly-owned operating subsidiaries as co-borrowers
entered into a new five year $200 million senior secured revolving bank
credit agreement. The credit facility is secured by liens on substantially
all of our assets and the assets of all of our wholly-owned operating
subsidiaries. Our joint-venture subsidiaries that operate the Argosy
Casino Lawrenceburg and the Belle of Sioux City Casino are not
co-borrowers under the credit facility. We used the initial borrowings
under the credit facility to fund the repurchase of approximately 90% of
our 13 1/4% first mortgage notes and the redemption of our 12% convertible
subordinated notes described below. We expect to use future borrowings to
finance capital improvements, to provide working capital and for general
corporate purposes. We have the right, within two years following the
closing of the credit facility, to arrange for a $75 million increase to
the borrowing availability under the credit facility. In addition, we have
the right, within two years following the closing, to arrange for a
further $150 million increase to fund the purchase of all outstanding
minority interests in the Lawrenceburg partnership.
- REPURCHASE OF 13 1/4% FIRST MORTGAGE NOTES AND CONSENT SOLICITATION. In
connection with the issuance of the outstanding notes, we commenced an
offer to purchase our $235 million principal amount of 13 1/4% first
mortgage notes due 2004. We also solicited consents to permit us to create
additional liens on the collateral securing our obligations under the
13 1/4% first mortgage notes and amend the indenture and the related
security documents of the 13 1/4% first mortgage notes to eliminate the
subsidiary guarantee provisions and most of the financial and restrictive
covenants in the indenture.
On May 18, 1999, we received consents to the amendments from holders of
approximately 90% of the outstanding principal amount of the 13 1/4% first
mortgage notes. On June 7, 1999, we repurchased all of the 13 1/4% first
mortgage notes that were tendered pursuant to our offer to purchase. As of
June 30, 1999 we have outstanding $22,242,000 13 1/4% first mortgage
notes. We are required under the terms of the credit facility to cash
collateralize our remaining obligations and call for redemption all
outstanding 13 1/4% first mortgage notes on the earliest redemption date,
June 1, 2000.
- REDEMPTION OF CONVERTIBLE SUBORDINATED NOTES. On June 8, 1999, we issued a
notice of redemption to redeem our $115 million aggregate principal amount
of 12% convertible subordinated notes due 2001, at a price equal to 102%
per note. On July 7, 1999, we redeemed all of our $115 million 12%
convertible subordinated notes using borrowings under the credit facility.
------------------------
We are a Delaware corporation. Our principal executive offices are located
at 219 Piasa Street, Alton, Illinois 62002 and our telephone number is (618)
474-7500. You may obtain additional information about us at our website,
www.argosycasinos.com.
5
<PAGE>
THE EXCHANGE OFFER
The following summary highlights selected information regarding the exchange
offer and may not contain all of the information that is important to you. You
should read "The Exchange Offer" for a more complete description.
<TABLE>
<S> <C>
OUTSTANDING NOTES............... 10 3/4% Senior Subordinated Notes due 2009, which were
issued on June 3, 1999.
EXCHANGE NOTES.................. 10 3/4% Senior Subordinated Notes due 2009, which have
been registered under the Securities Act of 1933. The
terms of the exchange notes are substantially identical to
those of the outstanding notes, except that the transfer
restrictions, registration rights and liquidated damages
provisions relating to the outstanding notes do not apply
to the exchange notes.
The Exchange Offer.............. Up to $200,000,000 aggregate principal amount of exchange
notes registered under the Securities Act are being
offered in exchange for the same principal amount of the
outstanding notes. The terms of the exchange notes and the
outstanding notes are substantially identical. Outstanding
notes may be tendered for exchange in whole or in part in
any integral multiple of $1,000. We are making the
exchange offer in order to satisfy our obligations under
the registration rights agreement relating to the
outstanding notes. For a description of the procedures for
tendering the outstanding notes, see "The Exchange Offer--
Procedures for Tendering Outstanding Notes."
Expiration Date................. 5:00 p.m., New York City time, , 1999, unless the
exchange offer is extended, in which case the expiration
date will be the latest date and time to which the
exchange offer is extended. See "The Exchange Offer--Terms
of the Exchange Offer."
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary conditions
described under "The Exchange Offer--Conditions to the
Offer." some of which we may waive in our sole discretion.
The exchange offer is not conditioned upon any minimum
principal amount of outstanding notes being tendered. We
reserve the right in our sole and absolute discretion,
subject to applicable law, at any time and from time to
time:
- to delay the acceptance of the outstanding notes for
exchange;
- to terminate the exchange offer if one or more specific
conditions have not been satisfied;
- to extend the expiration date of the exchange offer and
retain all outstanding notes tendered pursuant to the
exchange offer, subject, however, to the right of
holders of outstanding notes to withdraw their tendered
outstanding notes; or
- to waive any condition or otherwise amend the terms of
the exchange offer in any respect.
See "The Exchange Offer--Procedures for Tendering
Outstanding Notes."
Withdrawal Rights............... Tenders of outstanding notes may be withdrawn at any time
on or prior to the expiration date by delivering a written
notice of
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
withdraw to the exchange agent in conformity with the
procedures discussed under "The Exchange Offer--Withdrawal
of Tender."
Procedures for Tendering
Outstanding Notes............. Tendering holders of outstanding notes must complete and
sign a letter of transmittal in accordance with the
instructions contained in the letter of transmittal.
Tendering holders must forward the completed letter of
transmittal by mail, facsimile or hand delivery, together
with any other required documents, to the exchange agent,
or must submit to the exchange agent the outstanding notes
you are tendering or comply with the specified procedures
for guaranteed delivery of outstanding notes. Brokers,
dealers and commercial banks, trust companies and other
nominees may also effect tenders by book-entry transfer.
If your outstanding notes are registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee, we urge you to contact your nominee holder
promptly if you wish to tender outstanding notes pursuant
to the exchange offer. See "The Exchange Offer--Procedures
for Tendering Outstanding Notes."
Letter of Transmittal and certificates representing
outstanding notes should not be sent to us. Those
documents should be sent only to the exchange agent. The
address and telephone and facsimile numbers of the
exchange agent are set forth in "The Exchange
Offer--Exchange Agent" and in the letter of transmittal.
GUARANTEED DELIVERY
PROCEDURES.................... If you are a registered holder of the outstanding notes
and wish to tender your outstanding notes in the exchange
offer, but
- the outstanding notes are not immediately available;
- time will not permit your outstanding notes or other
required documents to reach the exchange agent before the
expiration of the exchange offer, or
- the procedure for book-entry transfer cannot be
completed prior to the expiration of the exchange offer,
you may tender outstanding notes by following the
procedures described below under the caption "The Exchange
Offer-- Guaranteed Delivery Procedures".
Acceptance of Outstanding Notes
and Delivery of Exchange
Notes......................... Upon consummation of the exchange offer, we will accept
any and all outstanding notes that are properly tendered
in the exchange offer and not withdrawn prior to 5:00
p.m., New York City time, on the expiration date. The
exchange notes issued pursuant to the exchange offer will
be delivered promptly after acceptance of the outstanding
notes. See "The Exchange Offer-- Terms of the Exchange
Offer."
Resales of Exchange Notes....... We believe that you will be able to offer for resale,
resell or otherwise transfer exchange notes issued in the
exchange offer without compliance with the registration
and prospectus delivery provisions of the federal
securities laws, provided that:
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
- you are not a broker-dealer;
- you are not participating in a distribution of the
exchange notes; and
- you are not an "affiliate" Argosy Gaming Company, as the
term is defined in Rule 144A under the Securities Act of
1933.
Our belief is based on interpretations by the staff of the
SEC, as set forth in no-action letters issued to third
parties unrelated to us. The staff has not considered this
exchange offer in the context of a no-action letter, and
we cannot assure you that the staff would make a similar
determination with respect to this exchange offer.
If our belief is not accurate and you transfer an exchange
note without delivering a prospectus meeting the
requirements of the federal securities laws or without an
exemption from these laws, you may incur liability under
the federal securities laws. We do not and will not
assume, or indemnify you against, this liability.
Each broker-dealer that receives exchange notes for its
own account in exchange for outstanding notes which were
acquired by the broker-dealer as a result of market-making
or other trading activities must agree to deliver a
prospectus meeting the requirements of the federal
securities laws in connection with any resale of the
exchange notes. See "The Exchange Offer--Resales of the
Exchange Notes."
Exchange Agent.................. The exchange agent with respect to the exchange offer is
Bank One Trust Company, NA. The address and telephone and
facsimile numbers of the exchange agent are set forth in
"The Exchange Offer--Exchange Agent" and in the letter of
transmittal.
Use of Proceeds................. We will not receive any cash proceeds from the issuance of
the exchange notes offered hereby.
Material Federal Tax
Considerations................ You should review the information set forth under
"Material Federal Tax Considerations" prior to tendering
outstanding notes in the exchange offer.
Consequences of Not Exchanging
Outstanding Notes............. If you do not exchange your outstanding notes in the
exchange offer, your outstanding notes will continue to be
subject to the restrictions on transfer described in the
legend on the certificate for your outstanding notes. In
general, you may offer or sell your outstanding notes
only:
- if they are registered under the Securities Act and
applicable state securities laws;
- if they are offered or sold under an exemption from
registration under the Securities Act and applicable
state securities laws; or
- if they are offered or sold in a transaction not subject
to the Securities Act and applicable state securities
laws.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
We do not currently intend to register the outstanding
notes under the Securities Act. For more information
regarding the consequences of not tendering your
outstanding notes, see "The Exchange Offer.
</TABLE>
TERMS OF THE EXCHANGE NOTES
The exchange offer applies to an aggregate principal amount of $200,000,000
of the outstanding notes. The form and terms of the exchange notes will be
identical in all material respects to the form and terms of the outstanding
notes except:
- the exchange notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer;
- holders of exchange notes will not be entitled to any liquidated damages
under the registration rights agreement relating to the outstanding notes;
and
- holders of the exchange notes will not be, and upon consummation of the
exchange offer, holders of the outstanding notes will no longer be,
entitled to specific rights under the registration rights agreement for
the outstanding notes intended for the holders of unregistered securities.
The exchange notes will be our obligations entitled to the benefits of the
indenture. See "Description of the Exchange Notes."
<TABLE>
<S> <C>
Exchange Notes Offered.......... $200,000,000 aggregate principal amount of 10 3/4% Senior
Subordinated Notes.
Maturity Date................... June 1, 2009.
Interest........................ Interest on the exchange notes is payable semi-annually in
cash on June 1 and December 1, commencing on December 1,
1999. For a description of the requirement to offer to
exchange the exchange notes and the possible effect on the
interest rate, see "The Exchange Offer--Terms of the
Exchange".
Subsidiary Guarantees........... All of our wholly-owned operating subsidiaries will
guarantee the exchange notes. The joint-venture
subsidiaries that operate the Lawrenceburg casino and the
Sioux City casino will not guarantee the exchange notes.
If Argosy Gaming Company cannot make payments on the
exchange notes when they are due, the subsidiary
guarantors must make them instead.
Ranking......................... The exchange notes and subsidiary guarantees are unsecured
senior subordinated obligations of Argosy Gaming Company
and the subsidiary guarantors, respectively. The exchange
notes will rank junior to all of the senior indebtedness
of Argosy Gaming Company, including borrowings under the
credit facility and the subsidiary guarantees will rank
junior to the senior indebtedness of the subsidiary
guarantors.
Optional Redemption............. We may redeem some or all of the exchange notes beginning
on June 1, 2004, initially at 105.375% of their principal
amount, plus accrued interest and declining ratably to
100% of their principal amount, plus accrued interest, on
or after June 1, 2007.
Before June 1, 2002, we may redeem up to 35% of the
exchange notes with the proceeds of one or more public
offerings of our capital stock at a redemption price of
110.750% of their principal
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
amount, plus accrued interest. However, we may only make
such redemptions if at least $135 million aggregate
principal amount of exchange notes remains outstanding
after each redemption, excluding exchange notes held by us
or the subsidiary guarantors, and such redemption occurs
within 60 days of the date of the closing of the sale of
the capital stock. See "Description of the Exchange
Notes--Optional Redemption."
Mandatory Offer to Repurchase... If we experience specific kinds of changes of control, or
under certain circumstances, if we sell assets, we must
offer to repurchase the exchange notes at the prices
listed in "Description of the Exchange Notes."
Basic Covenants of the
Indenture..................... The terms of the outstanding notes do, and of the exchange
notes will, restrict our ability to, among other things:
- borrow money;
- pay dividends on, redeem or repurchase our capital
stock;
- make investments;
- incur liens on our assets to secure debt;
- merge or consolidate with another company; and
- transfer or sell our assets.
These covenants are subject to important exceptions and
qualifications which are described in "Description of the
Exchange Notes--Certain Covenants."
Covenants Relating to Sale of
Lawrenceburg Interests........ The terms of the outstanding notes do, and of the exchange
notes will, provide that upon certain sales of our
partnership interest in, or the assets of, the
Lawrenceburg partnership, we must either make an offer to
repurchase an amount of exchange notes such that the Debt
to EBITDA Ratio would be no greater than 3.5 to 1, or we
may call all, but not less than all of the exchange notes,
in each case at the prices listed in the section
"Description of the Exchange Notes--Certain Covenants--
Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest." Certain other sales of such
partnership interest or assets will require us to comply
with the covenant described below under "Description of
Exchange Notes--Certain Covenants--Limitation on Asset
Sales."
</TABLE>
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that you should
carefully consider before deciding to tender your outstanding notes in the
exchange offer.
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data has been derived from our
consolidated financial statements and should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and consolidated financial statements and notes thereto, included
elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT RATIO DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Casino revenues................ $ 138,425 $ 237,613 $ 228,388 $ 319,830 $ 473,505 $ 108,323 $ 129,128
Net revenues................... 153,045 252,691 244,817 344,083 506,668 115,700 137,391
Income (loss) from
operations................... 22,994 27,662 (10,751) 6,530 87,811 15,651 24,591
Interest expense............... 8,182 14,708 34,842 47,116 57,487 14,292 14,134
Minority interests............. 336 526 4,879 (6,916) (26,205) (4,606) (7,843)
Net income (loss).............. 9,635 6,953 (24,839) (40,213) 6,561 (2,537) 2,921
OTHER DATA:
EBITDA(a)(b)................... $ 39,529 $ 53,939 $ 29,548 $ 51,203 $ 121,247 $ 23,717 $ 34,864
Adjusted EBITDA(c)............. -- -- 29,266 36,777 81,536 15,757 23,914
Depreciation and
amortization................. 9,846 20,450 22,416 33,292 33,436 8,066 8,473
Capital expenditures........... 112,013 71,854 97,409 117,444 34,051 15,107 4,130
Cash provided by (used in):
Operating activities......... 24,783 49,564 (7,460) 31,628 81,663 21,466 30,237
Investing activities......... (118,714) (86,644) (179,810) (72,567) (14,181) (8,212) (4,130)
Financing activities......... 104,818 34,948 209,395 62,009 (36,979) (8,307) (10,028)
Ratio of EBITDA to interest
expense...................... 4.8x 3.7x 0.8x 1.1x 2.1x 1.7x 2.5x
Ratio of total debt to LTM
EBITDA....................... 2.9x 3.1x 12.9x 8.8x 3.5x 7.0x 3.2x
Ratio of Adjusted EBITDA to
Adjusted Interest
Expense(c)................... -- -- 0.8x 0.9x 1.7x 1.3x 1.9x
Ratio of Adjusted Total Debt to
Adjusted LTM EBITDA(c)....... -- -- 12.2x 10.1x 4.5x 8.5x 4.1x
Ratio of earnings to fixed
charges(d)(e)................ 2.3x 1.5x -- -- 1.5x 1.1x 1.7x
PRO FORMA DATA(F):
Pro forma ratio of EBITDA to interest expense.............................. 2.6x 3.1x
Pro forma ratio of total debt to LTM EBITDA................................ 3.5x 3.2x
Pro forma ratio of Adjusted EBITDA to
Adjusted Interest Expense................................................ 2.2x 2.5x
Pro forma ratio of Adjusted Total Debt to
Adjusted LTM EBITDA...................................................... 4.6x 4.1x
Pro forma ratio of earnings to fixed charges............................... 1.8x 2.1x
</TABLE>
SEE FOOTNOTES ON FOLLOWING PAGES.
11
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31, 1999
----------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 ACTUAL AS ADJUSTED
--------- --------- --------- --------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....... $ 18,291 $ 16,159 $ 38,284 $ 59,354 $ 89,857 $ 105,936 $ 68,313
Total assets.................... 232,831 309,882 532,159 559,856 562,752 573,806 537,654
Long-term debt including current
maturities.................... 115,431 169,702 380,208 449,790 424,000 419,537 421,805
Total stockholders' equity...... 90,587 97,540 72,701 32,663 40,863 49,190 10,770
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
-----------------------------------------------------------
SLOTS AND VIDEO
OPERATING DATA: CASINO SQUARE FOOTAGE POKER MACHINES GAMING TABLES
- ---------------------------------------------------------------- --------------------- ----------------- -----------------
<S> <C> <C> <C>
PROPERTY
Argosy Casino Lawrenceburg...................................... 74,300 2,000 104
Alton Belle Casino.............................................. 22,800 700 32
Argosy Casino of Greater Kansas City............................ 36,000 1,100 45
Belle of Baton Rouge Casino..................................... 28,000 750 42
Belle of Sioux City Casino...................................... 12,500 450 23
------- ----- ---
Total......................................................... 173,600 5,000 246
------- ----- ---
------- ----- ---
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASINO REVENUES
Argosy Casino Lawrenceburg..................... $ 3,930 $ 127,908 $ 264,352 $ 55,570 $ 73,079
Alton Belle Casino............................. 72,369 61,877 67,798 17,029 18,109
Argosy Casino of Greater Kansas City........... 82,247 61,750 71,955 18,359 19,198
Belle of Baton Rouge Casino.................... 51,007 47,628 46,828 12,104 12,579
Belle of Sioux City Casino..................... 18,835 20,667 22,572 5,261 6,163
--------- --------- --------- --------- ---------
Total........................................ $ 228,388 $ 319,830 $ 473,505 $ 108,323 $ 129,128
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
NET REVENUES
Argosy Casino Lawrenceburg..................... $ 4,412 $ 137,024 $ 284,721 $ 59,751 $ 78,469
Alton Belle Casino............................. 77,933 67,208 72,064 18,058 18,993
Argosy Casino of Greater Kansas City........... 88,473 66,548 76,960 19,614 20,415
Belle of Baton Rouge Casino.................... 53,420 50,436 49,054 12,704 13,026
Belle of Sioux City Casino..................... 19,887 21,672 23,526 5,477 6,369
Other.......................................... 692 1,195 343 96 119
--------- --------- --------- --------- ---------
Total........................................ $ 244,817 $ 344,083 $ 506,668 $ 115,700 $ 137,391
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS(B)
Argosy Casino Lawrenceburg..................... $ 334 $ 25,625 $ 87,907 $ 17,287 $ 24,424
Alton Belle Casino............................. 12,240 7,489 13,850 3,393 3,982
Argosy Casino of Greater Kansas City........... 9,410 2,481 5,369 614 2,035
Belle of Baton Rouge Casino.................... 3,507 (4,146) (3,381) (1,457) (107)
Belle of Sioux City Casino..................... 295 848 1,919 264 845
Jazz(g)........................................ (3,435) (4,655) (6,312) (1,220) (1,231)
Corporate...................................... (14,207) (11,432) (9,990) (2,863) (3,226)
Other.......................................... (1,012) 1,701 (1,551) (367) (331)
--------- --------- --------- --------- ---------
Total........................................ $ 7,132 $ 17,911 $ 87,811 $ 15,651 $ 26,391
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
EBITDA(A)(B):
Argosy Casino Lawrenceburg................... $ 750 $ 38,471 $ 105,674 $ 21,227 $ 29,199
Alton Belle Casino........................... 16,446 11,944 17,835 4,357 5,008
Argosy Casino of Greater Kansas City......... 16,134 8,428 11,293 2,091 3,494
Belle of Baton Rouge Casino.................. 9,151 1,322 1,891 (164) 1,264
Belle of Sioux City Casino................... 1,141 1,861 3,016 518 1,125
Jazz(g)...................................... (2,053) (2,301) (3,633) (569) (556)
Corporate.................................... (12,520) (9,324) (9,436) (2,657) (3,219)
Lawrenceburg financial advisory fee(h)....... (38) (1,924) (5,200) (1,061) (1,460)
Other........................................ 537 2,726 (193) (25) 9
--------- --------- --------- --------- ---------
Total...................................... $ 29,548 $ 51,203 $ 121,247 $ 23,717 $ 34,864
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(a) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA should not be construed as an alternative to operating
income or net income (as determined in accordance with generally accepted
accounting principles) as an indicator of the Company's operating
performance, or as an alternative to cash flows generated by operating,
investing and financing activities (as an indicator of cash flow or a
measure of liquidity). EBITDA is presented solely as a supplemental
disclosure because management believes that it is a widely used measure of
operating performance in the gaming industry and for companies with a
significant amount of depreciation and amortization. EBITDA may not be
comparable to similarly titled measures reported by other companies. The
Company has other significant uses of cash flows, including debt service and
capital expenditures, which are not reflected in EBITDA.
(b) Excludes one time charges of approximately $6.7 million for the year ended
December 31, 1994, $5.8 million for the year ended December 31, 1995, $17.9
million for the year ended December 31, 1996, $11.4 million for the year
ended December 31, 1997 and $1.8 million for the three months ended March
31, 1999. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
13
<PAGE>
(c) The following table reflects adjustments necessary to calculate Adjusted
EBITDA, Adjusted Total Debt and Adjusted Interest Expense after
consideration of the Lawrenceburg minority interests. Adjusted EBITDA is
presented to reflect the elimination of that portion of EBITDA that is
attributable to the minority partners of the Lawrenceburg casino. Similarly,
Adjusted Total Debt and total interest expense eliminate that portion of
total debt and total interest expense owed or attributable to the minority
partners of the Lawrenceburg casino.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
EBITDA
As reported....................... $ 29,548 $ 51,203 $ 121,247 $ 23,717 $ 34,864
Deduct EBITDA attributable to
Lawrenceburg minority
interests....................... (282) (14,426) (39,712) (7,960) (10,950)
--------- --------- --------- --------- ---------
Adjusted EBITDA................. $ 29,266 $ 36,777 $ 81,535 $ 15,757 $ 23,914
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL DEBT
As reported....................... $ 380,208 $ 449,790 $ 424,000 $ 443,634 $ 419,537
Deduct Lawrenceburg partner
loans........................... (23,197) (67,134) (45,196) (61,897) (41,826)
Deduct 42.5% Lawrenceburg vessel
loan............................ -- (10,625) (9,225) (10,287) (8,841)
--------- --------- --------- --------- ---------
Adjusted Total Debt............. $ 357,011 $ 372,031 $ 369,579 $ 371,450 $ 368,870
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL INTEREST EXPENSE
As reported....................... $ 34,842 $ 47,116 $ 57,487 $ 14,292 $ 14,134
Deduct interest on Lawrenceburg
partner loans................... (254) (6,667) (8,166) (2,236) (1,629)
Deduct 42.5% of interest on
Lawrenceburg vessel loan........ -- (36) (945) (245) (213)
--------- --------- --------- --------- ---------
Adjusted Total Interest
Expense....................... $ 34,588 $ 40,413 $ 48,376 $ 11,811 $ 12,292
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
(d) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before income taxes plus fixed
charges less capitalized interest and preferred equity return to
Lawrenceburg partner) by fixed charges (interest expense plus capitalized
interest plus preferred equity return to Lawrenceburg partner and one third
of rental expense (the portion deemed representative of the interest
factor)).
(e) The Company's earnings were inadequate to cover fixed charges for the years
ended 1996 and 1997 by approximately $45.9 million, and $45.3 million
respectively.
(f) The pro forma data for the year ended December 31, 1998 and for the three
months ended March 31, 1999 gives effect to the offering of the outstanding
notes, initial borrowings of $130.0 million under the credit facility; the
repurchase of the 13 1/4% first mortgage notes and the redemption of the 12%
convertible subordinated notes. The pro forma data assumes that such
transactions occurred on January 1, 1998, in the case of the year ended
December, 1998 and on January 1, 1999 in the case of the three months ended
March 31, 1999 and reflect a net reduction in interest expense and
amortization of debt issue costs.
(g) Jazz Enterprises, Inc. is our wholly-owned subsidiary which owns Catfish
Town.
(h) The Lawrenceburg joint-venture subsidiary pays a financial advisory fee
equal to 5.0% of its EBITDA to a minority partner.
14
<PAGE>
Chart outlining organizational structure of Argosy Gaming Company and its
subsidiaries
15
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO TENDER YOUR OUTSTANDING NOTES IN THE EXCHANGE
OFFER.
SUBSTANTIAL LEVERAGE--OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT
OUR FINANCIAL CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER
THESE EXCHANGE NOTES.
We have a substantial amount of indebtedness. The following table shows
certain important credit statistics. The amounts reflect our refinancing by
repurchasing approximately 90% of our 13 1/4% first mortgage notes, redeeming
our 12% convertible subordinated notes, borrowing $130.0 million under our
credit facility and completing the offering of the outstanding notes as of the
date specified below:
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------
ACTUAL PRO FORMA
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long term debt, including current portion............................... $ 419,537 $ 421,805
Stockholders' equity.................................................... 49,190 10,770
Debt to capitalization ratio............................................ 0.9x 1.0x
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1999
--------------------------
ACTUAL PRO FORMA
----------- -------------
<S> <C> <C>
Ratio of earnings to fixed charges......................................... 1.7x 2.1x
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Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to perform our obligations with respect to
these notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing amounts
available for working capital, capital expenditures and other general
corporate purposes;
- limit our flexibility in planning for, or reacting to changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds.
ABILITY TO SERVICE DEBT AND LIQUIDITY--WE WILL REQUIRE A SIGNIFICANT AMOUNT
OF CASH TO SERVICE OUR INDEBTEDNESS. OUR ABILITY TO GENERATE CASH DEPENDS ON
MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, including
the exchange notes and the credit facility, will depend on our ability to
generate cash in the future. Our ability to generate cash is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.
We cannot assure you that our business will generate sufficient cash flow or
that future borrowings will be available to us in an amount sufficient to enable
us to pay our indebtedness, including these exchange notes, or to fund our other
liquidity needs including the possible expansions and maintenance of our
riverboat casinos and future developments. We may need to refinance all or a
portion of our indebtedness, including these exchange notes and the credit
facility, on or before maturity. We cannot assure you that we will be able to
refinance any of our indebtedness, including these exchange notes and our credit
facility, on commercially reasonable terms or at all.
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ADDITIONAL BORROWINGS AVAILABLE--DESPITE OUR SIGNIFICANT INDEBTEDNESS, WE
AND OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS
COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. For example, the indenture permits us to increase
the borrowing availability of the credit facility by $75 million for general
corporate purposes and a further $150 million to fund potential offers to
purchase the minority interests in our Lawrenceburg partnership, for a total of
up to $425 million. The increases in availability are subject to a number of
contingencies, including lender approval. All of the borrowings under the credit
facility will be senior to the exchange notes and the guarantees of our
subsidiary guarantors. If new debt is added to our current debt levels, the
related risks that we now face could intensify.
SUBORDINATION--YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES WILL BE
JUNIOR TO THE CREDIT FACILITY AND POSSIBLY ALL OF OUR FUTURE BORROWINGS.
FURTHER, THE GUARANTEES OF THESE EXCHANGE NOTES ARE JUNIOR TO ALL OF THE
GUARANTOR SUBSIDIARIES' EXISTING INDEBTEDNESS TO THE SUBSIDIARIES' GUARANTEES OF
THE CREDIT FACILITY AND POSSIBLY TO ALL OF THEIR FUTURE BORROWINGS.
The exchange notes will be junior to all of our existing and future
indebtedness, other than trade payables and any future indebtedness that
expressly provides that it ranks equal with or junior to the exchange notes. The
guarantees will be junior to all of the guarantor subsidiaries' existing and
future indebtedness, other than trade payables and any future indebtedness that
expressly provides that it ranks equal with or junior to the guarantees. As a
result, upon any distribution to our creditors in a bankruptcy, liquidation or
reorganization or similar proceeding relating to us or a subsidiary guarantor,
the holders of senior indebtedness will be entitled to be paid in full in cash
before any payment may be made on the exchange notes or the guarantees.
In addition, all payments on the exchange notes and the guarantees will be
blocked in the event of a payment default under the credit facility and may be
blocked for up to 179 of 360 consecutive days in the event of non-payment
defaults on senior debt. In the event of a default on the exchange notes and any
resulting acceleration of the exchange notes, the holders of senior indebtedness
then outstanding will be entitled to payment in full in cash of all obligations
in respect of such senior indebtedness before any payment or distribution may be
made with respect to the exchange notes.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the subsidiary guarantors, you will participate
with trade creditors and all other holders of subordinated indebtedness in the
assets remaining after we have paid all of the senior debt. However, because the
indenture requires that amounts otherwise payable to holders of the exchange
notes in a bankruptcy or similar proceeding be paid to holders of senior debt
instead, you may receive less, ratably, than holders of trade payables in any
such proceeding. In any of these cases, we may not have sufficient funds to pay
all of our creditors and holders of exchange notes may receive less, ratably,
than the holders of senior debt.
At July 7, 1999, upon funding the redemption of our 12% convertible
subordinated notes, the exchange notes were subordinated to $152.2 million of
senior debt, and approximately $70.0 million was available for borrowing as
additional senior debt under our credit facility. Since some of our subsidiaries
will not guarantee the exchange notes, the exchange notes will be effectively
junior to all debt and other liabilities of these non-guarantor subsidiaries. In
the event of a bankruptcy, liquidation, reorganization or similar proceeding
relating to any of our non-guarantor subsidiaries, holders of their debt and
their trade creditors will generally be entitled to payment of their claims from
the assets of those subsidiaries before any assets are made available for
distribution to our creditors. The indenture allows us to borrow substantial
additional indebtedness in the future, including senior debt.
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ENCUMBRANCES ON ASSETS--IN ADDITION TO THE EXCHANGE NOTES BEING JUNIOR TO
THE CREDIT FACILITY AND POSSIBLY ALL OF OUR FUTURE BORROWINGS, THE EXCHANGE
NOTES WILL NOT BE SECURED BY ANY OF OUR ASSETS. FURTHER, OUR ASSETS WILL SECURE
THE CREDIT FACILITY AND POSSIBLY OTHER DEBT.
In addition to being subordinated to all of our existing and future
indebtedness, other than trade payables and any future indebtedness that
expressly provides that it ranks equal with, or subordinated in right of payment
to, the exchange notes, the exchange notes will not be secured by any of our
assets or any of the assets of our guarantor subsidiaries. Our obligations under
the credit facility will be secured by liens on substantially all of our assets.
If we become insolvent or are liquidated, or if payment under the credit
facility or of other secured obligations is accelerated, the lenders under the
credit facility or the obligees with respect to the other secured obligations
will be entitled to exercise the remedies available to a secured lender under
applicable law and the applicable agreements and instruments. Accordingly, our
secured lenders will have a prior claim with respect to our pledged assets and
the assets of the guarantor subsidiaries and there may not be sufficient assets
remaining to pay amounts due on the exchange notes then outstanding or to
satisfy the obligations under the guarantees.
RESTRICTIVE LOAN COVENANTS--RESTRICTIVE COVENANTS IN THE CREDIT FACILITY AND
THE INDENTURE MAY RESTRICT OUR ABILITY TO PURSUE OUR BUSINESS STRATEGIES. OUR
ABILITY TO COMPLY WITH THESE RESTRICTIONS DEPENDS ON MANY FACTORS BEYOND OUR
CONTROL.
The indenture and the credit facility will include certain restrictive
covenants that, among other things, restrict our ability to:
- borrow money;
- pay dividends on, redeem or repurchase our capital stock;
- make investments;
- incur liens on our assets to secure debt;
- merge or consolidate with another company; and
- transfer or sell our assets.
We will also be required by the credit facility to maintain certain
financial ratios, including maximum debt to EBITDA ratios and minimum fixed
charge coverage ratios. All of these restrictive covenants may restrict our
ability to make capital expenditures or to pursue other business strategies. Our
ability to comply with these and other provisions of the indenture and the
credit facility may be affected by changes in business condition or results of
operations, adverse regulatory developments or other events beyond our control.
The breach of any of these covenants could result in a default under our
indebtedness, which could cause those obligations to become due and payable. If
we default under our credit facility, we could be prohibited from making
payments with respect to the exchange notes until the default is cured or all
indebtedness under the credit facility or other senior debt is paid in full. If
our indebtedness were to be accelerated, there can be no assurance that we would
be able to repay it.
DEPENDENCE ON RESULTS OF LAWRENCEBURG CASINO--UNTIL THE LAWRENCEBURG CASINO
OPENED, WE HAD A RECENT HISTORY OF LOSSES.
We returned to profitability in 1998 and reported net income $6.6 million,
after reporting net losses of $24.8 million and $40.2 million in 1996 and 1997,
respectively. Our prior period losses were principally the result of substantial
interest expense incurred during the period when the Lawrenceburg casino was
under construction. The return to profitability in 1998 was due to earnings
generated by our Lawrenceburg casino, which moved from a temporary site to its
permanent site in December 1997 and became fully operational in June 1998 with
the completion of its hotel and permanent pavilion. During 1998, the
Lawrenceburg casino represented 56.2% of our net revenues and 82.9% of our
EBITDA,
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after taking into consideration management fees paid to a minority partner. Our
ability to maintain positive net income in the future and to meet our operating
and debt service requirements is substantially dependent upon the continued
success of the Lawrenceburg casino. The Lawrenceburg casino's operations could
be adversely affected by numerous factors including,
- increased competition;
- changes in applicable gaming or taxation regulations;
- adoption of gaming in the adjacent states of Ohio or Kentucky; and
- the occurrence of natural disasters, including flooding along the Ohio
River.
CERTAIN RISKS UNDER THE LAWRENCEBURG CASINO PARTNERSHIP AGREEMENT--THE
AGREEMENT CONTAINS PROVISIONS REQUIRING US TO BUY OUT OUR PARTNERS OR SELL OUR
PARTNERSHIP INTEREST AND REQUIRING OUR REMOVAL AS GENERAL PARTNER IN CERTAIN
CIRCUMSTANCES.
PARTNERSHIP INTEREST BUY-SELL OBLIGATIONS. The Lawrenceburg partnership
agreement provides that: (i) after December 10, 1999, each limited partner has
the right to sell its interest to the other partners (pro rata in accordance
with their respective percentage interests) or (ii) at any time after a deadlock
by the partners with respect to significant items in any annual operating budget
of the partnership for budget year 1999 and thereafter, any partner has a right
to sell its interest to the other partners.
After a partner gives notice of its intent to sell, the partners have 60
days to attempt in good faith to agree to a purchase price. If no agreement is
reached within 60 days, then the selling partner's interest is appraised to
determine its fair market value. After the appraised fair market value is
determined, the other partners have 60 days to reject a purchase of the interest
at that price. After such a rejection, the general partner is required to
solicit bids and sell all of the assets of the Lawrenceburg partnership within
twelve months to the highest bidder and following such sale, dissolve the
Lawrenceburg partnership.
No assurance can be given that we will have sufficient funds to acquire any
selling partner's interest in the circumstances provided for above or that we
will choose to make such a purchase. In such an event, the assets of the
Lawrenceburg partnership would have to be sold to the highest bidder as provided
above, which could result in our losing control of the Lawrenceburg casino. If
we sold the assets of the Lawrenceburg partnership, any outstanding amounts
under the credit facility would be accelerated. In addition, the indenture
provides that upon certain sales of our partnership interest in, or the assets
of, the Lawrenceburg partnership, we must either make an offer to repurchase an
amount of exchange notes such that the Debt to EBITDA Ratio would be no greater
than 3.5 to 1, or the Company may call all, but not less than all of the
exchange notes, in each case at the prices set forth in "Description of the
Exchange Notes--Certain Covenants--Repurchase of the Exchange Notes in
Connection with Sale of Lawrenceburg Interest." Certain other sales of such
partnership interest or assets will require us to comply with the covenant
described below under "Description of the Exchange Notes--Certain
Covenants--Limitation on Asset Sales."
In addition, the partnership agreement provides all partners with a right of
first refusal on transfers of any partnership interest. A foreclosure by a
secured creditor, such as the lenders under the credit facility, would
constitute a transfer of our partnership interest and under the partnership
agreement would provide all partners a right of first refusal to purchase that
partnership interest.
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REMOVAL AS GENERAL PARTNER. The Lawrenceburg partnership agreement provides
that our wholly-owned subsidiary, The Indiana Gaming Company, can be removed as
general partner of the partnership by the limited partners under certain limited
circumstances, including:
- a material breach (after notice and expiration of applicable cure periods)
of certain material provisions of the partnership agreement dealing with
such things as distributions to partners or the failure to obtain the
required consent of the limited partners for certain major decisions;
- if the general partner is convicted of embezzlement or fraud;
- certain bankruptcy events;
- if our partnership interest in the Lawrenceburg partnership is less than
40% due to sales or dilution for failure to pay required capital;
- a final unappealable judgment against The Indiana Gaming Company in excess
of $25 million which is uninsured and remains unsatisfied, unreleased or
unstayed for 180 days;
- certain acts by the general partner constituting "gross mismanagement;"
and
- if a secured creditor, such as the lenders under the credit facility, were
to foreclose on the pledge of our partnership interest in the Lawrenceburg
partnership.
Upon removal of The Indiana Gaming Company, as general partner, its general
partnership interest becomes a "special limited partner" interest with rights to
partner distributions but only limited voting rights on partnership matters.
Also, if the reason for the removal is an event described above, other than a
less than 40% ownership, the limited partners may acquire all, but not less than
all, of The Indiana Gaming Company's interest for fair market value as
determined by an appraisal process.
If we are forced to sell our partnership interest, we may be required to
call or make an offer to purchase the Notes. See "Description of the Exchange
Notes--Certain Covenants--Repurchase of the Exchange Notes in Connection with
Sale of Lawrenceburg Interest". Our business could be adversely affected if we
are removed as general partner or if we are forced to sell our partnership
interest.
COMPETITION--WE FACE INTENSE COMPETITION IN EACH OF OUR GAMING MARKETS.
The United States gaming industry is intensely competitive and features many
participants, including riverboat casinos, dockside casinos, land-based casinos,
video lottery and poker machines not located in casinos, Native American gaming
and other forms of gambling in the United States. Gaming competition is
particularly intense in each of the markets where we operate. Historically, we
have been an early entrant in each of our markets; however, as competing
properties have opened, our operating results in each of these markets have been
negatively affected. Many of our competitors have more gaming industry
experience, are larger and have significantly greater financial and other
resources. In addition, some of our direct competitors in certain markets may
have superior facilities and/or operating conditions in terms of: (i) dockside
versus cruising riverboat gaming; (ii) multiple riverboat casinos, which feature
more continuous boarding; (iii) amenities offered at the gaming facility and the
related support and entertainment facilities; (iv) convenient parking
facilities; (v) a location more favorably situated to the population base of a
market and ease of accessibility to the casino site; and (vi) favorable tax or
regulatory factors.
There could be further competition in our markets as a result of the
upgrading or expansion of facilities by existing market participants, the
entrance of new gaming participants into a market or legislative changes. We
expect each market in which we participate to be highly competitive. The
following paragraphs summarize the specific competitive environment in which
each of our riverboat casinos operate.
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ARGOSY CASINO LAWRENCEBURG. The Lawrenceburg casino currently faces
competition from one other riverboat casino in the Cincinnati market. In
addition, a riverboat casino opened in November 1998 in the Louisville, Kentucky
area approximately 100 miles from Lawrenceburg and a riverboat casino is
expected to open in 2000 approximately 45 miles from Lawrenceburg in Switzerland
County, Indiana.
ALTON BELLE CASINO. Our Alton casino faces competition from five riverboat
casino companies currently operating in the St. Louis area. Four of these
competitors are located in Missouri and one is located in Illinois.
ARGOSY CASINO OF GREATER KANSAS CITY. Our casino in Kansas City faces
competition from three casinos in the Kansas City area. Two of our competitors
operate two gaming vessels each, which allows them to offer more continuous
boarding than we are able to provide with one vessel. There was an additional
competitor in the Kansas City market that closed its facility in July 1998.
BELLE OF BATON ROUGE. Our Baton Rouge casino faces competition from a
casino located in downtown Baton Rouge, a nearby Native American casino and
multiple casinos throughout Louisiana.
BELLE OF SIOUX CITY. We compete with certain providers and operators of
video gaming in the neighboring state of South Dakota. In addition, we face
competition from two land-based Native American casinos, slot machines at a
pari-mutuel race track in Council Bluffs, Iowa and two riverboat casinos in the
Council Bluffs, Iowa/Omaha, Nebraska market.
POTENTIAL FOR FUTURE COMPETITION. Casino gaming is currently prohibited or
restricted in several states adjacent to Indiana, Iowa and Missouri. As a
result, residents of these states, principally Ohio, Kentucky, Nebraska and
Kansas, comprise a significant portion of the patrons at our Lawrenceburg, Sioux
City and Kansas City casinos. The legalization of casino gaming in Ohio or
Kentucky would increase competition with respect to the Lawrenceburg casino
because a substantial portion of the Lawrenceburg casino's customers live in
Ohio and Kentucky. The legalization of casino gaming in Kansas would increase
competition with respect to our Kansas City casino because residents of Kansas
comprise a significant portion of our target market. In early 1999, the Kansas
state legislature failed to pass a bill which would have authorized casino
gaming within its borders.
GAMING REGULATION--OUR OPERATIONS ARE STRICTLY REGULATED BY STATE AND LOCAL
AUTHORITIES.
LICENSING AND REGULATION BY GAMING AND LOCAL AUTHORITIES. The ownership and
operation of casino gaming facilities are subject to extensive state and local
regulation. These regulations apply not only to us, but also to our
subsidiaries, stockholders and officers and directors. The Illinois Gaming
Board, the Indiana Gaming Commission, the Iowa Racing and Gaming Commission, the
Louisiana Gaming Control Board and the Missouri Gaming Commission (herein
collectively referred to as "Applicable Gaming Commissions") have broad
discretion to, among other things, limit, condition, suspend, fail to renew or
revoke a gaming license or approval to own an equity interest in the Company or
our subsidiaries, for any cause they deem reasonable. The suspension, failure to
renew or revocation of any of our licenses or the levy on us of substantial
fines or forfeiture of assets would have a material adverse effect on our
business.
To date, we have obtained all governmental licenses, registrations, permits
and approvals necessary for the operation of our current gaming activities.
Gaming licenses and related approvals are deemed to be privileges under the laws
of our licensing states. We cannot assure you that the Applicable Gaming
Commissions will renew or not revoke our existing licenses or that they will
grant us any new licenses, permits or approvals that may be required in the
future. In addition, the loss of a license in one jurisdiction could trigger the
loss of a license or affect our eligibility for a license in another
jurisdiction.
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The approval of the Applicable Gaming Commissions is required for any
material debt or equity financing. We cannot assure you that we will obtain the
required approvals for future financings.
RISK OF ADVERSE CHANGES IN LAWS AND REGULATIONS. Regulations governing the
conduct of gaming activities and the obligations of gaming companies in any
jurisdiction in which we have gaming operations are subject to change and could
impose additional operating, financial or other burdens on the way we conduct
our business. Moreover, legislation to prohibit or limit gaming may be
introduced in the future in states where gaming has been legalized. The
enactment of any such legislation or adverse regulatory changes in jurisdictions
where we operate gaming facilities could have a material adverse effect on our
business.
GAMING TAXATION AND FEES. We believe that the prospect of significant
additional tax revenue is one of the primary reasons why new jurisdictions have
legalized gaming. As a result, gaming operators are typically subject to
significant taxes and fees in addition to normal federal and state corporate
income taxes. These taxes and fees are subject to increase at any time. We pay
substantial taxes and fees with respect to our operations and will likely incur
similar burdens in any other jurisdiction in which we conduct gaming operations
in the future. Any material increase, or the adoption of additional taxes or
fees, could have a material adverse effect on our future financial results. For
example, Illinois introduced a graduated tax structure on gaming revenues in
1998 that resulted in an increase in the gaming taxes paid by certain Illinois
casino operators other than us.
FRAUDULENT CONVEYANCE MATTERS--FEDERAL AND STATE STATUTES ALLOW COURTS,
UNDER SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO
RETURN PAYMENTS RECEIVED FROM GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of that guarantor if the
guarantor at the time it incurred the indebtedness evidenced by its guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee and was insolvent or rendered insolvent
by reason of such incurrence;
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater than
the fair saleable value of all of its assets;
- if the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
The indenture requires that future subsidiaries guarantee the exchange
notes. These considerations will also apply to these guarantees.
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On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to its
guarantee of these exchange notes, and its guarantee of the credit facility will
not be insolvent, will not have unreasonably small capital for the business in
which it is engaged and will not have incurred debts beyond its ability to pay
such debts as they mature. We cannot assure you, however, as to what standard a
court would apply in making such determinations or that a court would agree with
our conclusions in this regard.
FINANCING CHANGE OF CONTROL OFFER--THE CREDIT FACILITY WILL PROHIBIT US FROM
PURCHASING ANY EXCHANGE NOTES. FURTHER, WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURE.
Upon the occurrence of change of control events specified in the indenture,
we will be required to offer to repurchase all outstanding exchange notes.
Certain important corporate events such as leveraged recapitalizations, would
not constitute a change of control under the indenture. The credit facility
generally prohibits us from purchasing any exchange notes and will also provide
that specific change of control events will be a default under that agreement.
Any future credit or other debt agreements to which we become a party may
contain similar restrictions and provisions. If a change of control occurs at a
time when we are prohibited from purchasing exchange notes, we could seek the
consent of our lenders to purchase the exchange notes or we could attempt to
refinance the debt that contains that prohibition. However, we cannot assure you
that we will be able to obtain lender consent or refinance those borrowings.
Even if such a consent were obtained or the debt is refinanced, it is possible
that we will not have sufficient funds at the time of the change of control to
make the required repurchase of exchange notes. Our failure to purchase the
exchange notes would be a default under the indenture that would, in turn, be a
default under the credit facility and, potentially, other senior debt. If the
senior debt were to be accelerated, we may be unable to repay these amounts and
make the required repurchase of exchange notes. See "Description of the Exchange
Notes-- Repurchase at the Option of Holders."
LOSS OF A RIVERBOAT OR DOCKSIDE FACILITY FROM SERVICE--FLOODING, MECHANICAL
FAILURE, SEVERE WEATHER CONDITIONS OR COLLISION COULD DECREASE ATTENDANCE,
INCREASE EXPENSES AND INTERRUPT SERVICE AT OUR RIVERBOAT CASINOS.
Our revenues are generated primarily by gaming operations conducted on
riverboat casinos, which are supplemented by dockside entertainment and support
facilities. A riverboat or dockside facility could be lost from service for a
variety of reasons, including casualty, forces of nature, mechanical failure or
extended or extraordinary maintenance. In addition, our riverboats are subject
to risks generally associated with the movement of vessels on inland waterways,
including risks of collision or casualty due to river turbulence and traffic.
The areas in which our riverboats operate are subject to periodic flooding
that has caused us to experience decreased attendance and increased operating
expenses. Any flood or other severe weather condition could lead to the loss of
use of a riverboat or dockside facility for an extended period. In addition, a
significant portion of our land-based assets is not covered by flood insurance
and we do not currently have any business interruption insurance. The loss of
any riverboat from service, the inability to use a dockside facility or the loss
of parking or land-based facilities could have a material adverse effect on our
financial results.
U.S. Coast Guard regulations require a hull inspection for all riverboats at
five-year intervals. In the event that one of our riverboats failed its
inspection, the regulations would require us to remove the vessel from service
for repairs. Our riverboat located in Louisiana is due for this inspection in
mid-1999.
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PENDING INTERNAL REVENUE SERVICE AUDIT--AN ADVERSE RESULT IN A PENDING IRS
AUDIT COULD RESULT IN A SIGNIFICANT TAX LIABILITY.
As a result of an audit by the Internal Revenue Service of certain of our
predecessor entities, the IRS has proposed certain adjustments relating to the
1992 and 1993 tax years. The principal issues raised by the IRS involve the
status of a predecessor entity as an S-corporation and the deductibility of an
$8.5 million accommodation fee paid to William J. McEnery, a director and
significant shareholder of Argosy Gaming Company, in 1992 and 1993. The total
federal tax liability asserted by the IRS against us resulting from these
proposed adjustments is approximately $11.5 million, including interest through
March 31, 1999, but excluding penalties, if any. We have filed a protest with
the IRS and are vigorously contesting these proposed adjustments. While we
believe our predecessor entity has legal authority for its position that it met
the S-corporation requirements and properly deducted the accommodation fee, we
cannot assure you that its position will be upheld. An adverse judgment arising
from this contingent tax liability could have a material adverse effect on our
results of operations, financial position and cash flows. No provision has been
made for this contingency in our consolidated financial statements.
RISKS ASSOCIATED WITH UNDERPERFORMING BATON ROUGE CASINO--WE MAY HAVE TO
TAKE A CHARGE AGAINST THE BATON ROUGE CASINO'S LONG-LIVED ASSET VALUE IF ITS
OPERATING RESULTS DO NOT IMPROVE.
Our weakest performing asset is the Belle of Baton Rouge Casino and related
Catfish Town entertainment facility which is operated by our wholly-owned
subsidiary, Jazz Enterprises, Inc. Catfish Town provides the most convenient
access to our riverboat casino facility and as a result we keep the facility
climate controlled even though it is not fully utilized. In 1998, expenses
associated with operating Catfish Town produced $3.6 million of negative cash
flow. In addition, our Baton Rouge results are adversely affected by the terms
of a development agreement with the City of Baton Rouge. Under this agreement,
we are required to pay an incremental head tax of $2.50 per passenger until we
commence construction of a convention hotel near our facility. We recently
announced plans to construct a 300-room hotel in downtown Baton Rouge at a cost
of approximately $20 million. Construction will commence upon the approval of
the Baton Rouge Metropolitan Council. Once construction commences, the
incremental head tax will cease and we would save approximately $3 million
annually based on present passenger levels. We cannot assure you that we will
obtain approval of the hotel project or that the financial commitment required
of us will not exceed our original estimates.
RISKS ASSOCIATED WITH YEAR 2000 COMPUTER COMPLIANCE--OUR BUSINESS AND OUR
SUPPLIERS' BUSINESSES ARE HIGHLY DEPENDENT ON COMPUTER SYSTEMS. ANY COMPUTER
PROBLEMS DUE TO THE YEAR 2000 MAY ADVERSELY AFFECT OUR BUSINESS.
We use computer systems in virtually all areas of our operations. We have
determined that we will need to modify or replace significant portions of our
software so that our computer systems function properly with respect to dates in
the year 2000 and beyond. Furthermore, we are dependent on third-party software
for all of our major computer applications. Should we or certain of our vendors
not be "Y2K compliant," the operations of our riverboat casinos could be
disrupted for an indeterminate period of time, potentially having a material
adverse impact on results of operations. Possible consequences of our not being
Y2K compliant include, but are not limited to, problems with the updating and
accumulation of slot machine player marketing information. Additionally,
disruptions could occur to the compiling of financial information in our
back-office accounting, purchasing, inventory and payroll systems. Embedded
microchips in certain systems such as elevators, escalators and the heating,
ventilation and air conditioning could lead to interruptions in service. All of
these problems could inconvenience riverboat casino customers, resulting in a
loss of business.
We could also be exposed to a Y2K problem should certain of our suppliers
have disruptions to their operations due to Y2K problems. We do not consider
these problems to be as significant as those
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with our own systems because in most instances we believe we could find
alternate vendors for our supplies. However, Y2K problems for certain suppliers,
such as utility providers, could result in disruptions to our riverboat casino
operations for an indeterminate period of time. Additionally, should providers
of financial services such as ATM's, credit card processing and credit card cash
advance experience Y2K problems, our operations could be adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Year 2000."
UNCERTAIN EFFECT OF NATIONAL GAMBLING IMPACT STUDY COMMISSION.
The United States Congress has established a National Gambling Impact and
Policy Commission to conduct a comprehensive study of the social and economic
impact of gaming in the United States. On June 18, 1999, the National Commission
issued a final report of its findings and conclusions, together with certain
recommendations for legislative and administrative action. Specifically, the
National Commission recommended a moratorium on the expansion of gaming. We do
not believe that the findings and recommendations of the National Commission
will have a material adverse effect on our business. However, we are unable at
this time to determine the ultimate disposition by Congress or state governments
of the National Commission's recommendations, or the impact, if any, the report
will have on us or the gaming industry in general.
LACK OF PUBLIC MARKET FOR THE NOTES--YOU MAY NOT BE ABLE TO SELL YOUR NOTES.
The outstanding notes were not registered under the Securities Act or under
the securities laws of any state and may not be resold unless they are
subsequently registered or an exemption from the registration requirements of
the Securities Act and applicable state securities laws is available. The
exchange notes will be registered under the Securities Act, but will constitute
a new issue of securities with no established trading market, and we cannot
assure you as to:
- the liquidity of any market that may develop;
- the ability of exchange note holders to sell their notes; or
- the price at which the exchange note holders would be able to sell their
notes. If such a market were to exist, the exchange notes may trade at
higher or lower prices than their principal amount or purchase price,
depending on many factors, including prevailing interest rates and the
market for similar debentures.
The notes are designated for trading among qualified institutional buyers in
The Portal-SM- Market. We understand that the Placement Agents presently intend
to make a market in the notes. However, they are not obligated to do so, and any
market-making activity with respect to the notes may be discontinued at any time
without notice. In addition, this market-making activity will be subject to the
limits imposed by the Securities Act and the Securities Exchange Act of 1934,
and may be limited during the exchange offer or the pendency of an applicable
shelf registration statement. We cannot assure you that an active trading market
will exist for the notes or that any trading market which does develop will be
liquid.
Outstanding notes that are not tendered or are tendered but not accepted
will, following the completion of the exchange offer, continue to be subject to
existing restrictions on transfer, and, upon completion of the exchange offer,
registration rights with respect to the outstanding notes will terminate. In
addition, any outstanding note holder who tenders in the exchange offer for the
purpose of participating in a distribution of the registered notes may be deemed
to have received restricted securities, and if so, will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. To the extent that outstanding notes
are tendered and accepted in the exchange offer, the trading market for
untendered and tendered but unaccepted outstanding notes could be adversely
affected.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On June 8, 1999 we sold $200.0 million in principal amount at maturity of
the outstanding notes in a private placement through Morgan Stanley & Co.
Incorporated, Credit Suisse First Boston, SG Cowen and Banc One Capital Markets,
Inc. to a limited number of "Qualified Institutional Buyers," as defined under
the Securities Act of 1933. In connection with the sale of the outstanding
notes, we and Morgan Stanley & Co. Incorporated entered into a registration
rights agreement, dated as of June 8, 1999. Under that agreement, we must, among
other things, use our best efforts to file with the SEC a registration statement
under the Securities Act of 1933 covering the exchange offer and to cause that
registration statement to become effective under the Securities Act of 1933.
Upon the effectiveness of that registration statement, we must also offer each
holder of the outstanding notes the opportunity to exchange its securities for
an equal principal amount of exchange notes. You are a holder with respect to
the exchange offer if you are a person in whose name any outstanding notes are
registered on our books or any other person who has obtained a properly
completed assignment of outstanding notes from the registered holder.
We are making the exchange offer to comply with our obligations under the
registration rights agreement. A copy of the registration rights agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
In order to participate in the exchange offer, you must represent to Argosy
Gaming Company, among other things, that:
- you are not a broker-dealer;
- you are not participating in a distribution of the exchange notes; and
- you are not an "affiliate" of Argosy Gaming Company, as the term is
defined in Rule 144A under the Securities Act of 1933.
RESALE OF THE EXCHANGE NOTES
Based on previous interpretations by the staff of the SEC set forth in
no-action letters issued to third parties, we believe that the exchange notes
issued in the exchange offer may be offered for resale, resold and otherwise
transferred by you, except if you are our affiliate, without compliance with the
registration and prospectus delivery provisions of the Securities Act of 1933,
provided that the representations set forth in "Purpose and Effect of the
Exchange Offer" apply to you.
If you tender in the exchange offer with the intention of participating in a
distribution of the exchange notes, you cannot rely on the interpretation by the
staff of the SEC as set forth in the no-action letters and you must comply with
the registration and prospectus delivery requirements of the Securities Act of
1933 in connection with a secondary resale transaction. In the event that our
belief regarding resale is inaccurate, those who transfer exchange notes in
violation of the prospectus delivery provisions of the Securities Act of 1933
and without an exemption from registration under the federal securities laws may
incur liability under these laws. We do not assume, nor will we indemnify you
against, this liability.
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of compliance with the securities or blue sky laws of the
particular jurisdiction. Each broker-dealer that receives exchange notes for its
own account in exchange for outstanding notes, where the outstanding notes were
acquired by that broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of the exchange notes. In order to facilitate the
disposition of exchange notes by broker-dealers participating in the exchange
offer, we have agreed, subject to specific conditions, to make this prospectus,
as it may
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<PAGE>
be amended or supplemented from time to time, available for delivery by those
broker-dealers to satisfy their delivery obligations under the Securities Act of
1933.
TERMS OF THE EXCHANGE OFFER
Upon the terms and conditions in this prospectus, and in the accompanying
letter of transmittal, we will accept all outstanding notes validly tendered
prior to 5:00 p.m., New York City time, on the expiration date. We will issue
$1,000 in principal amount of exchange notes in exchange for an equal principal
amount of outstanding notes tendered and accepted in the exchange offer. You may
tender some or all of your outstanding notes tendered and accepted in the
exchange offer in any denomination of $1,000 or in integral multiples thereof.
In addition, in connection with any resales of exchange notes, any
broker-dealers who acquired outstanding notes for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the exchange notes. The SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements for the
exchange notes other than a resale of an unsold allotment from the original
sales of outstanding notes, with the prospectus contained in the exchange offer
registration statement. Under the registration rights agreement we are required
to allow participating broker-dealers, and other persons, if any, subject to
similar prospectus delivery requirements, to use the prospectus contained in the
exchange offer registration statement in connection with the resale of exchange
notes. However, we are not required to amend or supplement this prospectus for a
period exceeding 90 days after the date of the last expiration date. "Expiration
Date" means 5:00 p.m. New York City time, on , 1999 unless we, in
our sole discretion, extended the exchange offer. If we do, the "expiration
date" will be 5:00 p.m. New York City time on the latest date to which the
exchange offer is extended. The expiration date will be at least 20 business
days from the date that this prospectus is mailed to the holders of the
outstanding notes. We have also agreed that in the event that either we do not
consummate the exchange offer or a shelf registration statement is not declared
effective on or prior to December 8, 1999, the interest rate of the outstanding
notes will be increased by one-half of one percent (.5%) per annum until the
earlier of the consummation of the exchange offer or the effectiveness of the
shelf registration statement.
If we consummate the exchange offer on or before December 8, 1999, we will
not be required to file a shelf registration statement to register any
outstanding notes, and the interest rate on any outstanding notes will remain at
the initial level of 10 3/4% per annum. The exchange offer will be deemed to
have been consummated upon our having exchanged, pursuant to the exchange offer,
exchange notes for all outstanding notes that have been properly tendered and
not withdrawn by the expiration date. In this event, holders of outstanding
notes not participating in the exchange offer who are seeking liquidity in their
investment would have to rely on exemptions to registration requirements under
the securities laws, including the Securities Act.
The form and terms of the exchange notes will be the same as the form and
terms of the outstanding notes except that the exchange notes will not bear
legends restricting the transfer thereof. The exchange notes will be issued
under and entitled to the benefits of the indenture.
As of the date of this prospectus, $200,000,000 aggregate principal amount
of the outstanding notes are outstanding and there is one registered holder
thereof. In connection with the issuance of the outstanding notes, we arranged
for the outstanding notes to be eligible for trading in the Private Offering,
Resale and Trading through Automated Linkages Market. The PORTAL market is the
National Association of Securities Dealers' screen based, automated market
trading of securities eligible for resale under Rule 144A. The exchange notes
will also be issuable and transferable in book-entry form through DTC.
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We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice of acceptance to the exchange
agent. See "--Exchange Agent." The exchange agent will act as agent for the
tendering holders of outstanding notes for the purposes of receiving exchange
notes from us and delivering exchange notes to the holders.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender or the occurrence of certain other events described in this
prospectus, certificates for the unaccepted outstanding notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.
Holders of outstanding notes who tender in the exchange offer will not be
required to pay:
- brokerage commissions or fees; or
- transfer taxes with respect to the exchange of outstanding notes pursuant
to the exchange offer, subject to the instructions in the accompanying
letter of transmittal.
We will pay all charges and expenses, other than specified taxes, in
connection with the exchange offer. See "--Fees and Expenses."
Holders of outstanding notes do not have any appraisal or dissenters' rights
in connection with the exchange offer. We intend to conduct the exchange offer
in accordance with the provisions of the registration rights agreement and the
applicable requirements of the Exchange Act and the rules and regulations of the
SEC interpreting the Exchange Act. Outstanding notes that are not tendered for
exchange in the exchange offer will remain outstanding and be entitled and
continue to accrue interest, but will not be entitled to any rights or benefits
under the registration rights agreement. To the extent that outstanding notes
are tendered and accepted in the exchange offer, the trading market for
untendered and tendered but unaccepted outstanding notes could be adversely
affected.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m. New York City time, on
, 1999 unless we, in our sole discretion, extend the exchange offer.
If we do, the "expiration date" will be 5:00 p.m. New York City time on the
latest date to which the exchange offer is extended.
If we extend the expiration date, we will:
- notify the exchange agent of any extension by oral or written notice; and
- mail an announcement of the extension to the record holders of outstanding
notes prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
Any announcement may state that we are extending the exchange offer for a
specified period of time.
If any of the conditions listed under "Conditions to the Offer" occur and
are not waived by us, by giving oral or written notice to the exchange agent, we
reserve the right:
- to delay acceptance of any outstanding notes;
- to extend the exchange offer;
- to terminate the exchange offer;
- to refuse to accept outstanding notes not previously accepted, and
- to amend the terms of the exchange offer in any manner we deem to be
advantageous to the holders of the outstanding notes.
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Any delay in acceptance, extension, termination or amendment will be
followed as promptly as possible by oral or written notice to the exchange
agent. If the exchange offer is amended in a manner we determine constitutes a
material change, we will promptly disclose the amendment in a way reasonably
calculated to inform you of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise, or otherwise
communicate any public announcement, other than by making a timely release to
the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from the last interest payment date on
which interest was paid on the outstanding notes. If interest has not yet been
paid, the outstanding notes will bear interest from June 8, 1999. Interest will
be paid with the first interest payment on the exchange notes. Interest on the
outstanding notes accepted for exchange will cease to accrue upon issuance of
the exchange notes.
The exchange notes will bear interest at a rate of 10 3/4% per annum.
Interest on the exchange notes will be payable semi-annually, in arrears, on
each June 1 and December 1 following the consummation of the exchange offer.
Untendered outstanding notes that are not exchanged for exchange notes pursuant
to the exchange offer will bear interest at a rate of 10 3/4% per annum after
the expiration date.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
To tender in the exchange offer, you must do the following:
- complete, sign and date the letter of transmittal, or a facsimile of it;
- have the signatures guaranteed, if required by the letter of transmittal;
and
- mail or deliver the letter of transmittal, or the facsimile, together with
the outstanding notes and any other required documents, to the exchange
agent.
The exchange agent must receive these documents by 5:00 p.m., New York City
time, on the expiration date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the outstanding notes by causing
DTC to transfer the outstanding notes into the exchange agent's account via the
ATOP system in accordance with DTC's transfer procedure. Although delivery of
outstanding notes may be effected through book-entry transfer into the exchange
agent's account at DTC, the letter of transmittal, or its facsimile, with any
required signature guarantees and documents, must, in any case, be transmitted
to and received or confirmed by the exchange agent at its addresses in the
prospectus prior to 5:00 p.m., New York City time, on the expiration date.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Your tender of outstanding notes will constitute an agreement between you
and us in accordance with the terms and subject to the conditions in this
prospectus and in the letter of transmittal.
Delivery of all documents must be made to the exchange agent at its address
listed in this prospectus. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect tender
for them.
The method of delivery of outstanding notes and the letter of transmittal
and all other required documents to the exchange agent is up to you. However,
you also bear the risks of non-delivery. Instead of delivery by mail, we
recommend that you use an overnight or hand delivery service. In all cases, you
should allow sufficient time to assure timely delivery. No letter of transmittal
should be sent to us.
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Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. The term "holder" with respect to the exchange offer means any
person in whose name outstanding notes are registered on our books or any other
person who has obtained a properly completed bond power from the registered
holder or any person whose outstanding notes are held of record by DTC who
desires to deliver the outstanding notes by book-entry transfer at DTC.
Any beneficial holder whose outstanding notes are registered in the name of
the holder's broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact the registered holder promptly and instruct
the registered holder to tender on the holder's behalf. If the beneficial holder
wishes to tender on the holder's own behalf, the beneficial holder must, prior
to completing and executing the letter of transmittal and delivering the
outstanding notes, either make appropriate arrangements to register ownership of
the outstanding notes in the holder's name or obtain a properly completed bond
power from the registered holder. The transfer of record ownership may take
considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an "eligible institution" unless the outstanding
notes tendered are:
- tendered by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- tendered for the account of an "eligible institution."
An eligible institution is:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States, or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act; or
- an "eligible institution" that is a participant in a recognized medallion
signature guarantee program.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed therein, the outstanding notes tendered
must be endorsed or accompanied by appropriate bond powers which authorize that
person to tender the outstanding notes on behalf of the registered holder, in
either case signed as the name of the registered holder or holders appears on
the outstanding notes.
If the letter of transmittal or any outstanding 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, the person should indicate this when signing, and unless waived by us,
submit evidence satisfactory to us of that person's authority to so act with the
letter of transmittal.
We will determine, in our sole discretion, all questions as to the validity,
form, and eligibility, including time of receipt, acceptance and withdrawal of
the tendered outstanding notes. Our determination will be final and binding. We
reserve the absolute right to reject any all outstanding notes not properly
tendered or any outstanding notes of which our acceptant would, in the opinion
of our counsel, be unlawful. We also reserve the absolute right to waive any
irregularities or conditions of tender as to particular outstanding notes. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of outstanding notes must be cured within the time as we determine. Neither we,
the exchange agent nor any other person is under any duty to give notification
of defects or irregularities with respect to tenders of outstanding notes.
Additionally, none of them will incur any liability for failure to give this
notification. Tenders of outstanding notes will not be deemed to have been made
until these irregularities have been cured or waived. Any outstanding notes
received by the exchange agent that have defects or irregularities not
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cured or waived by use will be returned to you without cost by the exchange
agent, unless otherwise provided in the letter of transmittal as soon as
practicable after the expiration date.
In addition, we reserve the right in our sole discretion to:
- purchase or make offers for any outstanding notes that remain outstanding
subsequent to the expiration date;
- terminate the exchange offer according to the terms in "--Conditions to
the Offer"; and
- to the extent permitted by applicable law, purchase outstanding notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers may differ from the terms of
the exchange offer.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your outstanding notes and either your outstanding
notes are not immediately available, or you cannot deliver your outstanding
notes, the letter of transmittal or any other required documents to the exchange
agent prior to the expiration date, or if you cannot complete the procedure for
book-entry transfer on a timely basis, you may effect a tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from an eligible
institution a properly completed and duly executed notice of guaranteed
delivery, by facsimile transmission, mail or hand delivery, stating the
name and address of the holder of the outstanding notes, the certificate
number or numbers of such outstanding notes and the principal amount of
outstanding notes tendered, stating the tender is being made, and
guaranteeing that, within three business days after the expiration date,
the letter of transmittal, or facsimile thereof, together with the
certificate(s) representing the outstanding notes, unless the book-entry
transfer procedures are to be used, to be tendered in proper form for
transfer and any other documents required by the letter of transmittal,
will be deposited by the eligible institution with the exchange agent; and
- the properly completed and executed letter of transmittal, or facsimile
thereof, together with the certificates representing all tendered
outstanding notes in proper form for transfer, or confirmation of a
book-entry transfer in to the exchange agent's account at DTC of
outstanding notes delivered electronically, and all other documents
required by the letter of transmittal are received by the exchange agent
within three business days after the expiration date.
If you wish to tender your outstanding notes according to the guaranteed
delivery procedures, make your request to the exchange agent and a notice of
guaranteed delivery will be sent to you.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at the address given in the prospectus prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn, including the certificate
number or numbers and principal amount of the outstanding notes;
- be signed by the depositor in the same manner as the original signature on
the letter of transmittal by tendering the outstanding notes, including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to permit the trustee of the outstanding
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notes to register the transfer of the outstanding notes into the name of
the depositor withdrawing the tender; and
- specify the name in which any outstanding notes are to be registered, if
different from that of the depositor.
All questions as to the validity, form and eligibility, including time of
receipt, of any withdrawal notices will be determined by us, and will be final
and binding on all parties. Any outstanding notes so withdrawn will be deemed
not to have been validly tendered for purposes of the exchange offer, and no
exchange notes will be issued unless the outstanding notes previously withdrawn
are validly retendered. Any outstanding notes that have been tendered but which
are not accepted for exchange will be returned to the holder without cost to the
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering Outstanding Notes" at any time prior to the expiration date.
CONDITIONS TO THE OFFER
Regardless of any other term of the exchange offer, we are not required to
accept for exchange or to exchange any outstanding notes that are not accepted
for exchange according to the terms of the exchange offer. Additionally, we may
terminate or amend the exchange offer as provided in this prospectus before
accepting the outstanding notes if:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the exchange offer, which,
in our judgment, might materially impair our ability to proceed with the
exchange offer, or
- any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule or regulation is interpreted by the staff
of the SEC in a manner, which, in our judgment, might materially impair
our ability to proceed with the exchange offer.
These conditions are for our sole benefit. We may assert them in whole or in
part at any time and from time to time, in our sole discretion. Our failure at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any right and the right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, we will not accept for exchange any outstanding notes tendered,
and no exchange notes will be issued in exchange for any outstanding notes, if
at the time of tender:
- a stop order is threatened by the SEC or is in effect for the registration
statement that this prospectus is a part of, or
- a stop order is threatened or in effect regarding qualification of the
indenture under the Trust Indenture Act of 1939, as amended.
If we determine that we may terminate or amend the exchange offer, we may:
- refuse to accept any outstanding notes and return any tendered outstanding
notes to the holder;
- extend the exchange offer and retain all outstanding notes tendered prior
to the expiration of the exchange offer, subject to the rights of the
holders of tendered outstanding notes to withdraw their tendered
outstanding notes;
- waive the termination event with respect to the exchange offer and accept
all properly tendered outstanding notes that have not been withdrawn; or
- amend the exchange offer at any time prior to 5:00 p.m. New York City time
on the expiration date.
If the waiver or amendment constitutes a material change in the exchange
offer, we will disclose the change by means of a supplement to this prospectus
that will be distributed to each registered
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holder of outstanding notes, and we will extend the exchange offer for a period
of five to ten business days, if the exchange offer would otherwise expire
during that period, depending on the significance of the waiver or amendment and
the manner of disclosure to the registered holders of the outstanding notes.
The exchange offer is not conditioned on any minimum principal amount of
outstanding notes being tendered for exchange.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
with your financial and tax advisors in making your decision on what action to
take.
The outstanding notes which are not exchanged for the exchange notes
pursuant to the exchange offer will remain restricted securities. Accordingly,
such outstanding notes may be resold only:
- to a person whom the seller reasonably believes is a qualified
institutional buyer, as defined in Rule 144A under the Securities Act, in
a transaction meeting the requirements of Rule 144A;
- in a transaction meeting the requirements of Rule 144 under the Securities
Act;
- outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act;
- in accordance with another exemption from the registration requirements of
the Securities Act, and based upon an opinion of counsel, if we so
request, to us; or
- pursuant to an effective registration statement.
and, in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction. We do not
currently anticipate that we will register the outstanding notes under the
Securities Act.
As a result of the making of, and upon acceptance for exchange of all
validly tendered outstanding notes pursuant to the terms of, this exchange
offer, we will have fulfilled a covenant contained in the registration rights
agreement. Holders of outstanding notes who do not tender their outstanding
notes in the exchange offer will continue to hold such outstanding notes and
will be entitled to all the rights and limitations applicable thereto under the
indenture, except for any such rights under the registration rights agreement
that by their terms terminate or cease to have further effectiveness as a result
of the making of this exchange offer. All untendered outstanding notes will
continue to be subject to the restrictions on transfer set forth in the
indenture. To the extent that outstanding notes are tendered and accepted in the
exchange offer, the trading market for untendered outstanding notes could be
adversely affected.
EXCHANGE AGENT
Bank One Trust Company, NA has been appointed as exchange agent for the
exchange offer. Questions and requests for assistance and requests for
additional copies of this prospectus or of the letter of transmittal should be
directed to the exchange agent addressed as follows:
<TABLE>
<S> <C>
BY MAIL OF OVERNIGHT DELIVERY: BY HAND DELIVERY:
Bank One Trust Company, NA Bank One Trust Company, NA
Corporate Trust Services c/o First Chicago Corporate Trust
235 West Schrock Road Services
Westerville, Ohio 43081 14 Wall Street
Attention: Lora Marsch 8th Floor
New York, New York 10005
FACSIMILE: (614) 248-9987
TELEPHONE: (800) 346-5153
</TABLE>
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FEES AND EXPENSES
We will bear the expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation for tenders pursuant to the exchange offer is
being made by mail.
Additional solicitations may be made by our officers and regular employees
and our affiliates in person, by telegraph or by telephone.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with this exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses they incur in forwarding
copies of this prospectus, letter of transmittal and related documents to the
beneficial owners of the outstanding notes and in handling or forwarding tenders
for exchange.
We will pay the fees and expenses incurred in connection with the exchange
offer, for the following:
- the exchange agent;
- the trustee;
- accounting; and
- legal services.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes pursuant to the exchange offer. The amount of these transfer
taxes, whether imposed on the registration holder or any other persons, will be
payable by the tendering holder if:
- certificates representing exchange notes or outstanding notes not tendered
or accepted for exchange are to be delivered to, or are to be registered
or issued in the name of, any person other than the registered holder of
the outstanding notes tendered;
- tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
outstanding notes pursuant to the exchange offer.
If satisfactory evidence of payment of, or exemption from, these taxes is
not submitted with the letter of transmittal, the amount of these transfer taxes
will be billed directly to the tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by us upon the consummation of the exchange offer.
The expenses of the exchange offer will be amortized by us over the term of the
exchange notes under generally accepted accounting principles.
34
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999 as
adjusted to give effect to the refinancings. See "Summary--The Company--The
Refinancings." Please read this table in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes included in this prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1999
AS ADJUSTED
--------------
(IN THOUSANDS)
<S> <C>
Cash and cash equivalents(a).......................................... $ 68,313
--------------
--------------
Current maturities of long-term debt.................................. $ 11,748
Long-term debt
Credit facility(b).................................................. 130,000
Notes............................................................... 200,000
13 1/4% first mortgage notes........................................ 22,242
12% convertible subordinated notes.................................. --
Other notes payable, less current portion........................... 57,815
--------------
Total long-term debt.............................................. 410,057
--------------
Minority interests.................................................... 34,518
Stockholders' equity:
Common stock; $.01 par value per share; 60,000,000 shares
authorized; 28,140,326 shares issued and outstanding.............. 281
Capital in excess of par............................................ 79,894
Retained (deficit) earnings(c)...................................... (69,405)
--------------
Total stockholders' equity........................................ 10,770
--------------
Total capitalization............................................ $467,093
--------------
--------------
</TABLE>
- ------------------------
(a) On June 1, 1999 we made regularly scheduled interest payments of
approximately $22.5 million on our 13 1/4% first mortgage notes and 12%
convertible subordinated notes, which are not reflected above. Amount also
includes approximately $26.7 million held in a cash collateral account
required by the credit facility to secure our remaining obligations under
the 13 1/4% first mortgage notes.
(b) Amounts available for future borrowings under the credit facility would have
been approximately $70.0 million on an as adjusted basis, subject to certain
borrowing conditions, for a total availability of $200.0 million. See
"Description of Certain Indebtedness."
(c) As adjusted retained (deficit) earnings reflects the following extraordinary
charges associated with the early retirement of the 13 1/4% first mortgage
notes and the 12% convertible subordinated notes: (i) a $6.9 million
write-off of deferred financing costs; (ii) the $28.3 million repurchase
premium for the 13 1/4% first mortgage notes and the $2.3 million redemption
premium for the 12% convertible subordinated notes and (iii) fees of $0.9
million. No tax benefit from these transactions has been reflected as we are
in a net operating loss position.
35
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data for the Company presented below
under the captions "Statements of Operations Data" and "Balance Sheet Data" for
and as of the end of each of the five years ended December 31, 1998 are derived
from the Consolidated Financial Statements of the Company which have been
audited by Ernst & Young LLP, independent auditors. The selected statements of
operations data for the three months ended March 31, 1998 and 1999 and the
selected balance sheet data at March 31, 1998 and 1999 have been derived from
the unaudited condensed consolidated financial statements which are also
included in this prospectus and include all adjustments, consisting of normal
recurring accruals, that the Company considers necessary for a fair presentation
of its consolidated financial position and results of operations for such
periods. You should read the following information in conjunction with the
consolidated financial statements and notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
REVENUES:
Casino.............................. $ 138,425 $ 237,613 $ 228,388 $ 319,830 $ 473,505 $ 108,323 $ 129,128
Admissions.......................... 12,177 15,300 2,759 7,895 16,025 3,191 4,278
Food, beverage and other............ 12,036 18,537 29,212 34,836 51,057 11,133 13,593
--------- --------- --------- --------- --------- --------- ---------
162,638 271,450 260,359 362,561 540,587 122,647 146,999
Less: promotional allowances........ (9,593) (18,759) (15,542) (18,478) (33,919) (6,947) (9,608)
--------- --------- --------- --------- --------- --------- ---------
Net revenues...................... 153,045 252,691 244,817 344,083 506,668 115,700 137,391
--------- --------- --------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Casino.............................. 65,176 117,284 121,004 163,935 221,682 52,623 59,450
Food, beverage and other............ 11,876 17,242 23,769 29,962 40,550 9,349 9,637
Other operating expenses............ 8,486 15,616 19,111 28,695 26,639 6,618 6,588
Selling, general and
administrative.................... 24,906 47,549 52,048 69,725 96,041 23,393 28,652
Depreciation and amortization....... 9,846 20,450 22,416 33,292 33,436 8,066 8,473
Development and preopening.......... 9,761 3,411 12,365 594 509 -- --
Other(a)............................ -- 3,477 4,855 11,350 -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from operations..... 22,994 27,662 (10,751) 6,530 87,811 15,651 24,591
--------- --------- --------- --------- --------- --------- ---------
Interest expense, net............... (7,101) (14,272) (30,607) (41,179) (53,905) (13,482) (13,227)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before minority
interests, income taxes and
extraordinary item................ 15,893 13,390 (41,358) (34,649) 33,906 2,169 11,364
Minority interests.................. 336 526 4,879 (6,916) (26,205) (4,606) (7,843)
Income tax (expense) benefit........ (6,594) (6,963) 12,530 1,352 (1,140) (100) (600)
Extraordinary loss on extinguishment
of debt (net of income tax benefit
of $594).......................... -- -- (890) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)................... 9,635 6,953 (24,839) (40,213) 6,561 (2,537) 2,921
Preferred stock dividends and
accretion......................... -- -- -- -- (820) -- (27)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) attributable to
common shareholders............... $ 9,635 $ 6,953 $ (24,839) $ (40,213) $ 5,741 $ (2,537) $ 2,894
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Diluted income (loss) per share..... $ 0.40 $ 0.29 $ (1.02) $ (1.65) $ 0.23 $ (0.10) $ 0.10
Shares outstanding.................. 24,333 24,333 24,333 24,498 25,830 24,498 28,140
Ratio of earnings to fixed
charges(b)(c)..................... 2.3x 1.5x -- -- 1.5x 1.1x 1.7x
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $ 18,291 $ 16,159 $ 38,284 $ 59,354 $ 89,857 $ 64,301 $ 105,936
Total assets........................ 232,831 309,882 532,159 559,856 562,752 563,026 573,806
Long-term debt including current
maturities........................ 115,431 169,702 380,208 449,790 424,000 443,634 419,537
Total stockholders' equity.......... 90,587 97,540 72,701 32,663 40,863 30,192 49,190
</TABLE>
- ------------------------
(a) Other includes nonrecurring charges in 1995 related to a note receivable
writeoff. For additional information on 1996 and 1997 nonrecurring charges
that comprise Other, see the Statement of Operations contained in the
Consolidated Financial Statements of the Company included elsewhere in this
prospectus.
(b) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before income taxes plus fixed
charges less capitalized interest and preferred equity return to
Lawrenceburg partner) by fixed charges (interest expenses plus capitalized
interest plus preferred equity return to Lawrenceburg partner and one third
of rental expense (the portion deemed representative of the interest
factor)).
(c) The Company's earnings were inadequate to cover fixed charges for the years
ended 1996 and 1997 by approximately $45.9 million and $45.3 million
respectively.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Through our subsidiaries or joint ventures, we own and operate five
riverboat casinos: the Alton Belle Casino, in Alton, Illinois; the Argosy Casino
of Greater Kansas City in Riverside, Missouri; the Belle of Baton Rouge in Baton
Rouge, Louisiana; the Belle of Sioux City in Sioux City, Iowa; and the Argosy
Casino Lawrenceburg in Lawrenceburg, Indiana. We refer to our casinos in
Illinois, Iowa, Louisiana and Missouri as our "western casinos."
Our results of operations in 1998 improved dramatically due, in large part,
to the success of our Lawrenceburg casino, which moved to its permanent pavilion
in December, 1997 and completed its final phase of development in mid-1998 with
the opening of its 300-room hotel. The results also reflect the improved
operating performance at the four western casinos resulting from the continued
success of the strategic plan introduced in 1997.
In mid-1997 we began implementing a plan to transform our company from one
focused on developing casino properties to one focused on superior operational
performance. Our focus on increasing revenues through direct marketing programs,
investing in product enhancements, including new slot machines and player
tracking systems and implementing cost control programs and operating
efficiencies has yielded increased cash flow and improved margins at each of the
western properties. At the Lawrenceburg casino, this focus has contributed to
the Lawrenceburg casino becoming the gaming industry's largest revenue-producing
riverboat casino in the U.S.
The key to our strategy was to identify and reward our loyal customers and
to enhance the gaming experience for those customers. We redirected our
marketing efforts through the use of sophisticated player tracking systems that
enable us to identify and reward premium players and loyal customers. We also
revamped our entertainment and event strategy by launching a series of private
parties and special events targeted to their preferences. In addition, we
incorporated an aggressive direct mail program at each of our properties aimed
at rewarding those same loyal customers with special offers and incentives.
We have improved cost containment measures at the property level to ensure
that program costs are in-line with revenue potential, and we have cut corporate
expenses by streamlining corporate activities. The most effective cost control
measure introduced in 1998 has been to link management's incentive compensation
at each property to the improved cash flow of its operation. As a result, each
property's management evaluated whether the costs of promotional and
entertainment programs benefited cash flow or enhanced revenues. The best
overall example of programs eliminated were bus programs. Every property reduced
its reliance on bus passengers and redirected those marketing dollars toward
targeting more serious gaming customers.
We are continually focused on our cost structure and will be cross-training
employees in an effort to reduce costs further. By giving our employees a
broader set of skills, they will be more efficient and effective. Cross-training
will enable us to service more customers and provide better customer service
with the same number of employees. Investing in training also helps reduce
turnover and the associated costs.
In 1999, we intend to aggressively follow through on our strategic
initiatives. We are planning additional investment in slot machines, table
games, and other gaming equipment at the western casinos. We recently completed
renovating and retheming the Baton Rouge casino and construction is underway to
renovate the Alton casino. We will continue to invest prudently in our
facilities in order to enhance the gaming experience of our customers. We
recently announced plans to construct a $20 million 300-room hotel in downtown
Baton Rouge. Development of a Baton Rouge hotel is a corporate priority because
once construction begins, annual cash flows at Baton Rouge will benefit by
38
<PAGE>
$3 million annually due to the elimination of a $2.50 per passenger penalty head
tax (based on current passenger boarding levels).
We plan to begin construction upon approval of the Baton Rouge Metropolitan
Council, however, we can give you no assurances that we will obtain the
Council's approval or as to the ultimate financial commitment required of us.
Our ability to recover the carrying amount of the long-lived assets in Baton
Rouge is dependent on several factors including achieving anticipated operating
results, the competitive environment, and the hotel development. If we are
unable to develop the hotel or if our operating results do not improve through
cost efficiencies or following the elimination of video poker at competing
outlets, management's evaluation of recoverability could change and we could
record an impairment loss amounting to a substantial portion of our $115 million
Baton Rouge investment.
We have not recorded any federal tax expense on our 1998 or 1999 net income
or any federal tax benefit on our 1997 net loss, as we were in an operating loss
carryforward position.
Our net income for 1999 will include the effect of extraordinary charges in
the amount of $38.4 million associated with the early retirement of the 13 1/4%
first mortgage notes and the 12% convertible subordinated notes, specifically:
(i) a $6.9 million write-off of deferred financing costs; (ii) the $28.3 million
repurchase premium for the 13 1/4% first mortgage notes and the $2.3 million
redemption premium for the 12% convertible subordinated notes and (iii) fees of
$0.9 million. We do not expect to receive a tax benefit from these extraordinary
charges in 1999 as we are in a net operating loss position.
39
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain financial
information regarding our results of operations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASINO REVENUES
Argosy Casino Lawrenceburg................ $ 3,930 $ 127,908 $ 264,352 $ 55,570 $ 73,079
Alton Belle Casino........................ 72,369 61,877 67,798 17,029 18,109
Argosy Casino of Greater Kansas City...... 82,247 61,750 71,955 18,359 19,198
Belle of Baton Rouge Casino............... 51,007 47,628 46,828 12,104 12,579
Belle of Sioux City Casino................ 18,835 20,667 22,572 5,261 6,163
--------- --------- --------- --------- ---------
Total................................... $ 228,388 $ 319,830 $ 473,505 $ 108,323 $ 129,128
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
NET REVENUES
Argosy Casino Lawrenceburg................ $ 4,412 $ 137,024 $ 284,721 $ 59,751 $ 78,469
Alton Belle Casino........................ 77,933 67,208 72,064 18,058 18,993
Argosy Casino of Greater Kansas City...... 88,473 66,548 76,960 19,614 20,415
Belle of Baton Rouge Casino............... 53,420 50,436 49,054 12,704 13,026
Belle of Sioux City Casino................ 19,887 21,672 23,526 5,477 6,369
Other..................................... 692 1,195 343 96 119
--------- --------- --------- --------- ---------
Total................................... $ 244,817 $ 344,083 $ 506,668 $ 115,700 $ 137,391
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS(A)
Argosy Casino Lawrenceburg(b)............. $ 334 $ 25,625 $ 87,907 $ 17,287 $ 24,424
Alton Belle Casino........................ 12,240 7,489 13,850 3,393 3,982
Argosy Casino of Greater Kansas City(c)... 9,410 2,481 5,369 614 2,035
Belle of Baton Rouge Casino(d)............ 3,507 (4,146) (3,381) (1,457) (107)
Belle of Sioux City Casino................ 295 848 1,919 264 845
Jazz(e)................................... (3,435) (4,655) (6,312) (1,220) (1,231)
Corporate(f).............................. (14,207) (11,432) (9,990) (2,863) (3,226)
Other..................................... (1,012) 1,701 (1,551) (367) (331)
--------- --------- --------- --------- ---------
Total................................... $ 7,132 $ 17,911 $ 87,811 $ 15,651 $ 26,391
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
EBITDA(A)(G)
Argosy Casino Lawrenceburg(b)............. $ 750 $ 38,471 $ 105,674 $ 21,227 $ 29,199
Alton Belle Casino........................ 16,446 11,944 17,835 4,357 5,008
Argosy Casino of Greater Kansas City(c)... 16,134 8,428 11,293 2,091 3,494
Belle of Baton Rouge Casino(d)............ 9,151 1,322 1,891 (164) 1,264
Belle of Sioux City Casino................ 1,141 1,861 3,016 518 1,125
Jazz(e)................................... (2,053) (2,301) (3,633) (569) (556)
Corporate(f).............................. (12,520) (9,324) (9,436) (2,657) (3,219)
Lawrenceburg financial advisory fee(h).... (38) (1,924) (5,200) (1,061) (1,460)
Other..................................... 537 2,726 (193) (25) 9
--------- --------- --------- --------- ---------
Total................................... $ 29,548 $ 51,203 $ 121,247 $ 23,717 $ 34,864
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
- ------------------------
(a) Income from operations and EBITDA are presented before consideration of any
management fees paid to the Company and in the case of the Belle of Sioux
City and the Argosy Casino Lawrenceburg before the 30% and 42.5% minority
interests, respectively.
40
<PAGE>
(b) Excludes preopening expenses of $11,528 for the year ended December 31,
1996.
(c) Excludes $3,508 for the year ended December 31, 1996 related to lease
termination costs in connection with assets formerly used at the Riverside
temporary facility.
(d) Excludes operating expenses of $1,347 for the year ended December 31, 1996
related to referendum costs.
(e) Jazz Enterprises, Inc. is our wholly-owned subsidiary which owns Catfish
Town.
(f) Excludes expenses related to a severance package and a settlement
arrangement of $1,800 for the three months ended March 31, 1999. Excludes
severance expenses of $1,750 and a loss of $9,600 in connection with a
writedown of assets held for sale for the year ended December 31, 1997 and a
charge of $1,500 relating to legal fees and printing costs in connection
with the postponement of a private debt placement for the year ended
December 31, 1996.
(g) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and is presented before any management fees paid to Argosy.
EBITDA should not be construed as an alternative to operating income or net
income (as determined in accordance with generally accepted accounting
principles) as an indicator of the Company's operating performance, or as an
alternative to cash flows generated by operating, investing and financing
activities (as an indicator of cash flow or a measure of liquidity). EBITDA
is presented solely as a supplemental disclosure because management believes
that it is a widely used measure of operating performance in the gaming
industry and for companies with a significant amount of depreciation and
amortization. EBITDA may not be comparable to similarly titled measures
reported by other companies. The Company has other significant uses of cash
flows, including debt service and capital expenditures, which are not
reflected in EBITDA.
(h) The Lawrenceburg partnership pays a financial advisory fee equal to 5.0% of
its EBITDA to a minority partner.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
CASINO--Casino revenues for the three months ended March 31, 1999 increased
by $20.8 million to $129.1 million from $108.3 million for the three months
ended March 31, 1998 due primarily to a $17.5 million increase in casino
revenues at the Lawrenceburg casino, which generated total casino revenues of
$73.1 million for the three months ended March 31, 1999. The Company's other
properties reported an aggregate 6.2% increase in casino revenues from $52.8 to
$56.0 million. In particular, Alton casino revenues increased from $17.0 to
$18.1 million, Kansas City casino revenues increased from $18.4 to $19.2
million, Sioux City casino revenues increased from $5.3 to $6.2 million, and
Baton Rouge casino revenues increased from $12.1 to $12.6 million.
Casino expenses increased to $59.5 million for the three months ended March
31, 1999 from $52.6 million for the three months ended March 31, 1998. This
increase is primarily due to increased Lawrenceburg casino expenses of $6.3
million to $30.4 million attributable to the overall increase in Lawrenceburg
casino revenues of $17.5 million. Casino expenses at Alton increased $0.5
million due to the overall increase in Alton casino revenues of $1.1 million.
ADMISSIONS--Admissions revenues (net of complimentary admissions) decreased
slightly by $0.3 million to $1.5 million. Although the number of admissions
increased, more complimentary admissions were given to customers as part of
increased promotions.
FOOD, BEVERAGE AND OTHER--Food, beverage and other revenues increased $2.5
million to $13.6 million for the three month period ended March 31, 1999. This
increase is attributable to restaurants at the Lawrenceburg property being
opened the entire quarter in 1999. Food, beverage and other net profit improved
$2.2 million to $4.0 million for the three months ended March 31, 1999.
41
<PAGE>
Alton and Kansas City each reported decreases in food and beverage revenues and
expenses. Alton's decrease was due to the closing of a restaurant during the
entire three months ended March 31, 1999 in conjunction with a major renovation.
Kansas City's decreases were primarily due to the decreased use of food and
beverage as a promotional item.
The Lawrenceburg hotel, which opened in May 1998, contributed $0.8 million
in net revenues and $0.2 million of operating profit. The hotel occupancy
percentage was 78% and the average daily room rate was $79.
OTHER OPERATING EXPENSES--Other operating expenses were virtually unchanged
at $6.6 million for the three months ended March 31, 1999 as compared to the
three months ended March 31, 1998.
SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses increased $5.3 million to $28.5 million for the three months ended
March 31, 1999 due primarily to an increase of $3.0 million at Lawrenceburg
relating to expanded promotions and additional payments due to the city due to
increased gaming revenue. Baton Rouge selling, general and administrative
expenses decreased by $0.5 million due to the elimination of the group sales
department as a result of cost reduction programs and a decrease in insurance
expense due to favorable claims experience. Corporate expenses increased by $1.8
million due to expenses related to a severance package and settlement
arrangement.
DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased $0.4
million from $8.1 million for the three months ended March 31, 1998 to $8.5
million for the three months ended March 31, 1999, due to depreciation on the
Lawrenceburg hotel which was opened in May 1998.
INTEREST EXPENSE--Net interest expense decreased $0.3 million to $13.2
million for the three months ended March 31, 1999. This decrease is due to a
decrease in interest expense to a minority partner of $0.6 million offset by
capitalized interest of $0.5 million in the first three months of 1998.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
CASINO--Casino revenues for the year ended December 31, 1998, increased by
48.1% to $473.5 million from $319.8 million for the year ended December 31,
1997, due primarily to a $136.4 million increase in casino revenues at the
Lawrenceburg casino, which generated total casino revenues of $264.4 million for
the year ended December 31, 1998. The Company's other properties reported an
aggregate 9.0% increase in casino revenues from $191.9 to $209.2 million.
Specifically, Alton casino revenues increased from $61.9 to $67.8 million;
Kansas City casino revenues increased from $61.8 to $72.0 million; Sioux City
casino revenues increased from $20.7 to $22.6 million, offset by a decrease in
Baton Rouge casino revenues from $47.6 to $46.8 million.
Casino expenses increased 35.3% to $221.7 million for the year ended
December 31, 1998, from $163.9 million for the year ended December 31, 1997.
This is primarily due to a $52.2 million increase in Lawrenceburg casino
expenses associated with the overall increase in Lawrenceburg casino revenues.
Casino expenses increased $4.6 million at Kansas City in connection with the
increase in casino revenues. Alton casino expenses decreased slightly while
casino revenues increased 10%. This decrease in casino expenses in Alton is
attributable to improved operating efficiencies and the implementation of cost
reduction programs.
ADMISSIONS--Admissions revenues (net of complimentary admissions) increased
from $4.6 million in 1997 to $7.2 million in 1998 due to an increased number of
customers at the Lawrenceburg casino.
FOOD, BEVERAGE, AND OTHER--Food, beverage and other revenues increased from
$34.8 million to $51.1 million for the year ended December 31, 1998, due to the
expanded food and beverage facilities
42
<PAGE>
in Lawrenceburg. Food, beverage and other net profit improved $5.6 million to
$10.5 million for the year ended December 31, 1998, due primarily to this
increase in sales.
The Lawrenceburg hotel, which opened in May 1998, contributed $2.5 million
in net revenues and $0.7 million of operating profit. The hotel occupancy
percentage was 73.5% and the average daily room rate was $79.
OTHER OPERATING EXPENSES--Other operating expenses decreased from $28.7
million to $26.6 million for the year ended December 31, 1998, due primarily to
a decrease at Lawrenceburg of $2.3 million related to renting the temporary
vessel in 1997.
SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses increased 37.7% to $96.0 million for the year ended December 31, 1998,
due primarily to an increase of $20.0 million at Lawrenceburg related to
expanded marketing and operating costs of the larger facility, an increase of
$2.3 million at Riverside due to expanded marketing efforts and a $1.4 million
charge related to a writeoff of deferred lease costs at the Catfish Town real
estate project in Baton Rouge. The increase in selling, general and
administrative expenses was offset by a $1.5 million decrease at Baton Rouge
related primarily to insurance costs.
DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased
slightly to $33.4 million for the year ended December 31, 1998, from $33.3
million in 1997.
INTEREST EXPENSE--Net interest expense increased $12.7 million to $53.9
million for the year ended December 31, 1998. The increase in interest expense
is primarily attributable to a decrease of $7.3 million in the amount of
capitalized interest due to the completion of the final phase of the
Lawrenceburg project in June 1998, a weighted average increase of $11.0 million
in the balance of partner loans related to the Lawrenceburg casino, and an
equipment loan at the Lawrenceburg partnership which was outstanding for the
entire year of 1998.
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS--The Company reported
net income attributable to common stockholders of $5.7 million for the year
ended December 31, 1998 as opposed to a net loss of $40.2 million for the year
ended December 31, 1997, due primarily to the factors discussed above. In
addition, in 1998, the Company recorded $0.8 million in preferred dividends and
accretion related to the sale of Preferred Stock and Warrants in June 1998. In
1997, the Company recorded pretax charges of $9.6 million relating to the
write-down of assets held for sale and approximately $1.8 million in severance
expenses. Due to its net operating loss position, the Company's effective tax
rate for 1998 was 3.4%.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
CASINO--Casino revenues for the year ended December 31, 1997, increased to
$319.8 million from $228.4 million for the year ended December 31, 1996, due to
the opening of the Lawrenceburg casino, which generated $127.9 million of casino
revenues, offset by decreased revenues at three of the Company's other
properties. Alton casino revenues decreased from $72.4 to $61.9 million and
Kansas City casino revenues decreased from $82.2 to $61.8 million due to the
effects of increased competition. Baton Rouge casino revenues decreased from
$51.0 to $47.6 million due primarily to an overall decline in the Baton Rouge
market.
Casino expenses increased to $163.9 million for the year ended December 31,
1997, from $121.0 million for the year ended December 31, 1996, due primarily to
the opening of the Lawrenceburg casino. Casino expenses decreased in Alton,
Kansas City and Baton Rouge in connection with the decline in revenues.
43
<PAGE>
ADMISSIONS--Admissions revenues (net of complimentary admissions) increased
from $0.6 million in 1996 to $4.6 million in 1997 due to net admission fees in
Lawrenceburg.
FOOD, BEVERAGE, AND OTHER--Food, beverage and other revenues increased $5.6
million to $34.8 million for the year ended December 31, 1997, due primarily to
the opening of the Lawrenceburg casino. Food, beverage and other expenses
increased from $23.8 million in 1996 to $30.0 million in 1997 due primarily to
the opening of the Lawrenceburg casino.
OTHER OPERATING EXPENSES--Other operating expenses increased $9.6 million to
$28.7 million for the year ended December 31, 1997. This increase is due
primarily to costs associated with operating the Lawrenceburg casino offset
somewhat by a $1.1 million decrease in Kansas City due to cost control measures.
SELLING, GENERAL AND ADMINISTRATIVE--Selling, general and administrative
expenses increased $17.7 million to $69.7 million for the year ended December
31, 1997, due primarily to the opening of the Lawrenceburg casino resulting in
an increase of $20.9 million. This amount was offset by decreased costs
recognized through cost savings initiatives implemented at the Company's other
properties and the corporate office, the absence of 1996 expenses of
approximately $1.5 million related to the Company's response to a Marion County,
Indiana grand jury document subpoena and the related postponement of a private
placement of first mortgage notes.
DEPRECIATION AND AMORTIZATION--Depreciation and amortization increased $10.9
million from $22.4 million for the year ended December 31, 1996, to $33.3
million for the year ended December 31, 1997. This increase is largely
attributable to additional assets associated with the Lawrenceburg casino.
DEVELOPMENT AND PREOPENING COSTS--Development and preopening costs decreased
from $12.4 million for the year ended December 31, 1996, to $0.6 million for the
year ended December 31, 1997, due primarily to expenses related to developing
the casino in Lawrenceburg, Indiana in 1996.
INTEREST EXPENSE--Net interest expense increased $10.6 million to $41.2
million for the year ended December 31, 1997. The increase is attributable to
borrowings on the Company's $235 million first mortgage notes that were issued
in June 1996. This increase was offset somewhat by $8.4 million of capitalized
interest in 1997, as opposed to $3.0 million in 1996.
NET LOSS--Net loss increased from $24.8 million for the year ended December
31, 1996, to $40.2 million for the year ended December 31, 1997, primarily for
the reasons discussed above. In addition, in 1997, the Company recorded pretax
charges of $9.6 million relating to the write-down of assets held for sale and
$1.8 million for severance expenses. In 1996 the Company recorded a pretax
charge of $3.5 million related to lease termination costs related to assets
formerly used at its temporary facility in Kansas City. Also, the Company
recorded an extraordinary loss of $0.9 million (net of tax) related to the
writeoff of deferred finance costs associated with extinguishment of its
revolving secured line of credit in 1996. The Company is in a net operating loss
position and, therefore, has not recorded any federal tax benefits against its
losses for the year ended December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
During 1998, the Company generated cash flows from operating activities of
$81.7 million compared to $31.6 million for 1997. Cash flows from operating
activities increased by $59.5 million for the year ended December 31, 1998 over
1997 after eliminating the effects of income tax refunds in both years. This
increase is attributable to substantial cash flow increases from the
Lawrenceburg facility as well as improved cash flows from the Company's Alton,
Kansas City, Baton Rouge and Sioux City properties.
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In the three months ended March 31, 1999, the Company generated cash flows
from operating activities of $30.2 million compared to $21.5 million for the
same period in 1998. This increase is attributable to improved operations at
each of the Company's five casino locations.
During 1998, the Company used cash flows for investing activities of $14.2
million versus $72.6 million for 1997. The primary use of funds in both years
was capital investment in the Company's properties including the construction of
the Lawrenceburg facility. Overall capital expenditures have decreased between
periods reflecting the completion of the Lawrenceburg casino.
In the three months ended March 31, 1999, the Company used cash flows for
investing activities of $4.1 million versus $8.2 million for the three months
ended March 31, 1998. The primary use of funds in 1998 was the completion of the
construction of the Lawrenceburg facility and hotel. Overall capital
expenditures have decreased between periods reflecting the completion of the
Lawrenceburg casino.
During 1998, the Company used $37.0 million in cash flows for financing
activities compared to generating $62.0 million of cash flows from financing
activities for the same period in 1997. The uses of cash flows in 1998 were to
repay loans related to the Company's Lawrenceburg casino, partnership equity
distributions at the Lawrenceburg partnership, and for payments on installment
contracts and other long-term debt, offset by net proceeds of $7.4 million from
the sale of Convertible Preferred Stock and Warrants in June 1998. The primary
sources of cash flows from financing activities in 1997 were $46.6 million in
loans from the Company's partner in Lawrenceburg and $25.0 million in proceeds
from an equipment loan at the Lawrenceburg partnership offset by payments on
installment contracts and payments to partners.
During the three months ended March 31, 1999, the Company used $10.0 million
in cash flows for financing activities compared to using $8.3 million of cash
flows for financing activities for the same period in 1998. The uses of cash
flows in both 1999 and 1998 were to repay loans related to the Company's
Lawrenceburg casino, partner equity distributions related to the Lawrenceburg
partnership and for payments on installment contracts and other long-term
obligations.
As of March 31, 1999, we had approximately $105.9 million of cash, cash
equivalents, and marketable securities, including approximately $20.6 million
held at the Lawrenceburg partnership.
During an ongoing audit, the Internal Revenue Service has challenged the
S-corporation status of a predecessor entity of the Company. If the IRS
challenge is successful, the Company currently estimates that it would require
up to approximately $13.8 million (excluding penalties) through March 31, 1999
to fund the potential federal and any state income tax liability. We believe we
have substantial legal grounds for our tax position related to this matter and
is vigorously contesting the IRS challenge; however, no assurance can be given
that we will not be required to pay some or all of the disputed amount.
We have made a significant investment in property and equipment and plans to
make significant additional investments at certain of its existing properties.
In 1999, we expect to spend approximately $25 million to fund its capital
expenditures program principally related to upgrading its gaming facilities and
purchasing gaming equipment.
In connection with the offering of the outstanding notes, we entered into a
$200 million senior secured credit facility with a term of five years. We used
the net proceeds from the offering of the outstanding notes and initial
borrowings under the credit facility to fund the repurchase of approximately 90%
of our 13 1/4% first mortgage notes and the redemption of our 12% convertible
subordinated notes. As of June 16, 1999, we had outstanding $22.2 million of
13 1/4% first mortgage notes. Under the terms of the credit facility, we are
required to redeem all of the outstanding 13 1/4% first mortgage notes on the
earliest redemption date, June 1, 2000.
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Under the terms of the credit agreement, we have the right, within two years
following the closing of the credit facility, to arrange for a $75 million
increase to the borrowing availability under the credit facility. In addition,
we have the right, within two years following the closing, to arrange for a
further $150 million increase to fund the purchase of all outstanding minority
interests in the Lawrenceburg partnership. We expect to use future borrowings
under the credit facility to finance capital improvements, to provide working
capital and for general corporate purposes.
We believe that cash on hand, operating cash flows and borrowings under the
credit facility will be sufficient to fund our current operating, capital
expenditure and debt service obligations. While we believe that our sources of
liquidity are sufficient to meet its cash obligations during the next 12 months,
our ability to meet our operating and debt service requirements is substantially
dependent upon the success of the Lawrenceburg casino. If the operating results
of the Lawrenceburg casino would deteriorate significantly or there are any
other events that materially impact its sources or uses of cash, we may be
unable to meet future debt service payments without obtaining additional debt or
equity financing or without the disposition of assets. We cannot assure you that
we would be able to obtain such additional financing on suitable terms or sell
assets on favorable terms, if required.
YEAR 2000
We have determined that we will need to modify or replace significant
portions of its software so that our computer systems will function properly
with respect to dates in the year 2000 and beyond. As we are dependent on third
party software for all of our major applications we have initiated discussions
with our significant software vendors and financial institutions to ensure that
those parties have appropriate plans to remediate Year 2000 issues. Through
these discussions, we have determined that all of the systems that are critical
to our operations are either Year 2000 compliant or that Year 2000 compliant
versions exist that can be implemented by us.
The next phase in our efforts will be to plan for and implement the Year
2000 versions of the software into our systems. We have a September 1999 target
date to complete our implementation efforts.
As of March 31, 1999, we had incurred less than $200,000 of costs related to
Year 2000 issues. We estimate we will incur less than $300,000 in future
expenses to ensure all systems will function properly with respect to dates in
the Year 2000. These expenses are not expected to have a material adverse impact
on the financial position, cash flow or operations of our company.
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THE COMPANY
We are a leading owner and operator of five riverboat casinos located in
emerging gaming markets of the central United States. We pioneered riverboat
gaming in St. Louis, Kansas City, Baton Rouge and Sioux City by opening the
first casino in each of those markets. Our newest riverboat casino serves the
Cincinnati market from Lawrenceburg, Indiana and is the largest revenue
producing riverboat in the United States gaming industry. We operate the
Lawrenceburg casino through a joint venture subsidiary of which we currently own
a 57.5% interest.
The following summarizes our casino properties:
<TABLE>
<CAPTION>
APPROXIMATE
PRINCIPAL METROPOLITAN 1998 NET GAMING
CASINO NAME MARKETS SERVED REVENUES POSITIONS
- ------------------------------- ------------------------------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Argosy Casino Lawrenceburg Cincinnati-Dayton-Columbus, $ 284,721 2,600
Ohio
Alton Belle Casino St. Louis, Missouri 72,064 900
Argosy Casino of Greater Kansas Kansas City, Missouri 76,960 1,400
City
Belle of Baton Rouge Casino Baton Rouge, Louisiana 49,054 1,000
Belle of Sioux City Casino Sioux City, Iowa 23,526 600
</TABLE>
Since mid-1997, we have been implementing a strategic plan designed to
transform us from a company focused on developing casino properties to one
focused on achieving superior operational performance. Our strategy emphasizes
increasing revenues and profits through expanding direct marketing programs,
investing in state-of-the-art gaming products, such as new slot machines and
player tracking systems, and improving cost controls. To achieve these goals we
have strengthened our executive management team with the addition of a new chief
executive officer and new vice presidents of operations and sales and marketing
and several other key operating executives each with significant casino industry
experience.
Our initiatives have had the greatest impact at our four western casinos in
Alton, Kansas City, Baton Rouge and Sioux City. For the year ended December 31,
1998, net revenues at the western casinos combined increased 8% to $222 million,
while EBITDA (earnings before interest, taxes, depreciation and amortization)
increased 44% to $34 million. The trend continued in the first quarter of 1999
with net revenues at the western casinos increasing 5% to $59 million and EBITDA
growing 60% to $11 million as compared to the first quarter of 1998. At
Lawrenceburg, 1998 net revenues grew to $285 million while EBITDA increased to
$106 million, due primarily to the casino becoming fully operational with the
completion of its hotel and permanent pavilion. First quarter net revenues in
1999 at Lawrenceburg increased 31% to $78 million while EBITDA grew 38% to $29
million as compared to the first quarter of 1998. Overall, we reported record
results in 1998 with a 47% increase in net revenues to $507 million and a 137%
increase in EBITDA to $121 million. In the first quarter of 1999, our net
revenues increased 19% to $137 million while EBITDA grew 47% to $35 million.
BUSINESS STRATEGY
By capitalizing on the extensive gaming industry experience of our
management team, we have developed a strategy to maximize the performance of our
operating assets and improve financial results. We continue to implement changes
at each of our properties to improve our competitive position, increase gaming
revenues and enhance profitability. The key elements of our business strategy
include: (1) utilizing direct marketing to encourage repeat business and foster
customer loyalty; (2) enhancing the gaming product at our casinos by investing
in state-of-the-art gaming equipment; (3) renovating our properties to create
more exciting gaming environments; and (4) increasing our financial flexibility
to enable us to pursue future business opportunities.
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- REDIRECT MARKETING EFFORTS TOWARDS DIRECT MARKETING. We have changed our
marketing focus from mass marketing to direct and relationship marketing
to encourage repeat business and foster customer loyalty. At each of our
properties we use sophisticated player tracking systems to identify and
reward premium players and our most loyal customers. Based on a player's
gaming activity, we create targeted promotions including exclusive direct
mail offers and "member's only" concerts, parties, tournaments,
sweepstakes and special entertainment events.
- INVEST IN NEW GAMING EQUIPMENT. Historically, we used available capital to
develop new casinos while we deferred capital improvement projects and
gaming product upgrades at our existing facilities. Because slot machines
represent 80% of our revenues, we began a program in 1998 to
systematically upgrade our gaming product with state-of-the-art slot
machines. We believe that regularly replacing slot machines with the most
popular products creates a more exciting gaming experience and increases
profitability. We invested in over 800 new slot machines in 1998. At our
western casinos, the upgraded machines increased the average daily revenue
over the older machines they replaced. At Lawrenceburg, additional new
slot product helped us take advantage of increased market demand. Going
forward we expect to replace an average of 15-20% of our gaming equipment
annually.
- RENOVATE OUR RIVERBOAT AND DOCKSIDE ENTERTAINMENT FACILITIES. To maintain
a fresh and exciting gaming experience for our customers, we have
developed a prudent capital investment plan to systematically renovate our
casino and entertainment facilities. By late-1999 we will complete a $12
million project at Alton that will replace the existing entertainment
pavilion with a newly renovated barge that was originally used as the
Lawrenceburg temporary landing facility and an additional new barge. The
Alton renovation will significantly enhance the facility's restaurant and
entertainment amenities. In June 1999, we completed a $5 million
renovation and retheming of our Baton Rouge riverboat. The renovation of
the Baton Rouge riverboat's third deck features approximately 200 of the
newest and most popular video poker machines and gaming product upgrades
to target the video poker market. We are also considering expanding our
operations at Sioux City by replacing the existing support facility with
the three-level facility currently used in Alton.
- INCREASE FINANCIAL FLEXIBILITY. The issuance of the outstanding notes was
part of an overall refinancing plan designed to reduce borrowing costs,
extend debt maturities and increase our overall financial flexibility.
Future borrowing availability will enable us to complete the refurbishment
and upgrading of our facilities, fund a potential purchase of the minority
interests in our Lawrenceburg casino and pursue other strategic
opportunities.
CASINO PROPERTIES
ARGOSY CASINO LAWRENCEBURG
PROPERTY: The Lawrenceburg casino is located on the Ohio River in
Lawrenceburg, Indiana approximately 15 miles west of Cincinnati and is the
closest casino to the Cincinnati metropolitan area. The Lawrenceburg casino is
one of the largest riverboats in the United States with 74,300 square feet of
gaming space on three levels with approximately 2,000 slot machines and 104
table games. The vessel can accommodate 4,400 passengers and crew; however, to
enhance our customers' comfort and enjoyment, we operate at a self-imposed
capacity of 3,600 passengers. We typically conduct 9 two-hour cruises seven days
a week, with an additional cruise on Friday and Saturday evenings, for a total
of 65 cruises per week. Each cruise lasts two hours including a 30 minute
boarding time and we charge admission fees ranging from $5 to $9 depending on
the time and day of the cruise. Approximately 50% of our weekend cruises are
sold out. Indiana gaming law permits dockside gaming only when inclement weather
or water conditions prevent a riverboat from cruising. At such times, the
Lawrenceburg casino remains dockside and operates on its normal schedule.
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The complex also includes a 300 room hotel, which was completed in June
1998, a 120,000 square foot land-based entertainment pavilion and support
facility featuring a 350 seat buffet restaurant, two specialty restaurants, an
entertainment lounge and a 1,750 space parking garage. Employee and overflow
parking is provided at a 1,400 space remote lot that is accessed by shuttle bus.
We opened the Lawrenceburg casino on December 10, 1996 and, through September
30, 1997, operated from a temporary site utilizing a leased vessel and
entertainment and support barge that featured approximately 1,275 gaming
positions. Parking for the temporary facility was provided by 1,400 space remote
lot from which we operated a shuttle to and from the casino. On October 1, 1997,
the Lawrenceburg casino commenced operations from its permanent riverboat
vessel, which it used on a limited capacity basis at the temporary site. On
December 9, 1997, the Lawrenceburg casino moved to its permanent site and became
fully operational in June 1998 with the completion of its hotel.
We are the sole general partner of, and hold a 57.5% general partnership
interest in, Indiana Gaming Company, L.P., a joint-venture subsidiary of the
Company that operates the Lawrenceburg casino. Conseco Entertainment L.L.C.
("Conseco"), an indirect subsidiary of Conseco, Inc., holds a 29.0% limited
partnership interest and certain other investors hold the remaining 13.5%
limited partnership interest in the Lawrenceburg partnership. We manage the
operations of the Lawrenceburg casino and receive a management fee of 7.5% of
EBITDA, while Conseco receives a financial advisory fee of 5.0% of EBITDA. For a
more complete description of the partnership agreement see "Lawrenceburg Casino
Partnership Agreement."
GAMING MARKET: The Lawrenceburg casino draws from a population of
approximately 1.6 million residents in the Cincinnati metropolitan area and an
additional 5.4 million people who reside within 100 miles of Lawrenceburg,
including the major metropolitan markets of Dayton and Columbus, Ohio and, to a
lesser extent, Indianapolis, Indiana and Lexington, Kentucky. We are currently
adding approximately 18,000 customers to our Lawrenceburg casino database each
month.
In the Cincinnati market, the Lawrenceburg casino directly competes with one
other riverboat casino, which was opened in October 1996. The two riverboat
casinos operating in the Cincinnati market generated $428 million of gaming
revenues in 1998, a 58% increase from 1997. The increase was largely
attributable to the December 1997 opening of the permanent Lawrenceburg casino.
The Lawrenceburg casino represented 57% of gaming position capacity in the
Cincinnati market, but captured 62% of the market's gaming revenues.
Our closest competitor is located approximately 15 miles further south of
Lawrenceburg in Rising Sun, Indiana. The principal traffic route between the
greater Cincinnati metropolitan market and northern Kentucky and that competing
gaming facility passes through Lawrenceburg. A new riverboat casino is expected
to open in 2000 approximately 45 miles from the Lawrenceburg in Switzerland
County, Indiana. This competitor will be located even further from Lawrenceburg
and we expect it will primarily draw customers from Lexington and the
northeastern suburbs of Louisville. In addition, a riverboat casino opened in
November 1998 in the Louisville, Kentucky area approximately 100 miles from
Lawrenceburg.
Indiana gaming law currently limits the number of gaming licenses to be
issued in the state to a total of 11, including a maximum of 5 licenses along
the Ohio River and a limit of one license per county. Casino gaming is not
currently permitted under the laws of either Ohio or Kentucky. Our Indiana
gaming license is subject to renewal in 2001 and on an annual basis thereafter.
Indiana gaming law does not restrict the size of a licensee's gaming facility or
place limits on customer losses or betting levels.
CAPITAL IMPROVEMENTS: In 1998, we focused our capital improvements at
Lawrenceburg on the gaming floor with upgrades to our signage and equipment,
adding over 200 slot machines and seven table games to meet increased demand. We
recently completed a $1.4 million renovation and upgrade of the riverboat casino
to create an exclusive high-stakes gaming area, including $100 minimum
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blackjack tables and a slot area with $25 slot machines. In addition, we are
focusing on our customers' comfort by installing a smoke filtration system to
improve air quality in the riverboat and replacing the seating throughout the
casino. We plan to keep adding popular new games, primarily video slot machines,
in various denominations with more multi-nickel and 50-cent machines.
ALTON BELLE CASINO
PROPERTY: The Alton Belle Casino is located on the Mississippi River in
Alton, Illinois approximately 20 miles northeast of downtown St. Louis. We
commenced operations in Alton, Illinois in September 1991 as the first gaming
facility in Illinois and the St. Louis metropolitan market. Following the
success of our original Alton riverboat casino, we built and opened a larger
three-deck contemporary style cruise liner. The cruise liner features 22,800
square feet of gaming space, approximately 700 slot machines and 32 table games.
In June, Illinois passed a law permitting casinos to offer continuous dockside
gaming. As a result, the Alton Belle Casino remains dockside and offers its
customers unlimited ingress and egress during its hours of operation.
The existing Alton entertainment complex features a 37,000 square foot,
three-level floating entertainment pavilion, which includes a
sports/entertainment lounge, buffet and table service restaurant facilities and
conference facilities. By late-1999, we will replace our existing entertainment
pavilion with a newly-renovated barge that was originally used as the
Lawrenceburg temporary landing facility and an additional new barge. The new
entertainment pavilion will feature a newly designed entrance, larger and
improved food and beverage venues and a new main showroom offering better
viewing and more comfortable seating. Parking is available at an adjacent
city-owned surface parking facility and at two sites in the city of Alton, to
and from which we provide valet parking as well as free shuttle service.
GAMING MARKET: The Alton Belle Casino generally draws from a population of
approximately 2.5 million within the St. Louis metropolitan area and an
additional 1.2 million within a 100-mile radius of the City of St. Louis. The
target customers of the Alton Belle Casino are drawn largely from the northern
and eastern regions of the greater St. Louis metropolitan area, as well as
portions of central and southern Illinois.
The Alton Belle Casino faces competition from five other riverboat casino
companies currently operating in the St. Louis area and expects the level of
competition to remain intense in the future. As an Illinois licensee, the Alton
Belle Casino is not subject to Missouri's $500 loss limit and therefore has a
competitive advantage in attracting high-end customers over competitors
operating under Missouri licenses. The six riverboat casinos operating in the
St. Louis market generated $538 million of gaming revenues in 1998, a 15%
increase from 1997. The Alton Belle Casino represented approximately 9% of
gaming position capacity in the St. Louis market, but captured approximately 13%
of the market's gaming revenues.
Illinois gaming law currently limits the number of gaming licenses to be
issued in the state to 10. Each license permits the operation of up to two boats
as part of a single riverboat gaming operation with a combined maximum of 1,200
gaming positions. Our Illinois gaming license is subject to annual renewal in
October 1999.
CAPITAL IMPROVEMENTS: During 1998, we replaced nearly 220 slot machines and
invested over $1 million to upgrade our player tracking system at the Alton
Belle Casino. We are replacing our existing entertainment pavilion with the
newly renovated barge originally used as the Lawrenceburg temporary facility and
an additional new barge. This $12 million project will feature larger and
improved food and beverage venues and a new main showroom offering better
viewing and more comfortable seating. We also plan to replace nearly one-quarter
of our slot equipment. In addition, if we expand our casino complex in Kansas
City, we could replace the existing riverboat in Alton with the
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larger boat from Kansas City to provide increased gaming capacity at Alton to
the maximum 1,200 positions permitted under Illinois law.
ARGOSY CASINO OF GREATER KANSAS CITY
PROPERTY: The Argosy Casino of Greater Kansas City is located on the
Missouri River in Riverside, Missouri on a 55-acre site approximately five miles
from downtown Kansas City. The riverboat features approximately 36,000 square
feet of gaming space, approximately 1,100 slot machines and 45 table games. The
Kansas City casino began operations in Kansas City, Missouri on June 22, 1994 as
the first gaming facility to open in the Kansas City market. Monday through
Friday the Kansas City casino typically conducts 10 two-hour "dockside simulated
cruises" permitting limited ingress and unlimited egress and offers 24-hour
gaming on Saturday and Sunday.
The Kansas City casino is complemented by an 85,000 square foot land-based
entertainment facility featuring specialty and buffet restaurants, a
sports/entertainment lounge and 14,000 square feet of banquet/conference
facilities. A 624-space parking garage and a 1,262-space surface parking area
are located adjacent to the pavilion.
GAMING MARKET: The Kansas City casino draws from a population of
approximately 1.6 million in the greater Kansas City metropolitan area and an
additional 900,000 within a 100-mile radius of Kansas City. The Kansas City
casino site offers convenient access from two major highways. The Kansas City
casino primarily attracts customers who reside in the northern and western
regions of the Kansas City metropolitan area.
We currently face competition from three other casinos in the Kansas City
area. Two of our competitors operate two gaming vessels each, which allows them
to offer more continuous boarding than we are able to provide with one vessel.
The four riverboat casinos operating in the Kansas City market generated $458
million of gaming revenues in 1998, a 10% increase from 1997. The increase in
gaming revenues occurred in spite of the closing of a Kansas City casino in July
1998. The Kansas City casino represented 13% of gaming position capacity in the
Kansas City market, but captured 16% of the market's gaming revenues.
Our Missouri gaming license is subject to renewal in June 2000 and again
every two years thereafter.
CAPITAL IMPROVEMENTS: Our primary capital investment focus at Kansas City
in 1998 was on enhancing and expanding our gaming product and player tracking
system. We allocated nearly $1 million to replace approximately 175 machines,
including adding machines with bill acceptor/loss limit software. In the future,
we plan to continue to upgrade older machines with exciting multi-coin slot
games and high resolution video. We are also considering expanding our Kansas
City casino complex. An expansion would increase the number of gaming positions
and offer our patrons staggered boarding times, thereby maximizing customer
convenience and eliminating the competitive disadvantage we currently face with
respect to certain of our competitors. If we expand in Kansas City, the existing
riverboat could be relocated to Alton to increase our gaming capacity at that
facility to the maximum 1,200 positions permitted under Illinois law.
BELLE OF BATON ROUGE
PROPERTY: The Belle of Baton Rouge is located on the Mississippi River in
downtown Baton Rouge, Louisiana. The riverboat features approximately 28,000
square feet of gaming space, approximately 750 slot machines and 42 table games.
The Belle of Baton Rouge began operations in September 1994 as the first
riverboat gaming facility in the Baton Rouge market. The Belle of Baton Rouge is
a three-level riverboat casino that typically conducts eight 3-hour cruises
seven days of the week. Louisiana gaming law provides that a gaming vessel need
not cruise if there is inclement weather
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or if the river conditions endanger the passengers or crew. During such times
that the Belle of Baton Rouge is prevented from cruising it operates on an
unlimited ingress and egress schedule. Proposed regulations have been introduced
in the Louisiana general assembly that would limit the number of required
cruises per year. We view this legislation as a potential benefit as our market
research indicates that our Baton Rouge patrons prefer to gamble when the boat
is stationary.
The riverboat casino is complemented by our adjacent real estate development
known as Catfish Town. Catfish Town includes a 50,000 square foot glass-enclosed
atrium, entertainment/sports lounge, buffet/coffee shop, conference facilities
and approximately 150,000 square feet of retail space that is currently
available for lease. Catfish Town is located adjacent to Baton Rouge's
convention complex, the Centroplex, which has a 12,000-seat arena and a
30,000-square foot exhibition hall. We have improved customer accessibility to
the Belle of Baton Rouge by completing construction in October 1995 of a
733-space parking garage and by leasing in December 1995 a 271-space surface
parking lot adjacent to Catfish Town.
GAMING MARKET: The Belle of Baton Rouge draws from a population of
approximately 540,000 in the Baton Rouge metropolitan area. The Baton Rouge
casino faces competition from one casino located in downtown Baton Rouge, a
nearby Native American casino and multiple casinos throughout Louisiana. The two
riverboat casinos operating in the Baton Rouge market generated approximately
$117 million of gaming revenues in 1998, a 3% increase from 1997. This amount
does not include approximately $100 million of revenues generated by video poker
machines in bars, restaurants and truck stops throughout the Baton Rouge market.
The Belle of Baton Rouge Casino represented 46% of gaming position capacity in
the Baton Rouge market, but generated 40% of the market's gaming revenues.
As a result of a 1996 general referendum by which the public reaffirmed
casino gaming in Baton Rouge, video poker machines are no longer permitted in
non-casino locations in the majority of Baton Rouge parishes as of July 1, 1999.
In June, we completed a renovation of the Belle of Baton Rouge's facilities to
aggressively pursue the approximately $80 million portion of the video poker
market that is scheduled to be eliminated.
Our Louisiana license is subject to renewal in July 1999 and each year
thereafter.
CAPITAL IMPROVEMENTS: In June, 1999, we completed a nearly $5 million
renovation and retheming of all three levels of our Baton Rouge casino. The
major upgrade features an exciting new Caribbean pirate theme and a reconfigured
third deck including a video poker area with its own separate service and
featuring the newest and most popular video poker machines available. In July,
1999, we announced plans to develop a $20 million hotel as required by our
development agreement with the City of Baton Rouge.
JAZZ ENTERPRISES: Jazz Enterprises, Inc. owns and operates the Catfish Town
development adjacent to the riverboat casino. The development of the historical
Catfish Town riverfront warehouse district into a retail/entertainment district
was an integral element in obtaining a Louisiana gaming license for the Belle of
Baton Rouge Casino. Our original intent was to develop and operate the casino
and our joint-venture partner would develop and manage the Catfish Town real
estate and hotel. In 1995 our real estate partner experienced financial
difficulties, and to preserve our gaming license, we purchased Jazz Enterprises,
Inc.
Pursuant to a development agreement, Jazz Enterprises, Inc. has certain
obligations to the City of Baton Rouge including the obligation to construct a
convention size hotel or collect and pay to the City an incremental head tax of
$2.50 per passenger, fund a transportation system connecting downtown Baton
Rouge and Catfish Town and to develop the Catfish Town facility to accommodate
restaurants, retail space and entertainment and restaurant facilities. We
recently announced plans to build a $20 million 300-room hotel in Baton Rouge to
fulfill our obligations under the development agreement.
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Once construction of the hotel begins, our annual cash flows at Baton Rouge will
benefit by $3 million due to the elimination of the incremental head tax.
BELLE OF SIOUX CITY
PROPERTY: The Belle of Sioux City is located on the Missouri River in
downtown Sioux City, Iowa. The riverboat features 12,500 square feet of gaming
space, 450 slot machines and 23 table games. The Belle of Sioux City typically
conducts one two-hour cruise each day for 100 days per year. At all other times
the Belle of Sioux City remains dockside and operates with unlimited ingress and
egress. The casino is complemented by adjacent barge facilities featuring buffet
dining facilities, meeting space and administrative support offices.
We became the manager of the Belle of Sioux City on October 4, 1994 and on
December 1, 1994 began operating the Belle of Sioux City through a partnership
in which we are a 70% general partner and Sioux City Riverboat Corp., Inc. is a
30% limited partner. As manager of the casino we receive a management fee of
4.5% based upon the facility's adjusted gross gaming revenues (as defined in the
management agreement).
GAMING MARKET: The Belle of Sioux City draws from a population of
approximately 80,000 in Sioux City and an estimated 100,000 residents within a
40-mile radius of Sioux City. The Belle of Sioux City competes primarily with
land-based Native American casinos that are not required to report gaming
revenues and other operating statistics, therefore market comparisons cannot be
made. We also compete with certain providers and operators of video gaming in
the neighboring state of South Dakota. In addition, we compete with slot
machines at a pari-mutuel race track in Council Bluffs, Iowa and from two
riverboat casinos in the Council Bluffs/Omaha, Nebraska market. Our Iowa gaming
license is subject to annual renewal each March.
CAPITAL IMPROVEMENTS: In 1998 we spent $1.2 million to enhance our
customers' gaming experience at the Belle of Sioux City. Specifically, we
partially renovated our facility, replaced outdated equipment and expanded our
parking resources. As a result of our capital expenditures, by the end of 1999,
we will have replaced 95% of our electronic gaming devices over a two year
period. In addition, we are considering replacing the one-level barge facility
with the three level facility currently used in Alton and retheming the facility
after the 1904 World's Fair. The improved facility will provide new venues for
our patrons, including fine dining, entertainment, conference and banquet
anemities.
INSURANCE
We carry property and casualty insurance on our land-based assets and our
vessels generally in the amount of their replacement costs with a nominal
deductible with respect to our land-based assets and a deductible equal to 2% of
the replacement value of the vessels. Our land-based assets are not currently
covered by flood insurance. Our general liability insurance with respect to
land-based operations has a limit of $1 million per occurrence and $2 million as
an annual aggregate with a $50,000 deductible. Our general liability insurance
with respect to our marine operations has a $100,000 per occurrence deductible
with per occurrence coverage up to a $75 million limit. With respect to worker's
compensation we have a $250,000 per occurrence deductible with a $1 million per
occurrence limit.
COMPETITION
The U.S. gaming industry is intensely competitive and features many
participants, including riverboat casinos, dockside casinos, land-based casinos,
video lottery and poker machines not located in casinos, Native American gaming
and other forms of gambling in the United States. Gaming competition is
particularly intense in each of the markets where we operate. Historically, we
have been an early entrant in each of our markets; however, as competing
properties have opened, our operating
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results in each of these markets have been negatively affected. Many of our
competitors have more gaming industry experience, are larger and have
significantly greater financial and other resources. In addition, some of our
direct competitors in certain markets may have superior facilities and/or
operating conditions in terms of: (i) dockside versus cruising riverboat gaming;
(ii) multiple riverboat casinos, which feature more continuous boarding; (iii)
amenities offered at the gaming facility and the related support and
entertainment facilities; (iv) convenient parking facilities; (v) a location
more favorably situated to the population base of a market and ease of
accessibility to the casino site; and (vi) favorable tax or regulatory factors.
There could be further competition in our markets as a result of the
upgrading or expansion of facilities by existing market participants, the
entrance of new gaming participants into a market or legislative changes. We
expect each market in which we participate, both current and prospective, to be
highly competitive.
MARKETING
We have changed our marketing focus from mass marketing to direct and
relationship marketing in order to encourage repeat business and foster customer
loyalty. We have designed an overall marketing strategy to attain our objective
of utilizing direct marketing as our primary means of communicating with our
customers. Although the marketing plan for each of our properties is tailored to
the specific needs of the site, the overall strategic components are relatively
constant:
- Further refine and enhance our database marketing efforts;
- Create a full-service player development program to service our premium
customers;
- Aggressively market our gaming product and facility improvements;
- Refine, enhance and expand the schedule of parties, events and
entertainment; and
- Utilize public relations as a tool to increase awareness, and reinforce
marketing efforts by publicizing winners.
A key tactic in implementing our overall strategy is the effective use of
the information we obtain regarding our customers' playing activity. At each of
our properties, we encourage patrons to join the Argosy Preferred Club. We then
track the member's level of play through the use of sophisticated player
tracking systems. As of March 1999, we had over 800,000 active Preferred Club
members and we are adding, on average, over 26,000 new members each month. In
1998, we engaged database managers to enhance our database and oversee our data
collection and utilization programs. Utilizing the information from our
database, we create targeted promotions including exclusive direct mail offers
and "members only" parties, tournaments, sweepstakes and special entertainment
events.
EMPLOYEES
As of December 31, 1998, we employed approximately 4,146 full-time and 585
part-time employees. Approximately 2,354 employees, located throughout our
properties, are represented by the Seafarers International Union of North
America. We have collective bargaining agreements with that union which expire
at various times between July 1999 and June 2003. In Alton ten of our employees
are represented by the International Brotherhood of Electrical Workers and
approximately 73 employees are represented by the United Plant Guard Workers of
America. In addition, 18 employees located throughout our properties except
Alton are represented by American Maritime Officers Union.
We have not experienced any work stoppages and believe our labor relations
are generally satisfactory.
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LAWRENCEBURG CASINO PARTNERSHIP AGREEMENT
GENERAL. Through our wholly-owned subsidiary, The Indiana Gaming Company,
we are the majority partner in Indiana Gaming Company L.P., the Indiana
partnership that owns and operates the Lawrenceburg casino. The Indiana Gaming
Company, is the sole manager of the partnership and receives a fee of 7.5% of
EBITDA (as defined in the partnership agreement). The Indiana Gaming Company's
management of the casino is subject only to certain actions or major decisions
which require the consent of a majority in interest of the limited partners. The
largest minority partner, Conseco, receives a financial advisory fee of 5.0% of
EBITDA.
PARTNER DISTRIBUTIONS. After principal and interest on capital loans is
repaid, cash flow is distributed to the partners as follows:
- first, to the partners pro rata for tax payments in an amount equal to
their taxable net income for such period;
- second, to the partners as a prepayment of principal on capital loans to
be applied in the inverse order of maturity, up to 75% of the remaining
cash flow;
- third, in payment of a preferred return of 14% on any preferred equity
contributed by the partners;
- fourth, as a return of the preferred equity contributed by the partners;
- fifth, as a return of common equity contributed by the partners; and
- sixth, to the partners in accordance with their respective percentage
interests.
These distributions are required to be made no less frequently than
quarterly, but historically, they have been made monthly. The partnership
agreement provides that the net cash proceeds from a sale or refinancing are
distributed by the general partner in the same order as cash flow except that
the proceeds will be used to repay 100% of outstanding capital loans by the
partners.
PARTNERSHIP INTEREST BUY-SELL OBLIGATIONS. The Lawrenceburg partnership
agreement provides that: (i) after December 10, 1999, each limited partner has
the right to sell its interest to the other partners (pro rata in accordance
with their respective percentage interests) or (ii) at any time after a deadlock
by the partners with respect to significant items in any annual operating budget
of the partnership for budget year 1999 and thereafter, any partner has a right
to sell its interest to the other partners.
After the selling partner gives notice of its intent to sell, the partners
have 60 days to attempt in good faith to agree to a purchase price. If no
agreement is reached within 60 days, then the selling partner's interest is
appraised to determine its fair market value. After the appraised fair market
value of the selling partner's interest is determined, the other partners have
60 days to reject a purchase at that price. After such a rejection, the general
partner is required to solicit bids and sell all of the assets of the
Lawrenceburg partnership within twelve months to the highest bidder and
following such sale, dissolve Indiana Gaming Company L.P.
No assurance can be given that we will have sufficient funds to acquire any
selling partner's interest in the circumstances provided for above or that we
will choose to make such a purchase. In such an event, the assets of the
Lawrenceburg partnership would have to be sold to the highest bidder as provided
above, which could result in our losing control of the Lawrenceburg casino. If
we sold the assets of the Lawrenceburg partnership, any outstanding amounts
under the credit facility would be accelerated and under the indenture we would
be required to make an offer to purchase the exchange notes.
In addition, the partnership agreement provides all partners with a right of
first refusal on transfers of any partnership interest. A foreclosure by a
secured creditor, such as the lenders under the
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credit facility, would constitute a transfer of our partnership interest and
under the partnership agreement provides all partners a right of first refusal
on that partnership interest.
REMOVAL AS GENERAL PARTNER. The partnership agreement provides that The
Indiana Gaming Company, can be removed as general partner of the partnership by
the limited partners under certain limited circumstances, including:
- a material breach (after notice and expiration of applicable cure periods)
of certain material provisions of the partnership agreement dealing with
such things as distributions to partners or the failure to obtain the
required consent of the limited partners for certain major decisions;
- if the general partner is convicted of embezzlement or fraud;
- certain bankruptcy events;
- if our partnership interest in the Lawrenceburg partnership is less than
40% due to sales or dilution for failure to pay required capital;
- a final unappealable judgment against The Indiana Gaming Company in excess
of $25 million which is uninsured and remains unsatisfied, unreleased or
unstayed for 180 days;
- certain acts by the general partner constituting "gross mismanagement;"
and
- if a secured creditor, such as the lenders under the credit facility, were
to foreclose on the pledge of our partnership interest in the Lawrenceburg
partnership.
Upon removal, the general partnership interest becomes a "special limited
partner" interest with rights to partner distributions but only limited voting
rights on partnership matters. Also, if the reason for the removal is an event
described above, other than a less than 40% ownership, the limited partners may
acquire all, but not less than all, of The Indiana Gaming Company's interest for
fair market value as determined by an appraisal process.
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REGULATORY MATTERS
ILLINOIS
In February 1990, the State of Illinois pursuant to the Riverboat Gambling
Act (the "Riverboat Act") legalized riverboat gaming. The Riverboat Act
authorizes riverboat gaming upon any navigable stream within or forming a
boundary of the State of Illinois other than Lake Michigan. Newly enacted
legislation eliminated the prohibition on gaming operations in counties with
populations over 3,000,000. The Riverboat Act grants the Illinois Gaming Board
specific powers and duties, and all other powers which are necessary and proper
to effectuate the Riverboat Act. The Illinois Gaming Board's jurisdiction
extends to every person, association, corporation, partnership and trust
involved in riverboat gaming operations in the State of Illinois.
The Riverboat Act authorized a five member Illinois Gaming Board to issue up
to ten owner's licenses statewide. Each owner's license permits the operation of
up to two boats as a part of a single riverboat gaming operation with a combined
maximum of 1,200 gaming positions (as defined by the Illinois Gaming Board). In
addition to the ten owner's licenses which may be authorized under the Riverboat
Act, the Illinois Gaming Board may issue special event licenses allowing persons
who are not otherwise licensed to conduct riverboat gaming on a specified date
or series of dates. Riverboat gaming under such a license may take place on a
riverboat not normally used for riverboat gaming.
An owner's license is issued for an initial period of three years (with a
fee of $25,000 for the first year and $5,000 for each of the following two
years). Our Illinois gaming license is subject to renewal in October, 1999.
Newly enacted legislation has extended the renewal period from annually to once
every four years. Our license is eligible for renewal upon:
- payment of a $5,000 fee; and
- the Illinois Gaming Board's determination that we continue to meet all of
the requirements of the Riverboat Act.
The Illinois Gaming Board also requires that officers, directors and employees
of a gaming operation be licensed. Licenses issued by the Illinois Gaming Board
may not be transferred to another person or entity. All licensees must maintain
their suitability for licensure and have a continuing duty to disclose any
material changes in information provided to the Illinois Gaming Board.
Pursuant to its rule making authority under the Illinois Riverboat Act, the
Illinois Gaming Board has adopted certain regulations that provide that any
beneficial owner of the legal or beneficial interests of a gaming company may be
required, and in the case of a beneficial owner of 5% or more of the legal or
beneficial interests (a "5% Holder") is required, to furnish a detailed personal
disclosure form to the Illinois Gaming Board. The Illinois Gaming Board uses the
personal disclosure form as the basis for its investigation to determine such
holder's suitability as a stockholder of the company. In the case of a 5%
Holder, the Illinois Gaming Board conducts such an investigation. The Illinois
Gaming Board's decisions as to suitability are based on the same criteria used
for a finding of preliminary suitability for licensure including:
- character;
- reputation;
- experience; and
- financial integrity.
If the Illinois Gaming Board determines that a holder is not suitable, the
holder is entitled to request a hearing; however, if no hearing is requested
after such determination or such finding is upheld after a
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hearing, the holder is required to divest his shares of common stock of the
company. After a holder is required to divest and until divestiture, the
licensee is unable to distribute profits to such stockholder.
We are required to obtain formal approval from the Illinois Gaming Board for
changes in:
- our key personnel, including our officers, directors, managing agents, or
holders of a 5% or greater ownership interest in the business entity;
- our organizational form;
- our equity and debt capitalization;
- our investors and/or debt holders;
- our sources of funds;
- our economic development plan;
- the Alton Belle Casino's capacity or significant design changes;
- the number of gaming positions available on the Alton Belle Casino;
- anticipated economic impact; or
- oral or written agreements relating to the acquisition or disposition of
property of a value greater than $1 million.
A holder of an owner's license is allowed to make distributions to its partners,
stockholders or itself only to the extent that such distribution would not
impair the financial viability of the gaming operation. Factors to be considered
by the licensee include, but are not limited to, the following:
- working capital requirements;
- debt service requirements;
- requirements for repairs and maintenance; and
- capital expenditure requirements.
Minimum and maximum wagers on games are set by the licensee. Wagering may
not be conducted with money or negotiable currency. No person under the age of
21 is permitted to wager in Illinois, and wagers may only be taken from a person
present on a licensed riverboat. With respect to electronic gaming devices, the
payout percentage may not be less than 80% nor more than 100%.
Under the Riverboat Act, vessels must have:
- the capacity to hold a minimum of 500 persons if operating on the
Mississippi River or the Illinois River south of Marshall County, and a
minimum of 400 persons on any other waterway;
- be accessible to disabled persons;
- be either a replica of a 19th century Illinois riverboat or be a casino
cruise ship design; and
- comply with applicable federal and state laws, including but not limited
to U.S. Coast Guard regulations.
Pursuant to legislation enacted in June, 1999, we are not required to cruise
and may conduct gaming activities while remaining dockside offering unlimited
ingress and egress to our patrons.
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The Riverboat Act imposes a graduated wagering tax based on adjusted gross
receipts from gambling games at the following rates:
<TABLE>
<CAPTION>
ADJUSTED GROSS RECEIPTS TAX RATE
- ---------------------------------------------------------------- -------------
<S> <C>
Up to $25,000,000............................................... 15%
$25,000,001 to $50,000,000...................................... 20%
$50,000,001 to $75,000,000...................................... 25%
$75,000,001 to $100,000,000..................................... 30%
$100,000,001 and above.......................................... 35%
</TABLE>
The tax imposed is to be paid by the licensed owner by wire transfer to the
Illinois Gaming Board on the day after the day when the wagers were made. The
Riverboat Act also requires that licensees pay a $2.00 admission tax for each
person admitted to the Alton Belle Casino. In addition, all use, occupancy and
excise taxes that apply to food and beverages and all taxes imposed on the sale
or use of tangible property apply to sales aboard riverboats. We also pay a $.25
admission tax to the City of Alton for each person admitted to the Alton Belle
Casino.
The Illinois Gaming Board is authorized to conduct investigations into the
conduct of gaming as it may deem necessary and proper and into alleged
violations of the Riverboat Act. Employees and agents of the Illinois Gaming
Board have access to and may inspect any facilities relating to riverboat gaming
operations at all times.
A holder of any license is subject to the imposition of fines, suspension or
revocation of such license, or other action for any act or failure to act by
himself or his agents or employees, that is injurious to the public health,
safety, morals, good order and general welfare of the people of the State of
Illinois, or that would discredit or tend to discredit the Illinois gaming
industry or the State of Illinois. Any riverboat operation not conducted in
compliance with the Riverboat Act may constitute an illegal gaming place and
consequently may be subject to criminal penalties, which penalties include
possible seizure, confiscation and destruction of illegal gaming devices and
seizure and sale of riverboats and dock facilities to pay any unsatisfied
judgment that may be recovered and any unsatisfied fine that may be levied. The
Illinois Gaming Board may revoke or suspend licenses, as the Illinois Board may
see fit and in compliance with applicable laws of Illinois regarding
administrative procedures and may suspend an owner's license, without notice or
hearing, upon a determination that the safety or health of patrons or employees
is jeopardized by continuing a riverboat's operation. The suspension may remain
in effect until the Illinois Gaming Board determines that the cause for
suspension has been abated and it may revoke the owner's license upon a
determination that the owner has not made satisfactory progress toward abating
the hazard.
The Illinois Gaming Board may waive any licensing requirement or procedure
provided by rule if it determines that such waiver is in the best interests of
the public and the gaming industry.
INDIANA
In June 1993, the Indiana legislature adopted legislation permitting
riverboat gambling in counties contiguous to Lake Michigan, the Ohio River and
Patoka Lake. The legislation granted authority to supervise gaming activities to
the seven-member Indiana Gaming Commission. The Indiana Gaming Commission is
empowered to administer, regulate and enforce the system of riverboat gaming
established under Indiana's Riverboat Gambling Act (the "Indiana Riverboat Act")
and has jurisdiction and supervision over all riverboat gaming operations in
Indiana, as well as all persons on riverboats where gaming operations are
conducted. The Indiana Gaming Commission has broad powers to regulate riverboat
gaming operations and to approve the form of ownership and financial structure
of not only riverboat owner licensees, but also their entity qualifiers, and
intermediary and holding companies. Further, the Indiana General Assembly has
the power to promulgate new laws and
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implement amendments to the Indiana Riverboat Act, which can materially affect
the operation or economic viability of the gaming industry in Indiana.
The Indiana Riverboat Act requires the owner of a riverboat gaming operation
to hold an owner's license issued by the Indiana Gaming Commission. The Indiana
Gaming Commission is authorized to issue not more than 11 owner's licenses
statewide. Each license entitles the licensee to own and operate one riverboat
and gaming equipment as part of the gaming operation. A licensee may own no more
than a 10% interest in any other owner's license under the Indiana Riverboat
Act.
The Indiana Riverboat Act restricts the granting of the 11 owner's licenses
by location. The 11 licenses must be awarded as follows:
- two licenses for riverboats operating from Gary;
- one license for a riverboat operating in Hammond;
- one license for a riverboat operating in East Chicago;
- one license for a riverboat operating in any city located in LaPorte,
Porter or Lake counties, not including the above-named cities;
- five licenses for riverboats that operate upon the Ohio River from
counties contiguous thereto and with no more than one operating in any
county; and
- one license for a riverboat operating in Patoka Lake from either DuBois,
Crawford or Orange Counties.
Each owner's license runs for a period of five years after the effective
date of the license. Thereafter, the license is subject to renewal on an annual
basis upon a determination by the Indiana Gaming Commission that the licensee
continues to be eligible for an owner's license pursuant to the Indiana
Riverboat Act and the rules and regulations adopted thereunder. Our Indiana
gaming license is subject to renewal in 2001. A licensed owner undergoes a
complete investigation every three years. A licensed owner may apply for and may
hold other licenses that are necessary for the operation of a riverboat,
including licenses to sell alcoholic beverages, a license to prepare and serve
food and any other necessary license. Furthermore, the Indiana Riverboat Act
requires that officers, directors and employees of a gaming operation and
suppliers of gaming equipment, devices and supplies and certain other suppliers
be licensed. All Indiana state excise taxes, use taxes and gross retail taxes
apply to sales on a riverboat.
Applicants for licensure must submit comprehensive application and personal
disclosure forms and undergo an exhaustive background investigation prior to the
issuance of a license. The applicant must also disclose the identity of any
person in which the applicant has an equity interest of at least one percent
(1%) of all shares. The Indiana Gaming Commission has the authority to request
specific information on any shareholder.
A riverboat owner licensee or any other person may not lease, hypothecate,
borrow money against or loan money against an owner's riverboat gaming license.
An ownership interest in an owner's riverboat gaming license may only be
transferred in accordance with the regulations promulgated under the Indiana
Riverboat Act.
Pursuant to rules promulgated by the Indiana Gaming Commission, any person
(other than an institutional investor) who individually, or in association with
others, acquires directly or indirectly the beneficial ownership of 5% or more
of any class of voting securities of a publicly-traded corporation that is a
riverboat licensee or 5% or more of the beneficial interest in a riverboat
licensee, directly or indirectly, through any class of the voting securities of
any holding or intermediary company of a riverboat licensee shall apply to the
Indiana Gaming Commission for finding of suitability within 45 days after
acquiring the securities. Each institutional investor who, individually or in
association with
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others, acquires, directly or indirectly, beneficial ownership of 5% or more of
any class of voting securities of a publicly-traded corporation that is a
riverboat licensee or 5% or more of the beneficial interest in a riverboat
licensee through any class of the voting securities of any holding or
intermediary company of a riverboat licensee shall notify the Indiana Gaming
Commission within 10 days after the institutional investor acquires the
securities and shall provide additional information and may be subject to a
finding of suitability as required by the Indiana Gaming Commission.
An institutional investor who would otherwise be subject to a suitability
finding shall, within 45 days, after acquiring the interests submit information
to the Indiana Gaming Commission including the following:
- a description of the institutional investor's business
- a statement as to why the institutional investor satisfies the
definitional requirements of an institutional investor under Indiana
gaming rule requirements;
- a certification made under oath and the penalty of perjury that the voting
securities were acquired and are held for investment purposes only and
were acquired and are held in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the board of directors, any
change in the corporate charter, bylaws, management, policies or
operations of a riverboat licensee;
- the name, address, telephone number, social security number or federal tax
identification number of the officers and directors, or their equivalents,
of the institutional investor, as well as each person who has the power to
direct or control the institutional investor's exercise of its voting
rights as a holder of voting securities of the riverboat licensee;
- the name of each person who beneficially owns 5% or more of the
institutional investor's voting securities or equivalent;
- a list of the institutional investor's affiliates;
- a list of all securities of the riverboat licensee that are or were
beneficially owned by the institutional investor or its affiliates within
the preceding one year;
- a list of all regulatory agencies with which the institutional investor,
or an affiliate that beneficially owns voting securities of the riverboat
licensee, files periodic reports; a disclosure of all criminal and
regulatory sanctions imposed during the preceding ten years; a copy of any
filing made under 15 U.S.C. 18(a); and
- any other additional information the Indiana Gaming Commission may request
to insure compliance with Indiana gaming laws.
Each institutional investor who, individually or in association with others,
acquires, directly or indirectly, the beneficial ownership of 15% or more of any
class of voting securities of a publicly-traded corporation that owns a
riverboat owner's license or 15% or more of the beneficial interest in a
riverboat licensee directly or indirectly through any class of voting securities
of any holding company or intermediary company of a riverboat licensee shall
apply to the Indiana Gaming Commission for a finding of suitability within 45
days after acquiring the securities.
An institutional investor means any of the following:
- a retirement fund administered by a public agency for the exclusive
benefit of federal, state or local public employees;
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- an investment company registered under the Investment Company Act of 1940;
- a collective investment trust organized by banks under Part 9 of the Rules
of the Comptroller of the Currency;
- a closed end investment trust;
- a chartered or licensed life insurance company or property and casualty
insurance company;
- a banking, chartered or licensed lending institution;
- an investment adviser registered under the Investment Advisers Act of
1940; and
- any other entity the Indiana Gaming Commission determines constitutes an
institutional investor.
The Indiana Riverboat Act imposes a tax on admissions to gaming excursions
at a rate of $3.00 for each person admitted to the gaming excursion. This
admission tax is imposed upon the license owner conducting the gaming excursion
on a per-person basis without regard to the actual fee paid by the person using
the ticket, with the exception that no tax shall be paid by admittees who are
actual and necessary officials, employees of the licensee or other persons
actually working on the riverboat. The number and issuance of tax-free passes is
subject to the rules of the Indiana Gaming Commission. A list of all persons to
whom the tax-free passes are issued must be filed with the Indiana Gaming
Commission. A tax is imposed on the adjusted gross receipts received from gaming
games under the Indiana Riverboat Act at a rate of twenty percent (20%) of the
amount of the adjusted gross receipts. Adjusted gross receipts is defined as the
total of all cash and property (including checks received by a licensee),
whether collected or not, received by a licensee from gaming operations less the
total of all cash paid out as winnings to patrons including a provision for
uncollectible gaming receivables as is further set forth in the Indiana
Riverboat Act. The Indiana Gaming Commission may, from time to time, impose
other fees and assessments on riverboat owner licensees. In addition, all use,
excise and retail taxes apply to sales aboard riverboats.
Riverboats operating in Indiana must:
- have a valid certificate of inspection from the U.S. Coast Guard to carry
at least 500 passengers; and
- be at least 150 feet long.
Any riverboat that operates on the Ohio River must replicate, as nearly as
possible, historic Indiana steamboat passenger vessels of the nineteenth
century. Riverboats operating in Lake Michigan or Patoka Lake need not meet this
requirement.
Gaming sessions are generally required to be at least two hours and are
limited to a maximum duration of four hours. No gaming may be conducted while
the boat is docked, except
- for 30-minute time periods at the beginning and end of each cruise while
the passengers are embarking and disembarking (total gaming time is
limited to four hours, however, including the pre- and post-docking
periods); and
- when weather or water conditions prevent the boat from cruising.
The Indiana Gaming Commission may grant extended cruise hours at its discretion.
If the master of the riverboat reasonably determines and certifies in writing
that specific weather conditions or water conditions present a danger to the
riverboat and the riverboat's passengers and crew, the riverboat may remain
docked and gaming may take place until:
- the master determines that the conditions have sufficiently diminished for
the riverboat to safely proceed; or
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- the duration of the authorized excursion has expired.
No riverboat licensee or riverboat license applicant may enter into or
perform any contract or transaction in which it transfers or receives
consideration which is not commercially reasonable or which does not reflect the
fair market value of the goods or services rendered or received as determined at
the time the contract is executed. Any contract entered into by a riverboat
licensee or riverboat license applicant that exceeds the total dollar amount of
$50,000 shall be a written contract. A riverboat license applicant means an
applicant for a riverboat owner's license that has been issued a certificate of
suitability.
Pursuant to Indiana Gaming Commission rules, riverboat licensees and
riverboat license applicants must submit:
- an internal control procedure regarding purchasing transactions which must
contain provisions regarding ethical standards, compliance with state and
federal laws, and prohibitions on the acceptance of gifts and gratuities
by purchasing and contracting personnel from suppliers of goods or
services;
- any contract, transaction or series of transactions greater than $500,000
in any 12-month period to the Indiana Gaming Commission within 10 days of
execution; and
- submit a summary of all contracts or transactions greater than $50,000 in
any 12-month period on a quarterly basis.
The rules provide that contracts submitted to the Indiana Gaming Commission are
not submitted for approval, but grant the Indiana Gaming Commission authority to
cancel or terminate any contract that is not in compliance with Indiana law and
Indiana Gaming Commission rules or that does not maintain the integrity of the
riverboat gambling industry.
A riverboat owner licensee may not enter into or perform any contract or
transaction in which it transfers or receives consideration which is not
commercially reasonable or which does not reflect the fair market value of the
goods and services rendered or received. All contracts are subject to
disapproval by the Indiana Gaming Commission. A riverboat owner licensee or an
affiliate may not enter into a debt transaction of $1.0 million or more without
prior approval of the Indiana Gaming Commission. The Indiana Gaming Commission
has a rule requiring the reporting of certain currency transactions, which is
similar to that required by Federal authorities. See "--Other Applicable
Non-Gaming Regulations."
Indiana gaming laws provide that the opportunity for full minority and
women's business enterprise participation in the riverboat industry in Indiana
is essential to social and economic parity for minority and women business
persons. The Indiana Gaming Commission has the power to review compliance with
the goals of participation by minority and women business persons and impose
appropriate conditions on licensees to insure that goals for such business
enterprises are met. Under the Indiana Riverboat Act, a riverboat licensee or a
riverboat license applicant shall designate certain minimum percentages of the
value of its contracts for goods and services to be expended with minority
business enterprises and women's' business enterprises such that 10% of the
dollar value of the riverboat licensee's or the riverboat license applicant's
contracts for goods and services be expended with minority enterprises and 5% of
the dollar value of the riverboat licensee's or the riverboat license
applicant's contracts for goods and services be expended with women's business
enterprises. Expenditures with minority and women business enterprises are not
mutually exclusive. Licensees are required to report the dollar value and
percentage of contracts awarded to minority business enterprises and women's
business enterprises annually. If the Indiana Gaming Commission determines that
a licensee has not met these requirements, it may suspend, limit or revoke the
owner's license or fine or impose appropriate conditions on the licensee.
However, if a determination is made that a
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person holding an owner's license has failed to demonstrate compliance, the
person has ninety (90) days from the date of determination to comply.
All licensees subject to the jurisdiction of the Indiana Gaming Commission
have a continuing duty to maintain suitability for licensure. The Indiana Gaming
Commission may initiate an investigation or disciplinary action or both against
a licensee about whom the commission has reason to believe is not maintaining
suitability for licensure, is not complying with licensure conditions, and/or is
not complying with Indiana gaming laws or regulations. The Indiana Gaming
Commission may suspend, revoke, restrict or place conditions on the license of a
licensee; require the removal of a licensee or an employee of a licensee; impose
a civil penalty or take any other action deemed necessary by the Indiana Gaming
Commission to insure compliance with Indiana gaming laws.
The Indiana Riverboat Act prohibits contributions to a candidate for a
state, legislative, or local office, or to a candidate's committee or to a
regular party committee by the holder of a riverboat owner's license or a
supplier's license, by an officer of a licensee or by an officer of a person
that holds at least a 1% interest in the licensee. The Indiana Gaming Commission
has promulgated a rule requiring quarterly reporting by the holder of a
riverboat owner's license or a supplier's license or officers of the licensee,
officers of persons that hold at least a 1% interest in the licensee, and of
persons who directly or indirectly own a 1% interest in the licensee.
The Indiana Gaming Commission adopted a rule which prohibits a distribution
by a riverboat licensee to its partners, shareholders, itself, or any affiliated
entity, if the distribution would impair the financial viability of the
riverboat gaming operation. The Indiana Gaming Commission has adopted a rule
which requires riverboat licensees to maintain, on a quarterly basis, a cash
reserve in the amount of the actual payout for three days, and the cash reserve
would include cash in the casino cage, cash in a bank account in Indiana or cash
equivalents not committed or obligated.
The Governor of Indiana has appointed a Gaming Impact Study Commission
chaired by the Attorney General to review the impact of all forms of gaming in
Indiana and to issue its final report by December 31, 1999.
IOWA
In 1989, the State of Iowa legalized riverboat gaming on the Mississippi and
Missouri Rivers and certain other waterways located in Iowa. The Excursion
Gambling Act grants the Iowa Racing and Gaming Commission (the "Iowa
Commission") jurisdiction over all gambling operations.
The legislation authorized the granting of licenses to conduct riverboat
gaming to nonprofit corporations which, in turn, are permitted to enter into
operating agreements with persons who are licensed by the Iowa Commission to
operate riverboat casinos. The number of licenses which may be granted is
limited to 10 and restricted to the counties where such boats were operating (or
licensed to operate in the future) as of May 1, 1998.
Gaming is permitted only on riverboats which recreate, as nearly as
practicable, Iowa's riverboat history and have a capacity for at least 250
persons with tickets. In addition, the licensee must utilize Iowa resources,
goods and services in the operation of the riverboat. An excursion gambling boat
must operate at least one excursion each day for 100 days during the excursion
season, (from April 1 through October 31). Excursions consist of a minimum two
hours during the excursion season. While an excursion gambling boat is docked,
passengers may embark or disembark at any time during its business hours. If
during the excursion season it is determined that it would be unsafe to complete
any portion of an excursion, or if mechanical problems prevent the completion of
any portion of an excursion, the boat may be allowed to remain dockside.
A gaming license will be issued for not more than three years and is subject
to annual renewals thereafter. Our Iowa gaming license is subject to renewal in
March 2000. The Iowa Commission has
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broad discretion with regard to such renewals. The annual license fee to operate
an excursion gambling boat is based on the passenger carrying capacity,
including crew, for which the excursion gambling boat is registered. The annual
fee is five dollars per person capacity. Licenses issued by the Iowa Commission
may not be transferred to another person or entity. We must submit detailed
financial and operating reports to the Iowa Commission.
Iowa statute stipulates that a referendum must be held in 2002 to reaffirm
gaming in each county that has gaming and further stipulates that similar
referenda be held every eight years thereafter. Minimum and maximum wagers on
games are set by the licensee. Wagering may only be conducted with chips,
wagering debit cards or coins. Wagers may only be made by persons 21 years of
age and older. A licensee may not accept a credit card to purchase coins, tokens
or other forms of credit to be wagered on gambling games.
The legislation imposes a graduated tax based on adjusted gross receipts at
the following rates:
<TABLE>
<CAPTION>
ADJUSTED GROSS RECEIPTS TAX RATE
- ---------------------------------------------------------------- -------------
<S> <C>
Up to $1,000,000................................................ 1%
$1,000,0001 to $3,000,000....................................... 10%
$3,000,001 and above............................................ 20%
</TABLE>
The tax is to be paid by the licensee within 10 days after the close of business
of the day when the wagers were made. The legislation also permits the Iowa
Commission to impose an admission fee for each person embarking on an excursion
vessel, and the city or county in which gaming is conducted is permitted to
impose an admission fee of not greater than 50 cents.
Pursuant to its rule making authority, the Iowa Commission requires
officers, directors, owners, partners, joint venturers, trustees or other
persons who have a beneficial interest, direct or indirect, of 5 percent or
more, of the Company to be licensed by the Iowa Commission. The Iowa Commission
has jurisdiction to deny, suspend or revoke the license of an applicant or
licensee in which a director, officer, or holder of a beneficial interest
includes or involves any person or entity which would be, or is, ineligible in
any respect, such as through want of character, moral fitness, financial
responsibility, professional qualifications or due to failure to meet other
criteria employed by the Iowa Commission, to participate in gaming. The Iowa
Commission may order the ineligible person or entity to terminate all
relationships with the licensee or applicant, including divestiture of any
ownership interest or beneficial interest at acquisition cost. Any contract in
excess of $50,000 must be submitted to and approved by the Iowa Commission.
LOUISIANA
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
The legislation granted authority to supervise riverboat gaming activities to
the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement
Division of the Louisiana State Police (the "Louisiana Enforcement Division").
The Louisiana Riverboat Gaming Commission was authorized to hear and determine
all appeals relative to the granting, suspension, revocation, condition or
renewal of all licenses, permits and applications. In addition, the Louisiana
Riverboat Gaming Commission was to establish rules providing for and
determining, among other things, authorized routes, duration of excursions and
the stops a riverboat may make, minimum levels of insurance, construction of
riverboats, periodic inspections and procedures for negotiable instrument
transactions involving patrons. The Louisiana Enforcement Division was
authorized, among other things, to investigate applicants and issue licenses,
investigate violations of the statute, conduct continuing reviews of gaming
activities and exercise other broad oversight powers. A gaming license is issued
for five years and the Company's license will be subject to renewal in July
1999.
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In an April 1996 special session of the Louisiana legislature, Louisiana
lawmakers passed a measure which established the Louisiana Gaming Control Board
and provides that such board shall be the successor to all prior authorities,
and the sole and exclusive authority, with regard to the regulation and
supervision of gaming operations and activities in Louisiana except for the
regulation of horse racing and offtrack betting and the conducting of charitable
gaming operations. Effective May 1, 1996, the powers, duties, functions, and
responsibilities of the Louisiana Riverboat Gaming Commission and the Louisiana
Enforcement Division, including those with respect to riverboat gaming, were
transferred to the Louisiana Gaming Control Board. The Louisiana Enforcement
Division retains certain enforcement powers and responsibilities relative to
investigations, audits, and imposing regulatory sanctions that are subject to
administrative review.
The laws and regulations of Louisiana seek to:
- prevent unsavory or unsuitable persons from having any direct or indirect
involvement with gaming at any time or in any capacity;
- establish and maintain responsible accounting practices and procedures;
- maintain effective control over the financial practices of licensees,
including establishing procedures for reliable record keeping and making
periodic reports to the Board;
- prevent cheating, and fraudulent practices;
- provide a source of state and local revenues through fees; and
- ensure that gaming licensees, to the extent practicable, employ and
contract with Louisiana residents, women and minorities.
The Louisiana Act specifies certain restrictions and conditions relating to
the operation of riverboat gaming, including but not limited to the following:
- in parishes bordering the Red River, gaming may be conducted dockside;
however, in all other authorized locations, gaming is not permitted while
a riverboat is docked, other than for forty-five minutes between
excursions, unless dangerous weather or water conditions exist;
- each round trip riverboat cruise may not be less than three nor more than
eight hours in duration, subject to specified exceptions;
- agents of the Board are permitted on board at any time during gaming
operations;
- gaming devices, equipment and supplies may be purchased or leased from
permitted suppliers;
- gaming may only take place in the designated gaming areas and upon
designated rivers or waterways;
- gaming equipment may not be possessed, maintained, or exhibited by any
person on a riverboat except in the specifically designated gaming area,
or a secure area used for inspection, repair, or storage of such
equipment;
- wagers may be received only from a person present on a licensed riverboat;
- persons under 21 are not permitted in designated gaming areas;
- except for slot machine play, wagers may be made only with tokens, chips
or electronic cards purchased from the licensee aboard a riverboat;
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- licensees may only use docking facilities and routes for which they are
licensed and may only board and discharge passengers at the riverboat's
licensed berth;
- licensees must have adequate protection and indemnity insurance;
- licensees must have all necessary federal and state licenses, certificates
and other regulatory approvals prior to operating a riverboat; and
- gaming may only be conducted in accordance with the terms of the license
and the rules and regulations adopted by the Board.
The transfer of a license or permit or an interest in a license or permit is
prohibited without prior approval of the Louisiana Gaming Control Board. The
sale, purchase, assignment, transfer, pledge or other hypothecation, lease,
disposition or acquisition by any person of securities which represents 5% or
more of the total outstanding shares issued by a corporation that holds a
license is subject to Louisiana Gaming Control Board review and approval or
disapproval. A security issued by a corporation that holds a license must
disclose these restrictions, although a publicly traded corporation incorporated
before January 15, 1992 is only required to include the statement of
restrictions for certificates issued after the corporation applies for a
license. Section 2501 of the regulations enacted by the Louisiana State Police
Riverboat Gaming Division pursuant to the Louisiana Act (the "Regulations")
requires prior written approval of the Board of all persons involved in the
sale, purchase, assignment, lease, grant or foreclosure of a security interest,
hypothecation, transfer, conveyance or acquisition of an ownership interest
(other than in a corporation) or economic interest of five percent (5%) or more
in any licensee.
Section 2523 of the Regulations requires 60 days prior notification to and
prior approval from the Board of:
- the application for, receipt, acceptance or modification of a loan;
- the use of any cash, property, credit, loan or line of credit; or
- guarantee or granting of other forms of security for a loan by a licensee
or person acting on a licensee's behalf.
There are exceptions to prior written approval including exceptions for any
transaction for less than $2.5 million in which all of the lending institutions
are federally regulated, or if the transaction involves publicly registered debt
and securities registered with the SEC and sold pursuant to a firm underwriting
agreement.
The failure of a licensee to comply with the requirements set forth above
may result in the suspension or revocation of that licensee's gaming license.
Additionally, if the Board finds that the individual owner or holder of a
security of a corporate license or intermediary company or any person with an
economic interest in a licensee is not qualified under the Louisiana Act, the
Board may require, under penalty of suspension or revocation of the license,
that the person not:
- receive dividends or interest on securities of the corporation;
- exercise directly or indirectly a right conferred by securities of the
corporation;
- receive remuneration or economic benefit from the licensee; or
- continue in an ownership or economic interest in the licensee.
Fees for conducting gaming activities on a riverboat include:
- $50,000 per riverboat for the first year of operation and $100,000 per
year per riverboat thereafter;
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- a state franchise fee of 15% of net gaming proceeds;
- a state license fee of 3.5% of net gaming proceeds; and
- a local fee of up to $2.50 per passenger.
A licensee must periodically report the following information to the Board,
which is not confidential and is to be available for public inspection: the
licensee's net gaming proceeds from all authorized games; the amount of tax paid
on net gaming proceeds; and all quarterly and annual financial statements
presenting historical data that are submitted to the Board, including annual
financial statements that have been audited by an independent certified public
accountant.
The Board has adopted rules governing the method for approval of the area of
operations and the rules and odds of authorized games and devices permitted, and
prescribing grounds and procedures for the revocation, limitation or suspension
of licenses and permits.
In April 1996, the Louisiana legislature approved legislation mandating
local option elections to determine whether to prohibit or continue to permit
three individual types of gaming in Louisiana on a parish-by-parish basis. The
referendum was brought before the Louisiana voters at the time of the November
1996 presidential election. Voters elected to permit riverboat gaming in all
parishes where it is presently conducted and to allow land-based casino gaming
in Orleans Parish. Voters in 31 parishes elected to permit video draw poker
devices, but in 33 parishes, including East Baton Rouge Parish, voters elected
to prohibit the devices. Current operators of video poker devices in East Baton
Rouge Parish (and the other parishes where voters elected to prohibit video
poker) would be allowed to operate until June 30, 1999.
In January 1996, a suit was filed in the Nineteenth Judicial District Court
to set aside the November 1996 general referendum. On May 24, 1999, the district
court issued an order that provided, among other things, that the referendum was
null and void in the parishes that voted to eliminate video poker. On appeal the
district court's order was overturned and the referendum was reaffirmed. The
plaintiffs have filed an appeal with the United States Supreme Court, however
the U.S. Supreme Court has not yet determined whether or not it will hear the
appeal. As of July 1, 1999 video poker machines were no longer permitted to
operate in those parishes that voted to prohibit the devices. At the present
time, we are uncertain what the Supreme Court's final resolution of the suit
will be and whether video poker machines will be allowed to once again operate
in non-casino locations in those parishes in which they were prohibited.
MISSOURI
Gaming was originally authorized in the State of Missouri on November 3,
1992, although no governmental action was taken to enforce or implement the
original law. On April 29, 1993, Missouri enacted the Missouri Gaming Law which
replaced the original law and established the Missouri Gaming Commission, which
is responsible for the licensing and regulation of riverboat gaming in Missouri.
The number of licenses which may be granted is not limited by statute or
regulation. The Missouri Gaming Law grants specific powers and duties to the
Missouri Gaming Commission to supervise riverboat gaming and implement the
Missouri Gaming Law and take any other action as may be reasonable or
appropriate to enforce the Missouri Gaming Law. The Missouri Gaming Commission
has discretion to approve permanently moored ("dockside") riverboat casinos if
it finds that the best interest of Missouri and the safety of the public
indicate the need for continuous docking of an excursion gambling boat.
Opponents of gaming in Missouri have brought several legal challenges to
gaming in the past and may possibly bring similar challenges in the future.
There can be no assurances that any future challenges, if brought, would not
further interfere with full-scale gaming operations in Missouri, including the
operations of the Company and its subsidiaries.
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On November 3, 1998, the citizens of the State of Missouri approved a
Constitutional amendment which was proposed by initiative petition, that
retroactively legalized lotteries, gift enterprises and games of chance aboard
excursion gambling boats and floating facilities located within artificial
spaces containing water that are within 1,000 feet of the closest edge of the
main channel of the Mississippi or Missouri Rivers. This amendment to the
Constitution was certified on November 23, 1998.
Under the Missouri Gaming Law, the ownership and operation of riverboat
gaming facilities in Missouri are subject to extensive state and local
regulation. If a company is granted a gaming license in Missouri, such company,
any subsidiaries it may form and its officers, directors, significant
shareholders and employees will be subject to regulations. The initial license
and first subsequent license renewal of an excursion gambling boat operator
shall be for a period of one year. Thereafter, license renewal periods shall be
two years. The Company's gaming license will be subject to renewal in June 2000.
However, the Missouri Gaming Commission may reopen license hearings at any time.
As part of the application and licensing process for a gaming license, the
applicant must submit detailed financial, operating and other reports to the
Missouri Gaming Commission. Each applicant has an ongoing duty to update the
information provided to the Missouri Gaming Commission in the application. In
addition to the information required of the applicant, directors, officers and
other key persons must submit applications which include detailed personal
financial information and are subject to thorough investigations. All gaming
employees must obtain an annual occupational license issued by the Missouri
Gaming Commission. Operators' licenses are issued through application to the
Missouri Gaming Commission, which requires, among other things:
- investigations into an applicant's character, financial responsibility and
experience qualifications;
- the submission of an affirmative action plan for the hiring and training
of minorities and women;
- the submission of an economic development or impact report.
License fees are a minimum of $50,000 for the initial application and a
minimum $25,000 annually thereafter.
The Missouri Gaming Commission may revoke or suspend gaming licenses and
impose other penalties for violation of the Missouri Gaming Law and the rules
and regulations which may be promulgated thereunder. Penalties include, but are
not limited to, forfeiture of all gaming equipment used in the conduct of
unauthorized gambling games and fines of up to three times a licensee's highest
daily gross receipts derived from wagering on the gambling games, whether
authorized or unauthorized, conducted during the preceding twelve months. In
addition, the Missouri Gaming Commission requires 60 days notice of, and may
disapprove or require delay pending further investigation of, transactions in
excess of the greater of $500,000 or 30% of licensee's net worth, up to
$1,000,000, which transactions involve or relate to the gaming licensee.
Pursuant to its rule making authority, the Missouri Gaming Commission has
adopted certain regulations which provide, among other things, that:
(1) riverboat excursions are limited to a duration of four hours, and gaming
may be conducted at any time during the excursion;
(2) no gaming licensee or occupational licensee may pledge, hypothecate or
transfer in any way any license, or any interest in a license, issued by
the Missouri Gaming Commission;
(3) without first notifying the Missouri Gaming Commission at least 60 days
prior to such consummation of any of the following transactions (and
during such period the Missouri
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Gaming Commission may disapprove the transaction or require the
transaction to be delayed pending further investigation):
(a) any transfer or issuance of an ownership interest in a gaming
licensee (or holding company) that is not a publicly held entity or
(b) any pledge or hypothecation of, or grant of any type of security
interest (collectively, a "lien") in, an ownership interest in a
gaming licensee (or a holding company) that is not a publicly held
entity (which lien may only be made to or held by a financial
institution), provided that no such ownership interest may be
transferred pursuant to any such lien without a separate notice being
given to the Missouri Gaming Commission;
(4) at least 15 day's prior notice must be given to the Missouri Gaming
Commission of the intention to consummate any of the following
transactions (and the Missouri Gaming Commission may reopen the
licensing hearing of the applicable gaming licensee prior to or
following the consummation of such transaction to consider the effect of
the transaction on the gaming licensee's suitability):
(a) any issuance of ownership interests in a publicly held gaming
licensee (or holding company), if such issuance would involve,
directly or indirectly, an amount of ownership interests equaling 5%
or more of the ownership interests in the gaming licensee (or holding
company),
(b) any private incurrence of debt of $1,000,000 or more by a Class A
licensee (or any affiliated holding company),
(c) any public issuance of debt by a Class A licensee (or any affiliated
holding company) or
(d) any significant related party transactions;
(5) consummation of the following transactions must be reported to the
Missouri Gaming Commission no later than 7 days after such consummation:
(a) any transfer or issuance of ownership interests in a publicly held
gaming licensee (or holding company), if such transfer or issuance
has resulted in any entity or group of entities acting in concert
owning, directly or indirectly, a total amount of ownership interests
equaling 5% or more of the ownership interests in the gaming licensee
or holding company or
(b) the creation of any lien in 5% or more of the ownership interests in
a publicly held gaming licensee (or holding company), provided that
no such ownership interest may be transferred voluntarily or
involuntarily pursuant to any such lien without a separate notice
being given to the Missouri Gaming Commission;
(6) any Class A licensee must notify the Missouri Gaming Commission of its
intention or the intention of any affiliated entity to consummate any
transaction that involves or relates to the gaming licensee and has a
dollar value of $1,000,000 or more no later than 7 days after the
consummation of such transaction;
(7) the license held by a gaming licensee automatically becomes null and
void upon any change in control of the licensee (or its holding company)
unless the Missouri Gaming Commission has given its prior approval for
such change in control;
(8) no withdrawals of capital, loans, advances or distributions of any type
of assets in excess of 5% of the accumulated earnings of a Class A
licensee to anyone with an ownership interest in the licensee may occur
without the prior approval of the Missouri Gaming Commission;
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(9) the Missouri Gaming Commission may take appropriate action against a
licensee or other person who has been disciplined in another
jurisdiction for gaming related activity; and
(10) no holder of a Class A license may enter into any contract relating to
its licensed activities for consideration in excess of fair market
value.
The Missouri Gaming Law imposes operational requirements on riverboat
operators, including a charge of two dollars per gaming customer per excursion
that licensees must pay to the Missouri Gaming Commission, a minimum payout
requirement of 80% for gambling devices, a 20% tax on adjusted gross receipts,
prohibitions against providing credit to gaming customers (except for the use of
credit cards and cashing checks) and a requirement that each licensee reimburse
the Missouri Gaming Commission for all costs of any Missouri Gaming Commission
staff necessary to protect the public on the licensee's riverboat. Licensees
must also submit to the Commission on a quarterly basis an audit of compliance
and of the financial transactions and condition of the licensee's total
operations for the calendar quarter and pay the associated auditing fees. The
Missouri Gaming Law provides for a loss limit of $500 per person per excursion.
Although the Missouri Gaming Law provides no limit on the amount of riverboat
space that may be used for gaming, the Missouri Gaming Commission is empowered
to impose such space limitations through the adoption of rules and regulations.
Additionally, U.S. Coast Guard safety regulations could affect the amount of
riverboat space that may be devoted to gaming. The Missouri Gaming Law also
includes requirements as to the form of riverboats, which must resemble
Missouri's riverboat history to the extent practicable and include certain
non-gaming amenities. With respect to the availability of dockside gaming, which
may be more profitable than cruise gaming, the Missouri Gaming Commission is
empowered to determine on a site by site basis where such gaming is in the best
interest of Missouri and the safety of the public and shall be permitted. All
licensees currently operating riverboat gaming operations in Missouri are
authorized to conduct all or a portion of their operations on a dockside basis.
We began dockside operations in August 1995. Dockside gaming in Missouri may
differ from dockside gaming in other states, such as Mississippi, because the
Missouri Gaming Commission has the ability to require "simulated cruising." This
requirement permits customers to board dockside riverboats only at specific
times and prohibits boarding during a certain portion of each simulated cruise,
which are required to be a minimum of two hours and a maximum of four hours.
Dockside gaming in Missouri may not be as profitable as dockside gaming in other
states, that allow for continuous customer ingress and egress.
The licensee may receive wagers only from a person present on a licensed
excursion gambling boat. Wagering shall not be conducted with money or other
negotiable currency. A person under 21 years of age may not make a wager on an
excursion gambling boat and may not be allowed in the area of the excursion boat
where gambling is being conducted.
The Missouri Gaming Commission is authorized to enter the premises of
excursion gambling boats, facilities, or other places of business of a licensee
in Missouri to determine compliance with the Missouri Gaming Law and to
investigate alleged violations of the Missouri Gaming Law or Missouri Gaming
Commission rules, orders or final decisions. A holder of any license shall be
subject to imposition of penalties, suspension or revocation of such license, or
other action for any act or failure to act by himself or his agents or employees
that is injurious to the public health, safety, morals, good order and general
welfare of the people of the state of Missouri, or that would discredit the
Missouri gaming industry or the state of Missouri. The Missouri Gaming
Commission may waive any licensing requirement or procedure for any type of
license if it determines that the waiver is in the best interests
of the public. In addition, an annual supplier's license is required of persons
who sell or lease gambling equipment, gambling supplies or both to any licensee.
A licensee licensed to conduct gambling games shall acquire all gambling games
or implements of gambling from a licensed supplier.
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LEGISLATIVE AND REGULATORY CONSIDERATIONS IN CERTAIN ADJACENT JURISDICTIONS
KANSAS. Casino gaming is currently illegal in Kansas as a constitutionally
prohibited form of lottery. In order to amend the Kansas constitution,
two-thirds of the members of each house of the Kansas legislature and a majority
of Kansas voters would have to approve a proposed amendment. Several Kansas
racetracks have publicly lobbied for the right to conduct casino games. In early
1999, the Kansas state legislature failed to pass a bill which would have
authorized casino gambling within its borders.
The State of Kansas has approved Class III Indian compacts with four
separate tribes authorizing the tribes to conduct table and keno games, but not
slot machines, on their respective reservation lands. One such casino is open
and is located approximately 60 miles from Kansas City.
KENTUCKY. Casino gaming is illegal in Kentucky as a constitutionally
prohibited form of lottery. In order to amend the Kentucky constitution,
three-fifths of the members of each house of the Kentucky legislature and a
majority of Kentucky voters would have to approve a proposed amendment. Several
Kentucky racetracks have publicly lobbied for the right to conduct casino games
and the current governor of Kentucky recently proposed a constitutional
amendment to allow 12 to 14 land-based casinos to operate, mainly along
Kentucky's borders, at convention hotels. In addition, Kentucky lottery
officials have publicly stated that they believe that a constitutional amendment
is not necessary and that casino gaming is permissible with legislative action.
OHIO. Casino gaming is illegal in Ohio as a constitutionally prohibited
form of lottery. In order to amend the Ohio constitution, three-fifths of the
members of each house of the Ohio legislature and a majority of Ohio voters
would have to approve any proposed amendment.
NEBRASKA. A number of efforts to expand gaming in Nebraska failed during
1996. After an effort to present a statewide referendum on legalizing casino
gaming failed in the Nebraska legislature, three separate voter petition drives
also failed.
FEDERAL AND NON-GAMING REGULATIONS
We are subject to certain federal, state and local safety and health laws,
regulations and ordinances that apply to businesses generally, such as the Clean
Air Act, Clean Water Act, Occupational Safety and Health Act, Resource
Conservation Recovery Act and Comprehensive Environmental Response, Compensation
and Liability Act. We have not made, and do not anticipate making, material
expenditures with respect to such environmental laws and regulations. However,
the coverage and attendant compliance costs associated with such laws,
regulations and ordinances may result in additional costs to us. For example, in
1990 the U.S. Congress enacted the Oil Pollution Act to consolidate and
reconcile mechanisms under various oil spill response laws. The Department of
Transportation has proposed regulations requiring owners and operators of
certain vessels to establish through the U.S. Coast Guard evidence of financial
responsibility in the amount of $5.5 million for clean-up of oil pollution. This
requirement would be satisfied by either proof of adequate insurance (including
self-insurance) or the posting of a surety bond or guaranty.
All vessels operated by us must comply with U.S. Coast Guard requirements as
to safety and must hold a Certificate of Seaworthiness or must be approved by
the American Bureau of Shipping ("ABS") for stabilization and flotation, and may
also be subject to local zoning and building codes. These requirements set
limits on the operation of the vessels and require individual licensing of all
personnel involved with the operation of the vessel. Loss of the Certificate of
Seaworthiness of a vessel would preclude its use as a riverboat. Every five
years, the outside of the hull of the vessels must be inspected. The U.S. Coast
Guard has developed a pilot program which utilizes underwater equipment to
complete a hull inspection while the vessel remains in service. This procedure
was utilized to inspect the Alton casino in February 1998. If the procedure is
ever disapproved by the U. S. Coast Guard, we
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would be required to remove a riverboat from service and seek to lease another
riverboat casino or discontinue operations for the inspection period.
All of our shipboard employees employed on U.S. Coast Guard regulated
vessels, including those who have nothing to do with the actual operation of the
vessel, such as dealers, waiters and security personnel, may be subject to the
Jones Act which, among other things, exempts these employees from state limits
on workers' compensation awards.
We are subject to the provisions of the Americans With Disabilities Act but
do not anticipate incurring significant expenses to bring our facilities or
procedures into compliance with such Act.
The Bank Secrecy Act (the "BSA"), enacted by Congress in 1985, requires
banks, other financial institutions and casinos to monitor receipts and
disbursements of currency in excess of $10,000 and report them to the United
States Department of the Treasury (the "Treasury"). In management's opinion, the
BSA may have resulted in a reduction in the volume of play by high level
wagerers. The Treasury has proposed tentative amendments to the BSA which would
apply solely to casinos and their reporting of currency transactions. The most
significant proposed change in the BSA is a reduction in the threshold at which
customer identification data must be obtained and documented by the casino, from
$10,000 to $3,000 (which may include the aggregation of smaller denomination
transactions). Additionally, the amendments would substantially increase the
record-keeping requirements imposed upon casinos relating to customer data,
currency and non-currency transactions. Management believes the proposed
amendments, if enacted in their current form, could result in a further
reduction in the volume of play by upper- and middle-level wagerers while adding
operating costs associated with the more extensive record-keeping requirements.
However, we do not expect that the effect on our operations would be material.
73
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of our company's directors
and executive officers and the positions they hold.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
William F. Cellini(a)................................ 64 Chairman of the Board of Directors
James B. Perry....................................... 49 President and Chief Executive Officer
Roger L. Archibald................................... 41 Vice President, Planning and Development
Dale R. Black........................................ 35 Vice President and Chief Financial Officer
James A. Gulbrandsen................................. 58 Vice President, Operations
Donald J. Malloy..................................... 37 Vice President, Secretary and General Counsel
G. Dan Marshall...................................... 54 Vice President, Treasurer and Director of Investor
Relations
Virginia M. McDowell................................. 41 Vice President, Sales and Marketing
Edward F. Brennan(b)................................. 57 Director
George L. Bristol(c)................................. 58 Director
F. Lance Callis(b)................................... 63 Director
Jimmy F. Gallagher(c)................................ 70 Director
William J. McEnery(a)................................ 56 Director
John B. Pratt, Sr.(b)................................ 76 Director
</TABLE>
- ------------------------
(a) Messrs. Cellini and McEnery comprise a class of directors whose term expires
in 2002.
(b) Messrs. Callis, Pratt and Brennan comprise a class of directors whose term
expires in 2001.
(c) Messrs. Gallagher and Bristol comprise a class of directors whose term
expires in 2000.
WILLIAM F. CELLINI has been Chairman of the Company's Board of Directors
since February 1993. Mr. Cellini has served as Chief Executive Officer of New
Frontier Group, a real estate development, management and construction concern
with offices in Chicago and Springfield, Illinois since 1977. Mr. Cellini is a
member of the Nominating Committee of the Board of Directors.
JAMES B. PERRY has been President and Chief Executive Officer of the Company
since April 21, 1997 and has over 20 years of senior management experience in
the gaming, entertainment and leisure-time industries. From August 1996 to April
1997, Mr. Perry was President of the Hospitality Group of Keating Building
Group. From 1976 to August 1996, Mr. Perry was employed by Aztar Corporation in
numerous positions, including President and General Manager of TropWorld Casino
and Entertainment Resort in Atlantic City, New Jersey.
ROGER L. ARCHIBALD joined Argosy in January 1995 as Vice President, Planning
and Development. Prior to joining Argosy, Mr. Archibald served over 15 years at
Arthur Andersen.
DALE R. BLACK has been Vice President and Chief Financial Officer since
April 1998. From April 1993 to March 1998, Mr. Black served as Corporate
Controller. Prior to joining the Company, Mr. Black worked for 7 years in the
audit division of Arthur Andersen and 2 years for a national manufacturing
concern.
JAMES A. GULBRANDSEN has been Vice President, Operations since June 1, 1997.
Mr. Gulbrandsen is a veteran of over 30 years in the casino industry. From late
1996 to June 1997, Mr. Gulbrandsen was retired. From 1992 to 1996, Mr.
Gulbrandsen was an owner/operator of the Womack Casino in Cripple Creek,
Colorado.
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<PAGE>
DONALD J. MALLOY has been Vice President and General Counsel since April 6,
1999. From January 1996 until April 1999, Mr. Malloy served as Vice President
and Corporate Counsel. On January 8, 1999 Mr. Malloy assumed the additional role
of Secretary. From June 1990 to December 1995, Mr. Malloy was an attorney with
the law firm of Winston & Strawn in Chicago, Illinois.
G. DAN MARSHALL has served as Vice President, Treasurer and Director of
Investor Relations since April 1993. Before coming to Argosy, Mr. Marshall spent
over 28 years on Wall Street with such firms as Reich & Tang, A.G. Becker and
First Options of Chicago.
VIRGINIA M. MCDOWELL has been Vice President, Sales and Marketing since June
1, 1997. From September 1996 to May 1997, Ms. McDowell was General Manager of
the Northeast Offices of Creative Data Services, Inc. From 1984 to August 1996,
Ms. McDowell held numerous positions with Aztar Corporation including Vice
President of Business Development of TropWorld Casino and Entertainment Resort
in Atlantic City, New Jersey.
EDWARD F. BRENNAN has been a principal in the law firm of Brennan, Jones &
Brennan P.C. (formerly Brennan, Cates & Constance) in Belleville, Illinois since
1987. He has been a member of the Board of Directors of the Company since
January 1995, and also serves on the Audit Committee and Compensation Committee
of the Board of Directors.
GEORGE L. BRISTOL has been President of GLB, Inc., a consulting firm, since
1977. He has been a member of the Board of Directors of the Company since
January 1995 and is a member of its Audit Committee. Mr. Bristrol was the Acting
Chief Executive Officer of the Company from January 13, 1997 to April 20, 1997.
F. LANCE CALLIS has been a partner with the law firm of Callis, Papa,
Jackstadt & Halloran P.C. (formerly Pratt & Callis, P.C.), with offices in St
Louis, Missouri and Granite City, Illinois, since 1986. Mr. Callis has been a
member of the Board of Directors of the Company since February 1993 and is a
member of its Compensation Committee and Nominating Committee.
JIMMY F. GALLAGHER has been a director of the Company since February 1993
and is currently a member of its Nominating Committee and Audit Committee. Mr.
Gallagher retired from the gaming industry in March 1991. From March 1990 to
March 1991, he was Supervisor of Casino Games for the Park Hotel and Casino in
Las Vegas, Nevada.
WILLIAM J. MCENERY has served as the president of Gas City, Ltd., an
operator of gasoline stations and convenience stores in Illinois and Florida
headquartered in Frankfort, Illinois, since 1965. Since 1992, Mr. McEnery has
been a director and investor in the Empress Riverboat Casino Corporation, the
owner and operator of riverboat casino operations in Joliet, Illinois and
Hammond, Indiana. Mr. McEnery has been a member of the Company's Board of
Directors since February 1993 and is a member of its Compensation Committee.
JOHN B. PRATT, SR. has practiced law in White Hall, Illinois as a sole
practitioner since 1986. He has been a member of the Board of Directors of the
Company since February 1993 and is a member of its Compensation Committee,
Nominating Committee and Audit Committee.
75
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of our common stock as of March 31, 1999 by (i) each person
who, to our knowledge, owns more than 5% of our outstanding common stock, (ii)
by each of our directors and named executive officers and (iii) by all executive
officers and directors as a group.
<TABLE>
<CAPTION>
SHARES
REPRESENTED
NUMBER OF BY CONVERTIBLE
NAME(A) SHARES SECURITIES(B) PERCENT
- ------------------------------------------------------------ ------------- -------------- -------
<S> <C> <C> <C>
William F. Cellini.......................................... 1,843,456(c)(d) 31,075 6.7%
Edward F. Brennan........................................... 22,000(e) -- *
George L. Bristol........................................... 3,000(e) -- *
F. Lance Callis............................................. 1,537,778 17,512 5.6
Jimmy F. Gallagher.......................................... 1,337,778 -- 4.8
William J. McEnery.......................................... 1,527,778 -- 5.5
John B. Pratt, Sr........................................... 1,324,124(f) -- 4.7
James B. Perry.............................................. 309,000(e)(g) -- *
James A. Gulbrandsen........................................ 75,000(e)(h) -- *
Kornitzer Capital Management, Inc........................... 735,400(i) 1,729,661 8.3
Dimensional Fund Advisors, Inc.............................. 1,651,900(j) -- 5.9
James S. Connors............................................ 2,291,667(k) -- 8.2
Stephanie Pratt............................................. 1,124,124(f) -- 4.0
All directors and executive officers as a group (15
persons).................................................. 8,056,236(e) 48,587 28.8
</TABLE>
- ------------------------
* Less than one percent.
(a) The address of each of the stockholders named in this table is c/o Argosy
Gaming Company, 219 Piasa Street, Alton, Illinois 62002, except for (i)
Kornitzer Capital Management, Inc. which is P.O. Box 918, Shawnee Mission,
Kansas 66201, (ii) Dimensional Fund Advisors, Inc. which is 1299 Ocean
Avenue, 11th Floor, Santa Monica, California 90401 and (iii) Ms. Stephanie
Pratt which is Box 104 Moro Road, Moro, Illinois 62067.
(b) Shares of common stock represented by such person's ownership of convertible
notes, which are convertible into common stock of the Company at any time
prior to maturity at a conversion price of $17.70 per share.
(c) Includes 381,945 shares held in Trust for William F. Cellini, Jr., as
beneficiary with an independent third party as sole trustee and 381,944
shares held in Trust for William F. Cellini, Jr., as beneficiary, with
William F. Cellini, Jr. and William F. Cellini, father of William F.
Cellini, Jr., as co-trustees. Mr. William F. Cellini disclaims beneficial
ownership of the 381,945 shares of common stock held in the William F.
Cellini, Jr. Trust by an independent third party as sole trustee.
(d) Includes 381,945 shares held in Trust for Claudia Marie Cellini, as
beneficiary with an independent third party as sole trustee and 381,944
shares held in Trust for William F. Cellini, Jr., as beneficiary, with
Claudia Marie Cellini and William F. Cellini, father of Claudia Marie
Cellini, as co-trustees. Mr. William F. Cellini disclaims beneficial
ownership of the 381,945 shares of common stock held in the Claudia Marie
Cellini Trust by an independent third party as sole trustee.
(e) Amounts shown include 3,000 shares of common stock for Edward F. Brennan,
3,000 shares of common stock for George L. Bristol, 200,000 shares of common
stock for James B. Perry, 35,000 shares of common stock for James A.
Gulbrandsen and 316,322 for all directors and executive officers as a group
represented by stock options exercisable within 60 days of February 26,
1999.
76
<PAGE>
(f) Includes 1,124,125 shares of common stock held by Mr. Pratt as Trustee
pursuant to a Voting Trust Agreement with Stephanie Pratt, his
sister-in-law, over which Mr. Pratt exercises sole voting power.
(g) Includes 100,000 shares of restricted common stock issued pursuant to an
Employment Agreement dated April 14, 1997 and governed by the terms of a
Restricted Stock Award Certificate and Deposit Agreement.
(h) Includes 40,000 shares of restricted common stock issued pursuant to an
Employment Agreement dated May 21, 1997 and governed by the terms of a
Restricted Stock Award Certificate and Deposit Agreement.
(i) According to Schedule 13G filed with the Securities and Exchange Commission
under the Exchange Act, Kornitzer Capital Management, Inc. has shared voting
power with respect to such shares.
(j) According to Schedule 13G filed with the Securities and Exchange Commission
under the Exchange Act, Dimensional Fund Advisors, Inc. has sole voting
power with respect to such shares.
(k) From February 25, 1993 until September 8, 1994, Mr. Connors was a director
of the Company.
77
<PAGE>
DESCRIPTION OF OUR OTHER INDEBTEDNESS
The following is a summary of important terms of our material indebtedness.
CREDIT FACILITY
CREDIT FACILITY. As part of the refinancing transactions completed in
connection with the issuance of the outstanding notes, we and all of our
wholly-owned operating subsidiaries entered into a senior secured revolving bank
credit facility with Wells Fargo Bank, N.A. and certain other lenders. Under the
credit facility, we may borrow up to $200 million. The credit facility has a
term of five years. The initial advances of $130 million under the credit
facility were used in connection with the repurchase of our 13 1/4% first
mortgage notes and the redemption of the 12% convertible subordinated notes
described below. Subsequent advances under the credit facility may be used to
fund a potential purchase of the minority interests in our Lawrenceburg casino,
to finance capital improvements, to provide working capital and for general
corporate purposes. We closed the credit facility concurrently with the
outstanding notes offering.
The credit facility is secured by liens on substantially all our assets. The
joint-venture subsidiaries that operate the Lawrenceburg casino and the Belle of
Sioux City Casino are not co-borrowers under the credit facility. The credit
facility is secured by a pledge of the common stock of all of our wholly-owned
subsidiaries and by liens on substantially all of their other assets. The credit
facility also contains customary representations and warranties and affirmative
and negative covenants, including, among others, covenants relating to financial
and compliance reporting, capital expenditures, restricted payments, maintenance
of certain financial ratios, incurrence of liens, sale or disposition of assets
and incurrence of other debt.
At our option, interest for advances under the credit facility accrues at
either:
- the rate of interest for 1, 2, 3, or 6 month dollar deposits as quoted on
the Telerate System Reports in the London interbank eurodollar market
("LIBOR") plus a spread ranging from 1.50% to 2.75%; or
- the higher of (1) the rate most recently announced by Wells Fargo as its
"prime rate" or (2) the Federal Funds Rate plus one-half of one percent
per annum (such higher rate, the "Base Rate") plus a spread ranging from
0.25% to 1.50%.
The credit facility provides that interest on LIBOR advances is payable at
the end of each applicable interest period or quarterly. Interest on Base Rate
advances is payable quarterly. Upon default, interest accrues at the Base Rate
plus 2.00%.
Under the terms of the credit facility, we have the right, within two years
following the closing of the credit facility, to arrange for a $75 million
increase to the borrowing availability under the credit facility. In addition,
we have the right, within two years following the closing, to arrange for a
further $150 million increase to fund the purchase of all outstanding minority
interests in the Lawrenceburg partnership. The increases in the facility remain
subject to a number of contingencies, including lender approval. We cannot
assure you that we will be able to obtain either of the increases to the credit
facility or that they will be available on acceptable terms. If we are unable to
secure the $150 million increase to the credit facility or obtain timely
alternative financing on acceptable terms, we may not be able to fund a
potential offer to purchase the minority interests in our Lawrenceburg
partnership.
At July 7, 1999, upon funding the redemption of our 12% convertible
subordinated notes, we had $130.0 million outstanding under the credit facility.
78
<PAGE>
FIRST MORTGAGE NOTES
In June, 1996, we issued $235 million principal amount of 13 1/4% first
mortgage notes due 2004. The 13 1/4% first mortgage notes are secured by, among
other things, a first priority security interest in substantially all of our
assets. In connection with the issuance of the outstanding notes, we commenced
an offer to purchase our $235 million principal amount of 13 1/4% first mortgage
notes due 2004. We also solicited consents to permit us to create additional
liens on the collateral securing our obligations under the 13 1/4% first
mortgage notes and amend the indenture and the related security documents of the
13 1/4% first mortgage notes to eliminate the subsidiary guarantee provisions
and most of the financial and restrictive covenants in the indenture.
On May 18, 1999, we received consents to the amendments from holders of
approximately 90% of the outstanding principal amount of the 13 1/4% first
mortgage notes. On June 7, 1999, we repurchased all of the 13 1/4% first
mortgage notes that were tendered pursuant to our offer to purchase. As of June
30, 1999 we have $22,242,000 principal amount of such notes outstanding. We are
required under the terms of the credit facility to cash collateralize our
remaining obligations and call for redemption all outstanding 13 1/4% first
mortgage notes on the earliest redemption date, June 1, 2000.
CONVERTIBLE SUBORDINATED NOTES
In June 1994, we issued $115 million principal amount of 12% convertible
subordinated notes due 2001. On June 8, 1999, we issued a notice of redemption
to redeem our $115 million aggregate principal amount of 12% convertible
subordinated notes due 2001, at a price equal to 102% per note. On July 7, 1999,
we redeemed all of our $115 million 12% convertible subordinated notes using
borrowings under the credit facility.
79
<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
Except as otherwise indicated below, the following summary applies to both
the outstanding notes and the exchange notes. For this section, the term "Notes"
means both the outstanding notes and the exchange notes unless otherwise
indicated.
The outstanding notes were, and the exchange notes will be, issued under the
indenture dated as of June 8, 1999, among the Company, the Subsidiary
Guarantors, as guarantors, and, Bank One Trust Company, NA, as trustee. In this
description, the word "Company" refers only to Argosy Gaming Company and not to
any of its subsidiaries.
The terms of the exchange notes are nearly identical to the outstanding
notes in all material respects, including interest rate and maturity, except
that the exchange notes will not be subject to:
- the restrictions on transfer; and
- the registration rights agreement's covenants regarding registration.
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indenture, including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended. We urge you to read the Indenture, because it and not
this description, defines your rights as holders of the Notes. You may obtain
copies of the Indenture from the Company upon request. Certain defined terms
used in this description but not defined below under "--Certain Definitions"
have the meanings assigned to them in the Indenture.
GENERAL
The Notes are unsecured senior subordinated obligations of the Company, in
an initial aggregate principal amount of $200 million, and mature on June 1,
2009. Subject to the covenants described below under "Covenants" and applicable
law, the Company may issue additional Notes under the Indenture. The Notes and
any additional Notes subsequently issued under the Indenture will be treated as
a single class for all purposes under the Indenture.
Interest on the Notes will accrue at the rate of 10 3/4% per annum and will
be payable semi-annually in arrears on June 1 and December 1, commencing on
December 1, 1999. The Company will make each interest payment to the Holders of
record on the immediately preceding May 15 and November 15. Interest on the
Notes will accrue from the date of original issuance or, if interest has already
been paid, from the date it was most recently paid.
As of June 8, 1999, all of our subsidiaries are "Restricted Subsidiaries,"
except Indiana Gaming Company, L.P. the subsidiary of the Company that operates
the Lawrenceburg Casino, which is an "Unrestricted Subsidiary." In addition, the
Indenture permits us to designate certain of our Restricted Subsidiaries as
Unrestricted Subsidiaries. Our Unrestricted Subsidiaries are not be subject to
many of the restrictive covenants in the Indenture and do not guarantee the
Notes.
If by the date that is six months after the Closing Date, we have not
consummated a registered exchange offer for the outstanding notes or caused a
shelf registration statement with respect to resales of the outstanding notes to
be declared effective, the interest rate will increase by 0.5% per annum until
the consummation of a registered exchange offer or the effectiveness of a shelf
registration statement.
In certain circumstances, if the Company sells its partnership interest in
Indiana Gaming Company L.P. or if Indiana Gaming L.P. sells substantially all of
its assets, the interest rate on the Notes will increase by 0.5% per annum. See
"--Certain Covenants--Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest."
80
<PAGE>
If a Holder has given wire transfer instructions to us, we will pay all
principal, interest and premium and Additional Interest, if any, on that
Holder's exchange notes in accordance with those instructions. All other
payments on the exchange notes will be made at the office or agency of the
Paying Agent and Registrar within the City and State of New York unless we elect
to make interest payments by check mailed to the Holders at their addresses set
forth in the register of Holders.
The exchange notes will be issued in fully registered form, without coupons,
in denominations of $1,000 and integral multiples of $1,000. See "--Book-Entry;
Delivery and Form." There is no service charge for any registration of transfer
or exchange of Notes, but we may require a Holder to pay any taxes and fees
required by law or permitted by the Indenture.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as Paying Agent and Registrar. We may change
the Paying Agent or Registrar without prior notice to the Holders, and the
Company or any of its Restricted Subsidiaries may act as Paying Agent or
Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
We are not required to transfer or exchange any exchange note selected for
redemption. Also, we are not required to transfer or exchange any exchange note
for a period of 15 days before a selection of exchange notes to be redeemed. See
"--Book Entry; Delivery and Form" and "Transfer Restrictions" below.
The registered Holder of an exchange note will be treated as the owner of it
for all purposes.
SUBSIDIARY GUARANTEES
Our payment obligations under the Notes will be jointly and severally
guaranteed by our Subsidiary Guarantors and any of our future Restricted
Subsidiaries that have at any time a Fair Market Value of more than $250,000
provided that the aggregate Fair Market Value of Restricted Subsidiaries that
are not Subsidiary Guarantors will not at any time exceed $1.0 million. Each
Subsidiary Guarantee will be subordinated to the prior payment in full of all
Senior Indebtedness of that Subsidiary Guarantor. The obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable law. See "Risk
Factors--Fraudulent Conveyance Matters."
Not all of our subsidiaries will guarantee the Notes. In particular, Indiana
Gaming Company L.P., our Unrestricted Subsidiary that operates the Lawrenceburg
Casino and Belle of Sioux City L.P., our Subsidiary that operates the Belle of
Sioux City will not be Subsidiary Guarantors of the Notes. In the event of a
bankruptcy, liquidation or reorganization of any of these non-guarantor
subsidiaries, these non-guarantor subsidiaries will pay the holders of their
debts and their trade creditors before they will be able to distribute any of
their assets to us. The Subsidiary Guarantors generated 45% of our consolidated
revenues in the twelve-month period ended March 31, 1999 and held 70% of our
consolidated assets as of March 31, 1999. See footnote 14 to our Consolidated
Financial Statements included at the back of this prospectus for more detail
about the division of our consolidated revenues and assets between our
Subsidiary Guarantors and non-guarantor subsidiaries. During 1998, the
Lawrenceburg casino represented 56.2% of our net revenues and 82.9% of EBITDA,
after taking into consideration management fees paid to a minority partner.
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<PAGE>
A Subsidiary Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
Person, other than the Company or another Subsidiary Guarantor, unless:
(1) immediately after giving effect to such transaction, no Default or Event
of Default exists; and
(2) either:
(A) the Person acquiring the property in any such sale or disposition or
the Person formed by or surviving any such consolidation or merger
assumes all the obligations of that Subsidiary Guarantor under the
Indenture and its Subsidiary Guarantee pursuant to a supplemental
indenture satisfactory to the Trustee; or
(B) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Limitations on Asset Sales" covenant described
below.
The Subsidiary Guarantee of a Subsidiary Guarantor will be released:
(1) in connection with any sale or other disposition of all or substantially
all of the assets of that Subsidiary Guarantor (including by way of
merger or consolidation) to a Person that is not (either before or after
giving effect to such transaction) the Company or a Subsidiary Guarantor,
if the Subsidiary Guarantor applies the Net Proceeds of that sale or
other disposition in accordance with the "Limitations on Asset Sales"
covenant described below;
(2) in connection with any sale of all of the Capital Stock of a Subsidiary
Guarantor to a Person that is not (either before or after giving effect
to such transaction) the Company or a Subsidiary Guarantor, if the
Company applies the Net Proceeds of that sale in accordance with the
"Limitation on Asset Sales" covenant described below; or
(3) if the Company designates any Subsidiary Guarantor as an Unrestricted
Subsidiary in accordance with the Indenture.
See "--Certain Covenants--Limitation on Asset Sales."
OPTIONAL REDEMPTION
On or after June 1, 2004, we may redeem all or a part of the exchange notes
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 Additional Interest, if any, thereon, to the applicable
redemption date, subject to the right of Holders of record on the relevant
record date that is on or prior to the redemption date to receive interest due
on an interest payment date, if redeemed during the twelve-month period
beginning on June 1, of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- -----------
<S> <C>
2004.......................................................... 105.375%
2005.......................................................... 103.583%
2006.......................................................... 101.792%
2007 and thereafter........................................... 100.000%
</TABLE>
In addition, at any time prior to June 1, 2002, the Company may on any one
or more occasions redeem up to 35% of the aggregate principal amount of the
exchange notes issued under the Indenture at a redemption price of 110.750% of
the principal amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the redemption date (subject to the right of Holders of
record on the
82
<PAGE>
relevant record date that is on or prior to the redemption date to receive
interest due on an interest payment date), with the Net Cash Proceeds of one or
more Public Equity Offerings; provided that:
(1) at least 65% of the aggregate principal amount of exchange notes remains
outstanding immediately after the occurrence of such redemption,
excluding the exchange notes held by us and our Subsidiaries); and
(2) the redemption occurs within 60 days of the date of the closing of
Public Equity Offering.
GAMING REDEMPTION
If any Gaming Authority:
(1) requests or requires a holder or beneficial owner of the exchange notes
to appear before, submit to the jurisdiction of or provide information
to, such Gaming Authority and such holder or beneficial owner either
refuses to do so or otherwise fails to comply with such request or
requirement within a reasonable period of time; or
(2) determines that any holder or beneficial owner of the exchange notes is
not suitable or qualified with respect to beneficial ownership of the
exchange notes,
then the Company may:
(1) require that such holder or beneficial owner dispose of its exchange
notes within 30 days (or such earlier date as required by the Gaming
Authority) of (A) the termination of the 30-day period described above
for the holder or beneficial owner to apply for a license, qualification
or finding of suitability or (B) the receipt of the notice from the
Gaming Authority that the holder or beneficial owner will not be
licensed, qualified or found suitable; or
(2) redeem the exchange notes of such holder or beneficial owner at a price
equal to the lesser of (A) the price at which such holder or beneficial
owner acquired such exchange notes or (B) the Fair Market Value of such
exchange notes or, if the exchange notes are listed on a national
securities exchange, the last reported sale price on the date the Company
notifies such holder or beneficial owner of the redemption.
Immediately upon a determination that a holder or beneficial owner will not
be licensed, qualified or found suitable, the holder or beneficial owner will
have no further rights (1) to exercise any right conferred by the exchange
notes, directly or indirectly, through any trustee, nominee or any other Person
or entity, or (2) to receive any interest or other distribution or payment with
respect to the exchange notes or any remuneration in any form from us for
services rendered or otherwise, except the redemption price of the exchange
notes. The holder or beneficial owner applying for a license, qualification or
finding of suitability must pay all costs of the licensure or investigation for
such qualification or finding of suitability.
SELECTION AND NOTICE
If less than all of the exchange notes are to be redeemed at any time, the
Trustee will select exchange notes for redemption as follows:
(1) if the exchange notes are listed, in compliance with the requirements of
the principal national securities exchange on which the exchange notes
are listed; or
(2) if the exchange notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate.
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<PAGE>
No exchange notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any
exchange note is to be redeemed in part only, the notice of redemption that
relates to that exchange note shall state the portion of the principal amount
thereof to be redeemed. A new exchange note in principal amount equal to the
unredeemed portion of the original exchange note will be issued in the name of
the Holder thereof upon cancellation of the original exchange note. Exchange
notes called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on exchange notes or
portions of them called for redemption.
SINKING FUND
There will be no sinking fund payments for the exchange notes.
RANKING
The exchange notes will be senior subordinated Indebtedness of the Company
and the Subsidiary Guarantees will be senior subordinated Indebtedness of the
Subsidiary Guarantors. The payment of the Senior Subordinated Obligations will,
to the extent set forth in the Indenture, be subordinated in right of payment to
the prior payment in full, in cash or cash equivalents, of all Obligations due
in respect of existing and future Senior Indebtedness. The exchange notes will
be effectively junior to all debt and other liabilities of our subsidiaries that
do not guarantee the exchange notes. As of July 7, 1999, upon funding the
redemption of our 12% convertible notes, the Company and the Subsidiary
Guarantors had $152.2 million of Indebtedness, other than the notes, all of
which constitutes Senior Indebtedness. In addition, our non-guarantor
subsidiaries had approximately $87.1 million of debt and other liabilities.
Notwithstanding the foregoing, payment from the money or the proceeds of U.S.
Government Obligations held in any defeasance trust described under
"--Defeasance" below, will not be contractually subordinated in right of payment
to any Senior Indebtedness or subject to the restrictions described herein.
The holders of Senior Indebtedness will be entitled to receive payment in
full in cash or cash equivalents of all Obligations due in respect of Senior
Indebtedness (including, with respect to Designated Senior Indebtedness, any
interest accruing after the commencement of any proceeding described below at
the rate specified in the applicable Designated Senior Indebtedness whether or
not interest is an allowed claim enforceable against the Company in such
proceeding) before the Holders of the exchange notes will be entitled to receive
any payment on account of Senior Subordinated Obligations or any payment to
acquire any of the exchange notes for cash, property or securities, or any
distribution with respect to the exchange notes of any cash, property or
securities (except that Holders of the exchange notes may receive and retain
Permitted Junior Securities and payments made from the trust described under
"--Defeasance"), in the event of any distribution to creditors of the Company:
(1) in a liquidation or dissolution of us;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to us or our property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of our assets and liabilities.
In addition, until all Obligations due with respect to Senior Indebtedness are
paid in full in cash or cash equivalents, any such distribution to which Holders
would be entitled shall be made to the holders
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of Senior Indebtedness (except that Holders may receive and retain Permitted
Junior Securities and payments made from the trust described under
"--Defeasance").
The Company and the Subsidiary Guarantors also may not make any payment in
respect of any Senior Subordinated Obligations (except in Permitted Junior
Securities or from the trust described under "--Defeasance") if:
(1) a payment default on Designated Senior Indebtedness occurs and is
continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing on any series of Designated
Senior Indebtedness that permits holders of that series of Designated
Senior Indebtedness to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the trustee or
other representative for the holders of any Designated Senior Debt, or
the holders of at least a majority of the outstanding principal amount of
such Designated Senior Indebtedness.
Payments on the exchange notes and the Subsidiary Guarantees may and shall
be resumed:
(1) in the case of a payment default, upon the date on which such default is
cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which
the applicable Payment Blockage Notice is received.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and Additional
Interest, if any, on the exchange notes that have come due have been paid
in full in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice.
Notwithstanding the foregoing, we will be permitted to redeem any Notes to
the extent required to do so by any Gaming Authority as described in "--Gaming
Redemption."
We must promptly notify holders of Senior Indebtedness if payment of the
Notes is accelerated because of an Event of Default.
Upon the occurrence of a Change in Control, certain Asset Sales, and certain
sales of its interest in the Lawrenceburg casino, we will be required to offer
to repurchase some or all of the exchange notes. See "Certain
Covenants--Limitation on Asset Sales," "--Repurchase of Exchange Notes upon a
Change of Control" and "Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest." The Credit Facility currently prohibits us from
purchasing any exchange notes, and also provides that certain change of control
or asset sale events with respect to us would constitute a default under the
Credit Facility. Any future credit agreements or other agreements relating to
Senior Indebtedness to which we become a party may contain similar restrictions
and provisions. In the event a Change of Control, Asset Sale or sale of
Lawrenceburg interests occurs at a time when we are prohibited from purchasing
Notes, we could seek the consent of its senior lenders to the purchase of
exchange notes or could attempt to refinance the borrowings that contain such
prohibition. If we do not obtain such a consent or repay such borrowings, we
will remain prohibited from purchasing the exchange notes. In such case, our
failure to purchase tendered exchange notes would constitute an Event of Default
under the Indenture which would, in turn, constitute a default under such Senior
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Indebtedness. In such circumstances, the subordination provisions in the
Indenture would likely restrict payments to the Holders of the exchange notes.
By reason of the subordination provisions described above, in the event of
liquidation or insolvency, Holders of Notes may recover less, ratably, than
creditors of the Company who are holders of Senior Indebtedness.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition by a Restricted Subsidiary; PROVIDED that Indebtedness of such
Person which is redeemed, defeased, retired or otherwise repaid at the time of
or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; PROVIDED that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(1) the net income of any Person that is not a Restricted Subsidiary, except
to the extent of the amount of dividends or other distributions actually
paid to us or any of our Restricted Subsidiaries by such Person during
such period;
(2) the net income (or loss) of any Person prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with us or any of
our Restricted Subsidiaries or all or substantially all of the property
and assets of such Person are acquired by us or any of our Restricted
Subsidiaries;
(3) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to Asset Sales;
(5) solely for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments" covenant described below, any amount
paid or accrued as dividends on our Preferred Stock owned by Persons
other than us and any of our Restricted Subsidiaries;
(6) all extraordinary gains and extraordinary losses, including any premium,
fees and expenses payable in connection with the offering of the Notes,
the repurchase of the First Mortgage Notes, the redemption of the
Convertible Subordinated Notes and the initial establishment of the
Credit Facility;
(7) any non cash impairment loss determined in accordance with GAAP related
to the carrying value of (A) the long-lived assets associated with the
Belle of Baton Rouge Casino or (B) other assets owned by us or our
Restricted Subsidiaries as of the date of the Indenture that are recorded
in the ordinary course of business and are being used by us or have been
replaced by other comparable assets of us or our Restricted Subsidiaries;
and
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(8) the cumulative effect of a change in accounting principles.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (1) an investment by us or any of our Restricted
Subsidiaries in any other Person pursuant to which such Person shall become a
Restricted Subsidiary or shall be merged into or consolidated with us or any of
our Restricted Subsidiaries, PROVIDED that such Person's primary business is
related, ancillary or complementary to the businesses of our company and our
Restricted Subsidiaries on the date of such investment or (2) an acquisition by
us or any of our Restricted Subsidiaries of the property and assets of any
Person other than of our company or any of our Restricted Subsidiaries that
constitute substantially all of a division or line of business of such Person;
PROVIDED that the property and assets acquired are related, ancillary or
complementary to the businesses of our company and our Restricted Subsidiaries
on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by us or any of our
Restricted Subsidiaries (other than to ourselves or another Restricted
Subsidiary) of (1) all or substantially all of the Capital Stock of any
Restricted Subsidiary or (2) all or substantially all of the assets that
constitute a division or line of business of our company or any of our
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by us or any of our Restricted Subsidiaries to
any Person other than ourselves or any of our Restricted Subsidiaries of (1) all
or any of the Capital Stock of any Restricted Subsidiary, (2) all or
substantially all of the property and assets of an operating unit or business of
our company or any of our Restricted Subsidiaries or (3) any other property and
assets (other than the Capital Stock of or other Investment in an Unrestricted
Subsidiary) that is outside the ordinary course of business of our company or
any of our Restricted Subsidiaries, in each case, other than a sale of all or
substantially all of the assets of our company in compliance with the "Merger,
Consolidation, or Sale of Assets" covenant described below; PROVIDED that "Asset
Sale" shall not include:
(1) sales or other dispositions of inventory, receivables and other current
assets in the ordinary course of business,
(2) sales, transfers or other dispositions of (i) assets constituting a
Restricted Payment permitted to be made under the "Limitation on
Restricted Payments" covenant or (ii) Investments permitted pursuant to
clause (6) of the definition of Permitted Investments,
(3) sales or other dispositions of assets for consideration at least equal
to the fair market value of the assets sold or disposed of, to the extent
that the consideration received are invested in accordance with clause
(B) of the "Limitation on Asset Sales" covenant,
(4) the sale or other transfer of any of our company's or any Restricted
Subsidiary's interest in Indiana Gaming Company L.P., which transaction
is governed by the "Repurchase of Exchange Notes in connection with Sale
of Lawrenceburg Interest" covenant described below,
(5) sales, transfers or other dispositions of assets with a Fair Market
Value not in excess of $1.0 million in any transaction or series of
related transactions, or
(6) sales, transfers or other dispositions of furniture, fixtures or
equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of our company or our
Restricted Subsidiaries.
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"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value of the obligation of the lessee for
net rental payments during the remaining term of the lease included in such sale
and leaseback transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (1) the sum of the products of (A)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (B) the amount
of such principal payment by (2) the sum of all such principal payments.
"Belle of Baton Rouge Casino" means the Belle of Baton Rouge Casino and the
related Catfish Town entertainment facility.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means the occurrence of any of the following:
(1) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the Exchange Act) other than a group comprised of one or more Excluded
Persons becomes the ultimate "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 40% of the total voting power of the
Voting Stock of our company on a fully diluted basis;
(2) individuals who on the Closing Date constitute the Board of Directors
(together with any new directors whose election by the Board of Directors
or whose nomination by the Board of Directors for election by our
stockholders was approved by a vote of at least two-thirds of the members
of the Board of Directors then in office who either were members of the
Board of Directors on the Closing Date or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in
office;
(3) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the properties or
assets of our company and our Subsidiaries taken as a whole to any
"person" (as that term is used in Section 13(d)(3) of the Exchange Act);
or
(4) the adoption of a plan relating to our liquidation or dissolution.
"Closing Date" means the date on which the Notes are originally issued under
the Indenture.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income:
(1) Consolidated Interest Expense,
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(2) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales
of assets),
(3) depreciation expense,
(4) amortization expense and
(5) all other non-cash items reducing Adjusted Consolidated Net Income
(other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all
non-cash items increasing Adjusted Consolidated Net Income (other than
normal recurring accruals of revenue in the ordinary course of business),
all as determined on a consolidated basis for us and our Restricted
Subsidiaries in conformity with GAAP,
PROVIDED that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multiplied by (B) the percentage ownership interest in the income of such
Restricted Subsidiary not owned on the last day of such period by us or any of
our Restricted Subsidiaries.
"Consolidated Indebtedness" means with respect to any Person at any date of
determination (without duplication):
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries, PLUS
(2) the total amount of Indebtedness of any other Person, to the extent that
such Indebtedness has been Guaranteed by the referrent Person or one or
more of its Restricted Subsidiaries, PLUS
(3) the aggregate liquidation value of all Disqualified Stock of such Person
and all preferred stock of Restricted Subsidiaries of such Person, in
each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of:
(1) interest in respect of Indebtedness of our company and our Consolidated
Subsidiaries (including, without limitation, amortization of original
issue discount on any such Indebtedness, the interest portion of any
deferred payment obligation and imputed interest with respect to
Attributable Debt, calculated in accordance with the effective interest
method of accounting; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements);
PROVIDED, HOWEVER, that "Consolidated Interest Expense" shall not include
interest in respect of (A) Indebtedness of Indiana Gaming Company L.P.
outstanding on the date of the Indenture that is owed to any minority
partner of Indiana Gaming Company L.P., (B) Indebtedness of Indiana
Gaming Company L.P. that is incurred after the date of the Indenture if
such Indebtedness is owed to any minority partner of Indiana Gaming
Company L.P. to the extent that Indiana Gaming Company L.P. concurrently
incurs Indebtedness to The Indiana Gaming Company on a pro rata basis,
based on The Indiana Gaming Company's percentage interest in Indiana
Gaming Company L.P.; and (C) the Indiana Gaming Company L.P. minority
partners' pro rata portion, based on such partners' percentage interest
in Indiana Gaming Company L.P., of Indebtedness of Indiana Gaming Company
L.P. (i) owed to third parties; and (ii) owed to any minority partner of
Indiana Gaming Company L.P. and incurred after the date of the Indenture
to the extent that such Indebtedness is not excluded from Consolidated
Interest Expense pursuant to clause (B) above;
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(2) all but the principal component of rentals in respect of Capitalized
Lease Obligations paid, accrued or scheduled to be paid or to be accrued
by us and our Restricted Subsidiaries during such period;
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien
on assets of such Person or one of its Subsidiaries, whether or not such
Guarantee or Lien is called upon; and
(4) the product of (a) all dividends, whether paid or accrued and whether or
not in cash, on any series of preferred stock of such Person or any of
its Restricted Subsidiaries, other than dividends on Capital Stock
payable solely in our Capital Stock (other than Disqualified Stock) or to
us or one of our Restricted Subsidiaries, times (b) 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 tax rate of such
Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP;
EXCLUDING, HOWEVER, (A) any amount of such interest of any Restricted Subsidiary
if the net income of such Restricted Subsidiary is excluded in the calculation
of Adjusted Consolidated Net Income pursuant to clause (3) of the definition
thereof (but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (3) of the definition thereof) and (B) any premiums, fees and
expenses (and any amortization thereof) payable in connection with the offering
of the Notes, the repurchase of the First Mortgage Notes, redemption of
Convertible Subordinated Notes and the initial establishment of the Credit
Facility, all as determined on a consolidated basis (without taking into account
Unrestricted Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of our company and our Restricted Subsidiaries (which
shall be as of a date not more than 135 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of our company or any of our Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Consolidated Subsidiaries" means, for any Person, each Subsidiary of such
Person (whether existing on the date of the Indenture or created or acquired
thereafter) the financial statements of which are consolidated for financial
statement reporting purposes with the financial statements of such Person in
accordance with GAAP.
"Credit Facility" means the Credit Agreement dated the date of the
Indenture, among us, the Subsidiary Guarantors, and Wells Fargo Bank, N.A., as
administrative agent bank and the lenders referred to therein, together with any
agreements, instruments and documents executed or delivered pursuant to or in
connection with such Credit Facility (including, without limitation, any
Guarantees and security documents), in each case as such Credit Facility or such
agreements, instruments or documents may be amended, supplemented, extended,
renewed, refinanced or otherwise modified from time to time.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
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"Debt to EBITDA Ratio" means, on any Transaction Date, the ratio of (1) the
aggregate amount of Consolidated Indebtedness of our company and our Restricted
Subsidiaries as of such Transaction Date to (2) the aggregate amount of
Consolidated EBITDA of our company and our Restricted Subsidiaries for the then
most recent four fiscal quarters prior to such Transaction Date (the "Four
Quarter Period") for which reports have been filed with the Commission or
provided to the Trustee. In making the foregoing calculation:
(A) PRO FORMA effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving PRO FORMA effect to the application of
proceeds of any Asset Disposition) that occur during the period (the
"Reference Period") commencing on the first day of the Four Quarter
Period and ending on the Transaction Date as if they had occurred and
such proceeds had been applied on the first day of such Reference Period;
and
(B) PRO FORMA effect shall be given to asset dispositions and asset
acquisitions (including giving PRO FORMA effect to the application of
proceeds of any asset disposition) that have been made by any Person that
has become a Restricted Subsidiary or has been merged with or into us or
any Restricted Subsidiary during such Reference Period and that would
have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if
such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Reference
Period;
PROVIDED that to the extent that clause (A) or (B) of this sentence requires
that PRO FORMA effect be given to an Asset Acquisition or Asset Disposition,
such PRO FORMA calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line of
business of the Person, that is acquired or disposed for which financial
information is available.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means
(1) any Indebtedness outstanding under the Credit Facility (except that any
Indebtedness which represents a partial refinancing of Indebtedness
theretofore outstanding pursuant to the Credit Facility, rather than a
complete refinancing thereof, shall only constitute Designated Senior
Indebtedness if such partial refinancing meets the requirements of clause
(2) below) and
(2) any other Senior Indebtedness that, at the date of determination, has an
aggregate principal amount outstanding of at least $20 million and that
had been specifically designated by us as "Designated Senior
Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed prior to
the Stated Maturity of the exchange notes, (2) redeemable at the option of the
holder of such class or series of Capital Stock at any time prior to the Stated
Maturity of the exchange notes or (3) convertible into or exchangeable for
Capital Stock referred to in clause (1) or (2) above or Indebtedness having a
scheduled maturity prior to the Stated Maturity of the exchange notes; PROVIDED
that any Capital Stock that would not contribute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the exchange
notes shall not constitute Disqualified Stock if the "asset sale" or "change of
control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in "Limitation
on Asset Sales" and "Repurchase of Exchange Notes upon a Change of Control"
covenants described below and such Capital Stock specifically provides that such
Person will not repurchase or redeem any such stock pursuant to such provision
prior our repurchase of such exchange notes as are required to be
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repurchased pursuant to the "Limitation on Asset Sales" and "Repurchase of
Exchange Notes upon a Change of Control" covenants described below.
"Excluded Persons" means William F. Cellini, F. Lance Callis, Jimmy F.
Gallagher, William J. McEnery, John B. Pratt, Sr., James S. Connors and
Stephanie Pratt, each of such person's immediate family or a trust or similar
entity existing solely for the benefit of such person or such person's immediate
family.
"Fair Market Value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a resolution of the Board of Directors.
"First Mortgage Notes" means our first mortgage notes due 2004.
"FF&E Indebtedness" means any Indebtedness of our company or any of its
Restricted Subsidiaries that is Incurred to finance the acquisition or lease
after the date of the Indenture of furniture, fixtures or equipment ("FF&E")
used directly in the operation of any of our Material Casinos and secured solely
by a Lien on such FF&E, which Indebtedness has a principal amount not to exceed
100% of the cost of the FF&E so purchased or leased.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those 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 approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of the United States or foreign
government, any state province or any city or other political subdivision, or
any officer of official thereof, including the Illinois Gaming Board, the
Indiana Gaming Commission, the Iowa Racing and Gaming Commission, the Louisiana
Gaming Control Board, the Missouri Gaming Commission and any other agency with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed or operated by us or any of our Subsidiaries.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct the present and future
gaming activities of our company and our Subsidiaries.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the
ordinary course of business), to take-or-pay, or to maintain financial
statement conditions or otherwise) or
(2) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); PROVIDED that the
term "Guarantee" shall not include endorsements for collection or deposit
in the ordinary course of business;
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EXCLUDING, HOWEVER, (A) Indebtedness of Indiana Gaming Company L.P. outstanding
on the date of the Indenture that is owed to any minority partner of Indiana
Gaming Company L.P., (B) Indebtedness of Indiana Gaming L.P. that is incurred
after the date of the Indenture if such Indebtedness is owed to any minority
partner of Indiana Gaming Company L.P. to the extent that Indiana Gaming Company
L.P. concurrently incurs Indebtedness to the Indiana Gaming Company on a pro
rata basis, based on The Indiana Gaming Company's percentage interest in Indiana
Gaming Company L.P. and (C) the Indiana Gaming Company L.P. minority partners'
pro rata portion, based on such partners' percentage interest in Indiana Gaming
Company L.P., of Indebtedness of Indiana Gaming Company L.P. (i) owed to third
parties and (ii) owed to any minority partner of Indiana Gaming Company L.P. and
incurred after the date of the Indenture to the extent that such Indebtedness is
not excluded from Consolidated Interest Expense pursuant to clause (B) above.
The term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; PROVIDED that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(3) all obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations (other than
obligations described in this definition) entered into in the ordinary
course of business of such Person to the extent such letters of credit
are not drawn upon or, if drawn upon, to the extent such drawing is
reimbursed no later than the third Business Day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit);
(4) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services, which purchase price is due more than six
months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except
Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person;
PROVIDED that the amount of such Indebtedness shall be the lesser of (A)
the Fair Market Value of such asset at such date of determination and (B)
the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, PROVIDED
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(A) that the amount outstanding at any time of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP, (B) that money
borrowed and set aside at the time of the Incurrence of any Indebtedness in
order to prefund the payment of the interest on such Indebtedness shall not be
deemed to be "Indebtedness" so long as such money is held to secure the payment
of such interest and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of (1)
the aggregate amount of Consolidated EBITDA of our company and our Restricted
Subsidiaries for the then most recent four fiscal quarters prior to such
Transaction Date for which reports have been filed with the Commission or
provided to the Trustee (the "Four Quarter Period") to (2) the aggregate
Consolidated Interest Expense of our company and our Restricted Subsidiaries
during such Four Quarter Period. In making the foregoing calculation:
(A) PRO FORMA effect shall be given to any Indebtedness Incurred or repaid
during the period (the "Reference Period") commencing on the first day of
the Four Quarter Period and ending on the Transaction Date (other than
Indebtedness Incurred or repaid under a revolving credit or similar
arrangement to the extent of the commitment thereunder (or under any
predecessor revolving credit or similar arrangement) in effect on the
last day of such Four Quarter Period unless any portion of such
Indebtedness is projected, in the reasonable judgment of our senior
management, to remain outstanding for a period in excess of 12 months
from the date of the Incurrence thereof), in each case as if such
Indebtedness had been Incurred or repaid on the first day of such
Reference Period (and pro forma effect shall be given to eliminate
interest attributable to the Indebtedness represented by the First
Mortgage Notes upon the funding on the date of the Indenture of a special
purpose account with the trustee for the First Mortgage Notes and any
other Indebtedness which has been defeased either pursuant to a "covenant
defeasance" or "legal defeasance" in accordance with the instrument under
which it was incurred);
(B) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a PRO FORMA
basis and bearing a floating interest rate shall be computed as if the
rate in effect on the Transaction Date (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate
Agreement has a remaining term in excess of 12 months or, if shorter, at
least equal to the remaining term of such Indebtedness) had been the
applicable rate for the entire period;
(C) PRO FORMA effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving PRO FORMA effect to the application of
proceeds of any Asset Disposition) that occur during such Reference
Period as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and
(D) PRO FORMA effect shall be given to asset dispositions and asset
acquisitions (including giving PRO FORMA effect to the application of
proceeds of any asset disposition) that have been made by any Person that
has become a Restricted Subsidiary or has been merged with or into us or
any Restricted Subsidiary during such Reference Period and that would
have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if
such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Reference
Period;
PROVIDED that to the extent that clause (C) or (D) of this sentence requires
that PRO FORMA effect be given to an Asset Acquisition or Asset Disposition,
such PRO FORMA calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line of
business of the Person, that is acquired or disposed for which financial
information is available.
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"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding advances to customers, suppliers or
contractors in the ordinary course of business that are, in conformity with
GAAP, recorded as accounts receivable or prepaid items on the balance sheet of
us or our Restricted Subsidiaries) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other similar instruments issued by,
such Person and shall include:
(1) the designation of a Restricted Subsidiary as an Unrestricted Subsidiary
and
(2) the retention of the Capital Stock (or any other Investment) by the
Company or any of its Restricted Subsidiaries, of (or in) any Person that
has ceased to be a Restricted Subsidiary, including without limitation,
by reason of any transaction permitted by clause (3) of the "Limitation
on the Issuance and Sale of Capital Stock of Restricted Subsidiaries"
covenant.
For purposes of the definition of "Unrestricted Subsidiaries" and the
"Limitation on Restricted Payments" covenant described below, the amount of or a
reduction in an Investment shall be equal to the fair market value thereof at
the time such Investment is made or reduced.
"Lawrenceburg Casino" means our hotel and casino located in Lawrenceburg,
Indiana.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (inducing, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Material Casino" means any gaming establishment possessing at least 400
slot machines and at least 20 table games.
"Minority Interests" means the partnership interests, including common and
preferred equity interests of, and the associated partner loans to, Indiana
Gaming Company L.P. of the partners of Indiana Gaming Company L.P. other than
the Company and its Restricted Subsidiaries.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(1) with respect to any Asset Sale, the proceeds of such Asset Sale in the
form of cash or cash equivalents, including payments in respect of
deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form
of cash or cash equivalents and proceeds from the conversion of other
property received when converted to cash or cash equivalents, net of
(A) brokerage commissions and other fees and expenses (including fees and
expenses of counsel and investment bankers) related to such Asset
Sale,
(B) provisions for all taxes (whether or not such taxes will actually be
paid or are payable) as a result of such Asset Sale without regard to
the consolidated results of operations of our company and our
Restricted Subsidiaries, taken as a whole,
(C) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (I) is secured
by a Lien on the property or assets sold or (II) is required to be
paid as a result of such sale and
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(D) appropriate amounts to be provided by the Company or any Restricted
Subsidiary as a reserve against any liabilities associated with such
Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in
conformity with GAAP and
(2) with respect to any issuance or sale of Capital Stock, the proceeds of
such issuance or sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of attorney's fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage,
consultant and other fees incurred in connection with such issuance or
sale and net of taxes paid or payable as a result thereof.
"Non-Recourse Indebtedness" means Indebtedness:
(1) as to which neither nor any of our Restricted Subsidiaries (A) provides
credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness) or (B) is directly or
indirectly liable as a guarantor or otherwise (other than the Indiana
Gaming Company solely in its capacity as general partner of Indiana
Gaming L.P.);
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness of our company or any of our Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated
maturity; and
(3) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of our company or any of our
Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase" means an offer made by us to purchase Notes from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(1) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase (which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest pursuant to
its terms;
(4) that, unless we default in the payment of the purchase price, any Note
accepted for payment pursuant to the Offer to Purchase shall cease to
accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form
entitled "Option of the Holder to Elect Purchase" on the reverse side of
the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying
Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment
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Date, a telegram, facsimile transmission or letter setting forth the name
of such Holder, the principal amount of Notes delivered for purchase and
a statement that such Holder is withdrawing 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; PROVIDED that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or integral multiples
thereof.
On the Payment Date, we shall (i) accept for payment on a pro rata basis Notes
or portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee all Notes or portions thereof so accepted together with an Officers'
Certificate specifying the Notes or portions thereof accepted for payment by us.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered, PROVIDED that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. We will publicly announce the results of an Offer to
Purchase as soon as practicable after the Payment Date. The Trustee shall act as
the Paying Agent for an Offer to Purchase. We will comply with Rule 14e-l under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that we are
required to repurchase Notes pursuant to an Offer to Purchase.
"Permitted Investment" means:
(1) an Investment in our company or a Restricted Subsidiary or a Person
which will, upon the making of such investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, us or a Restricted
Subsidiary; PROVIDED that such person's primary business is related,
ancillary or complementary to the businesses of our company and our
Restricted Subsidiaries on the date of such Investment;
(2) Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that are expected
at the time of such advances ultimately to be treated as expenses in
accordance with GAAP;
(4) stock, obligations or securities received in satisfaction of judgments;
(5) Interest Rate Agreements and Currency Agreements designed solely to
protect the Company or its Restricted Subsidiaries against fluctuations
in interest rates or foreign currency exchange rates;
(6) Investments in any Person the primary business of which is related,
ancillary or complementary to the businesses of our company and our
Restricted Subsidiaries; PROVIDED that at the time of such Investment the
aggregate amount of such Investments pursuant to this clause (6) does not
exceed $15.0 million;
(7) any purchase of less than 100% of the then outstanding Minority
Interests in Indiana Gaming Company L.P.; PROVIDED, that at the time of
such Investment,
(A) no Default or Event of Default shall have occurred and be continuing,
and
(B) either (i) we could Incur at least $1.00 of Indebtedness under the
first paragraph of the "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant; or (ii) without regard to whether we could
incur any amount of Indebtedness, we would have been permitted to
make a Restricted Payment pursuant to clause (C) of the first
paragraph of
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the "Limitation on Restricted Payments" covenant described below
equal to the amount of the proposed expenditure for such purchase of
the Minority Interests.
(8) Investments in an Unrestricted Subsidiary which are used to develop a
hotel to be used in connection with a Material Casino; PROVIDED that at
the time of such Investment the aggregate amount of such Investments
pursuant to this clause (8) does not exceed $10.0 million; and
(9) early retirement of Indebtedness outstanding on the date of the
Indenture owed to former shareholders of Jazz Enterprises Inc..
"Permitted Junior Securities" means:
(1) Equity Interests in our company or any Subsidiary Guarantor; or
(2) debt securities that are subordinated to all Senior Indebtedness and any
debt securities issued in exchange for Senior Indebtedness to
substantially the same extent as, or to a greater extent than, the
exchange notes and the Subsidiary Guarantees are subordinated to Senior
Indebtedness under the Indenture.
"Permitted Lender" means (1) the lenders under the Credit Facility, (2) any
affiliate of any lender under the Credit Facility, (3) any commercial bank,
savings bank or loan association having a combined capital and surplus of at
least $100.0 million, (4) any other financial institution, including a mutual
fund or other fund, having total assets of at least $250.0 million and (5) any
other Person that qualifies as a "qualified institutional buyer" pursuant to
Rule 144A under the Securities Act, any purchaser of Indebtedness pursuant to
Regulation S under the Securities Act and any purchaser of Indebtedness that is
registered under the Securities Act.
"Permitted Liens" means
(1) Liens securing obligations under Senior Indebtedness that is permitted
to be incurred pursuant to the Indenture including, without limitation,
the Credit Facility;
(2) Liens existing on the Closing Date;
(3) Liens granted after the Closing Date on any assets or Capital Stock of
our company or our Restricted Subsidiaries created in favor of the
Holders;
(4) Liens for taxes, assessments, governmental charges or claims that are
being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made;
(5) statutory and common law Liens of landlords and carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other similar Liens
arising in the ordinary course of business and with respect to amounts
not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made;
(6) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security;
(7) Liens incurred or deposits made to secure the performance of tenders,
bids, leases, statutory or regulatory obligations, bankers' acceptances,
surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of a similar nature incurred
in the ordinary course of business (exclusive of obligations for the
payment of borrowed money);
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(8) easements, rights-of-way, municipal and zoning ordinances and similar
charges, encumbrances, title defects or other irregularities that do not
materially interfere with the ordinary course of business of our company
or any of our Restricted Subsidiaries;
(9) Liens (including extensions and renewals thereof) upon real or personal
property acquired after the Closing Date; provided that (a) such Lien is
created solely for the purpose of securing Indebtedness Incurred, in
accordance with the "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant described below, to finance the cost (including
the cost of improvement or construction) of the item of property or
assets subject thereto and such Lien is created prior to, at the time of
or within six months after the later of the acquisition, the completion
of construction or the commencement of full operation of such property
(b) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of such cost and (c) any such Lien shall not extend to or
cover any property or assets other than such item of property or assets
and any improvements on such item;
(10) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of our company and our Restricted
Subsidiaries, taken as a whole;
(11) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of our company or our
Restricted Subsidiaries relating to such property or assets;
(12) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease;
(13) Liens arising from filing Uniform Commercial Code financing statements
regarding leases;
(14) Liens on property of, or on shares of Capital Stock or Indebtedness of,
any Person existing at the time such Person becomes or becomes a part of,
any Restricted Subsidiary, provided that such Liens do not extend to or
cover any property or assets of our company or any Restricted Subsidiary
other than the property or assets acquired;
(15) Liens in favor of us or any Restricted Subsidiary, other than Liens
securing intercompany Indebtedness incurred under clause (3) of the
second paragraph of the "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant described below;
(16) Liens arising from the rendering of a final judgment or order against
us or any Restricted Subsidiary that does not give rise to an Event of
Default;
(17) Liens securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof;
(18) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the
importation of goods;
(19) Liens encumbering customary initial deposits and margin deposits, and
other Liens that are within the general parameters customary in the
industry and incurred in the ordinary course of business, in each case,
securing Indebtedness under Interest Rate Agreements and Currency
Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect
us or any of our Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities;
(20) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by us or any of
our Restricted Subsidiaries in the ordinary course of business in
accordance with the past practices of our company and our Restricted
Subsidiaries prior to the Closing Date;
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(21) Liens on or sales of receivables;
(22) Liens securing obligations under Currency Agreements and Interest Rate
Agreements entered into in the ordinary course of business; and
(23) Liens in addition to the foregoing incurred in the ordinary course of
business provided that the amount of the obligations secured by such
Liens does not exceed in the aggregate $5.0 million at any one time
outstanding and that (A) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (B) do not in the
aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of the business by us or any of
our Subsidiaries.
"Public Equity Offering" means an underwritten primary public offering of
Common Stock of our company pursuant to an effective registration statement
under the Securities Act.
"Restricted Subsidiary" means any Subsidiary of our company other than an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, and its successors.
"Senior Indebtedness" means the following obligations of our company or a
Subsidiary Guarantor, whether outstanding on the Closing Date or thereafter
Incurred:
(1) all Indebtedness and all other monetary obligations (including, without
limitation, expenses, fees, principal, interest reimbursement obligations
under letters of credit and indemnities payable in connection therewith)
of our company or a Subsidiary Guarantor under (or in respect of) the
Credit Facility or any Interest Rate Agreement or Currency Agreement
relating to the Indebtedness under the Credit Facility and
(2) all other Indebtedness and all other monetary obligations of our company
or a Subsidiary Guarantor (other than the Notes), including principal and
interest on such Indebtedness, unless such Indebtedness, by its terms or
by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is on a parity with, or subordinated in right of
payment to, the Notes or any Subsidiary Guarantee;
Notwithstanding anything to the contrary in clauses (1) and (2) above,
Senior Indebtedness shall not include:
(1) any Indebtedness of our company that, when Incurred, was without
recourse to us,
(2) any Indebtedness of our company to a Subsidiary or to a joint venture in
which we have an interest,
(3) any Indebtedness of our company, to the extent not permitted by the
"Limitation on Indebtedness and Issuances of Preferred Stock" covenant or
the "Limitation on Senior Subordinated Indebtedness" covenant described
below,
(4) any repurchase, redemption or other obligation in respect of
Disqualified Stock,
(5) any Indebtedness to any employee of our company or any of our
Subsidiaries,
(6) any liability for taxes owed or owing by us or any of our Subsidiaries
or
(7) any Trade Payables.
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"Senior Subordinated Obligations" means any principal of, premium, if any,
or interest on the exchange notes payable pursuant to the terms of the exchange
notes or the Subsidiary Guarantees or upon acceleration, including any amounts
received upon the exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent relating to the
purchase price of the exchange notes and the Subsidiary Guarantees or amounts
corresponding to such principal, premium, if any, or interest on the exchange
notes.
"Significant Subsidiary" means, at any date of determination, any Subsidiary
that, together with its Subsidiaries:
(1) for the most recent fiscal year of our company, accounted for more than
10% of the consolidated revenues of our company and our Subsidiaries or
(2) as of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of our company and our Subsidiaries, all as set forth
on our most recently available consolidated financial statements for such
fiscal year.
"Stated Maturity" means, (1) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (2) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Subsidiary Guarantor" means (1) each of our Restricted Subsidiary and (2)
any other Subsidiary of our company that executes a Subsidiary Guarantee
pursuant to the "Additional Subsidiary Guarantees" covenant described below.
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any agency thereof
or obligations fully and unconditionally guaranteed by the United States
of America or any agency thereof;
(2) demand deposit accounts, time deposit accounts, certificates of deposit
and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America, and which
bank or trust company has capital, surplus and undivided profits
aggregating in excess of $100 million (or the foreign currency equivalent
thereof and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker
dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank or trust company meeting the qualifications described in
clause (2) above;
(4) commercial paper, maturing not more than one year after the date of
acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States
of America, any state thereof or any foreign country recognized by the
United States of America with a rating at the time as of which any
investment therein is made of "P-2" (or higher) according to Moody's or
"A-2" (or higher) according to S&P;
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(5) securities with maturities of one year or less from the date of
acquisition issued or fully and conditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's; and
(6) other dollar demoninated securities issued by any Person incorporated in
the United States rated at least "A" or the equivalent by S&P or at least
"A2" or the equivalent by Moody's and in each case either (A) maturing
not more than one year after the date of acquisition or (B) which are
subject to a repricing arrangement (such as a Dutch auction) not more
than one year after the date of acquisition (and reprices at least yearly
thereafter) which the Person making the investment believes in good faith
will permit such Person to sell such security at par in connection with
such repricing mechanism.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any Indebtedness
by our company or any of its Restricted Subsidiaries, the date such Indebtedness
is to be Incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of our company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below, and
(2) any Subsidiary of an Unrestricted Subsidiary;
PROVIDED that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with us or any of our Restricted Subsidiaries unless the terms of any
such agreement, contract, arrangement or understanding are no less
favorable to us or such Restricted Subsidiary than those that might be
obtained at the time from Persons who are not our Affiliates;
(3) is a Person with respect to which neither we nor any of our Restricted
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified
levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of our company or any of our Restricted
Subsidiaries.
If, at any time, any Unrestricted Subsidiary would fail to meet the
preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of our company as of such date and, if such Indebtedness is not
permitted to be incurred as of such date under the "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant described below, we shall be in
default of such covenant.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United
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States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof at any time prior to the Stated Maturity of the
Notes, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U. S. Government
Obligation held by such custodian for the account of the holder of a 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
U. S. Government Obligation or the specific payment of interest on or principal
of the U.S. Governmental Obligation evidenced by such depository receipt.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
COVENANTS
LIMITATION ON INDEBTEDNESS AND ISSUANCES OF PREFERRED STOCK
We will not, and will not permit any of our Restricted Subsidiaries to,
Incur any Indebtedness (other than the Notes and any guarantees thereof issued
on the Closing Date and other Indebtedness existing on the Closing Date) and we
will not issue any Disqualified Stock and will not permit any of our Restricted
Subsidiaries to issue any shares of preferred stock; PROVIDED that we may Incur
Indebtedness or issue Disqualified Stock and our Restricted Subsidiaries may
Incur Indebtedness or issue Disqualified Stock or preferred stock if, after
giving effect to the Incurrence of such Indebtedness or the issuance of such
Disqualified Stock or preferred stock and the receipt and application of the
proceeds therefrom, the Interest Coverage Ratio would be greater than 2.0:1.
Notwithstanding the foregoing, we and any Restricted Subsidiary (except as
specified below) may Incur each and all of the following:
(1) Subject to the provisions of the third paragraph of the covenant
entitled "Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest," Indebtedness and letters of credit under the
Credit Facility in an aggregate principal amount at any one time
outstanding under this clause (1) (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of our
company and our Subsidiaries thereunder) not to exceed $275.0 million
less any amount of such Indebtedness permanently repaid as provided under
the "Limitation on Asset Sales" covenant described below;
(2) Subject to the provisions of the third paragraph of the covenant
entitled "Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest," Indebtedness in an aggregate principal amount at
any one time outstanding under this clause (2) not to exceed $150.0
million less any amount of such Indebtedness permanently repaid as
provided under the "Limitation on Asset Sales" covenant described below;
PROVIDED that:
(A) the initial borrowing under the agreement governing such Indebtedness
is used exclusively to purchase at least 29.0% of the
then-outstanding interests of Indiana Gaming Company L.P.;
(B) all of the initial lenders or purchasers of such Indebtedness are
Permitted Lenders;
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(C) at the time of the initial borrowing under the agreement governing
such Indebtedness, after giving pro forma effect to the issuance of
all Indebtedness which is outstanding as of the date of determination
pursuant to the Credit Facility and which may otherwise be incurred
under such Credit Facility, the Interest Coverage Ratio would be at
least 1.5 to 1; and
(D) such Indebtedness is not issued with any equity or cash flow
participations.
(3) Indebtedness owed to us evidenced by a promissory note or to any
Restricted Subsidiary; PROVIDED that:
(A) if our company or any Subsidiary Guarantors is the obligor on such
Indebtedness and the payee is not us or a Subsidiary Guarantor, such
Indebtedness must be expressly subordinated to the prior payment in
full in cash of all Senior Subordinated Obligations with respect to
the exchange notes, in the case of us, or the Subsidiary Guarantee,
in the case of a Subsidiary Guarantor and
(B) any event which results in any such Restricted Subsidiary ceasing to
be a Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to us another Restricted Subsidiary) shall
be deemed, in each case, to constitute an Incurrence of such
Indebtedness not permitted by this clause (3);
(4) Indebtedness issued in exchange for, or the net proceeds of which are
used to refinance or refund, then outstanding Indebtedness Incurred under
clauses (7), (8), (9) and (10) of this paragraph, and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); PROVIDED that
Indebtedness the proceeds of which are used to refinance or refund the
exchange notes or Indebtedness that is PARI PASSU with, or subordinated
in right of payment to, the exchange notes shall only be permitted under
this clause (4) if:
(A) in case the exchange notes are refinanced in part or the Indebtedness
to be refinanced is PARI PASSU with the exchange notes, such new
Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made PARI PASSU with, or subordinate in right of payment
to, the remaining exchange notes,
(B) in case the Indebtedness to be refinanced is subordinated in right of
payment to the exchange notes, such new Indebtedness, by its terms or
by the terms of any agreement or instrument pursuant to which such
new Indebtedness is issued or remains outstanding, is expressly made
subordinate in right of payment to the exchange notes at least to the
extent that the Indebtedness to be refinanced is subordinated to the
exchange notes and
(C) such new Indebtedness, determined as of the date of Incurrence of
such new Indebtedness, does not mature prior to the Stated Maturity
of the Indebtedness to be refinanced or refunded, and the Average
Life of such new Indebtedness is at least equal to the remaining
Average Life of the Indebtedness to be refinanced or refunded;
and PROVIDED FURTHER that in no event may our Indebtedness that is PARI PASSU or
subordinated in right of payment to the exchange notes be refinanced by means of
any Indebtedness of any Restricted Subsidiary pursuant to this clause (4);
(5) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; PROVIDED that such agreements
(I) are designed solely to protect us or our Restricted Subsidiaries
against fluctuations in foreign currency exchange rates or interest rates
and (II) do not increase the Indebtedness of the obligor outstanding at
any time other than as a result of
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fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder; and (C)
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of our
company or any of our Restricted Subsidiaries pursuant to such
agreements, in any case Incurred in connection with the disposition of
any business, assets or Restricted Subsidiary (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary for the purpose of financing
such acquisition), in a principal amount not to exceed the gross proceeds
actually received by us or any Restricted Subsidiary in connection with
such disposition;
(6) the incurrence by us and the Subsidiary Guarantors of Indebtedness
represented by the exchange notes and the related Subsidiary Guarantees
to be issued pursuant to the Registration Rights Agreement;
(7) Indebtedness of our company, to the extent the net proceeds thereof are
promptly (A) used to purchase exchange notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the exchange notes as described below under "Defeasance";
(8) Guarantees of Indebtedness of our company or one of our Restricted
Subsidiaries or any of the Subsidiary Guarantors that was permitted to be
incurred by another provision of this covenant;
(9) FF&E Indebtedness, provided that the amount of such Indebtedness in the
aggregate outstanding at any time, including all refinancings,
replacements and refundings thereof, will not exceed $5.0 million
multiplied by the number of Material Casinos then operated by us or our
Restricted Subsidiaries; and
(10) Indebtedness of our company (in addition to Indebtedness permitted
under clauses (1) through (9) above) in an aggregate principal amount
outstanding at any time (together with refinancings thereof) not to
exceed $15.0 million.
Notwithstanding any other provision of this "Limitation on Indebtedness and
Issuances of Preferred Stock" covenant, the maximum amount of Indebtedness that
we or a Restricted Subsidiary may Incur pursuant to this "Limitation on
Indebtedness and Issuances of Preferred Stock" covenant shall not be deemed to
be exceeded, with respect to any outstanding Indebtedness due solely to the
result of fluctuations in the exchange rates of currencies. For purposes of
determining any particular amount of Indebtedness under this "Limitation on
Indebtedness and Issuances of Preferred Stock" covenant,
(1) Indebtedness incurred under the Credit Facility on or prior to the
Closing Date shall be treated as Incurred pursuant to clause (1) of the
second paragraph of this "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant,
(2) Guarantees, Liens or obligations with respect to letters of credit
supporting Indebtedness which is included in the determination of such
particular amount shall not be included and
(3) any Liens granted pursuant to the equal and ratable provisions referred
to in the "Limitation on Liens" covenant described below shall not be
treated as Indebtedness.
For purposes of determining compliance with this "Limitation on Indebtedness and
Issuances of Preferred Stock" covenant, in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses (other than Indebtedness referred to in clause
(1) of the preceding sentence), we, in our sole discretion, shall classify, and
from time to time may reclassify, such item of Indebtedness and only be required
to include the amount and type of such Indebtedness in one of such clauses.
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LIMITATION ON RESTRICTED PAYMENTS
We will not, and will not permit any Restricted Subsidiary to, directly or
indirectly:
(1) declare or pay any dividend or make any distribution on or with respect
to our or any Restricted Subsidiary's Capital Stock (other than dividends
or distributions payable solely in shares of its Capital Stock (other
than Disqualified Stock) or in options, warrants or other rights to
acquire shares of such Capital Stock) held by Persons other than us or
any of our Restricted Subsidiaries,
(2) purchase, redeem, retire or otherwise acquire for value any shares of
Capital Stock of our company or any Subsidiary of our company (including
options, warrants or other rights to acquire such shares of Capital
Stock) held by any Person;
(3) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of our company or a Subsidiary
Guarantor that is subordinated in right of payment to the exchange notes
or any Subsidiary Guarantee, as the case may be; or
(4) make any Investment, other than a Permitted Investment, in any Person
(such payments or any other actions described in clauses (1) through (4)
above being collectively "Restricted Payments");
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing,
(B) we could not Incur at least $1.00 of Indebtedness under the first
paragraph of the "Limitation on Indebtedness and Issuances of Preferred
Stock" covenant or
(C) the aggregate amount of all Restricted Payments, together with the
amount of any Investment that was made pursuant to clause (7)(B)(ii) of
the definition of "Permitted Investments" (the amount of any Restricted
Payment with a Fair Market Value in excess of $1.0 million, if other than
in cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the
Board of Directors), made after the Closing Date shall exceed the sum of
(I) 50% of the aggregate amount of the Adjusted Consolidated Net Income
(or, if the Adjusted Consolidated Net Income is a loss, minus 100%
of the amount of such loss) (determined by excluding income
resulting from transfers of assets by the Company or a Restricted
Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning
on the first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter
preceding the Transaction Date for which reports have been filed
with the Commission or provided to the Trustee PLUS
(II) the aggregate Net Cash Proceeds received by us after the Closing
Date from the issuance and sale permitted by the Indenture of its
Capital Stock (other than Disqualified Stock) to a Person who is not
our Subsidiary, including an issuance or sale permitted by the
Indenture of Indebtedness of our company for cash subsequent to the
Closing Date upon the conversion of such Indebtedness into our
Capital Stock (other than Disqualified Stock), or from the issuance
to a Person who is not Subsidiary of our company of any options,
warrants or other rights to acquire our Capital Stock (in each case,
exclusive of any Disqualified Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or are
required to be redeemed, prior to the Stated Maturity of the Notes)
PLUS
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(III) an amount equal to the net reduction in Investments treated as
Restricted Payments in any Person resulting from payments of
interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to us or any
Restricted Subsidiary or from the Net Cash Proceeds from the sale
of any such Investment (except, in each case, to the extent any
such payment or proceeds are included in the calculation of
Adjusted Consolidated Net Income and except, in each case, for any
such sale that is not included in the definition of "Asset Sales"),
or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in each case, the amount of
Investments previously made by us or any Restricted Subsidiary in
such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(1) the payment of any dividend within 60 days after the date of declaration
thereof if, at said date of declaration, such payment would comply with
the foregoing paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (4) of the second paragraph of the "Limitation on
Indebtedness and Issuances of Preferred Stock" covenant;
(3) the repurchase, redemption or other acquisition of Capital Stock of our
company or an Unrestricted Subsidiary (or options, warrants or other
rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of our Capital
Stock (other than Disqualified Stock), or options, warrants or other
rights to acquire such Capital Stock;
(4) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of our Indebtedness
which is subordinated in right of payment to the exchange notes in
exchange for, or out of the proceeds of, a substantially concurrent
offering of, shares of our Capital Stock (other than Disqualified Stock),
or options, warrants or other rights to acquire such Capital Stock;
(5) payments or distributions, to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or
substantially all of the property and assets of our company;
(6) pro rata dividends or distributions on Common Stock of Restricted
Subsidiaries held by minority stockholders;
(7) the redemption or repurchase of any debt or equity securities of our
company or any Restricted Subsidiary required by, and in accordance with
any order of any Gaming Authority, PROVIDED, that we have used our
reasonable best efforts to effect a disposition of such securities to a
third-party and have been unable to do so; or
(8) other Restricted Payments in an aggregate amount not to exceed $15.0
million
PROVIDED that, except in the case of clauses (1) and (3), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (2) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (3) or (4)
thereof), the Net Cash Proceeds from any issuance of Capital Stock referred to
in clauses (3) and (4), and any Investment that is made pursuant to
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clause 7(B)(ii) of the definition of Permitted Investments shall be included in
calculating whether the conditions of clause (C) of the first paragraph of this
"Limitation on Restricted Payments" covenant have been met with respect to any
subsequent Restricted Payments. In the event the proceeds of an issuance of our
Capital Stock are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is PARI PASSU with the exchange notes, then the
Net Cash Proceeds of such issuance shall be included in clause (C) of the first
paragraph of this "Limitation on Restricted Payments" covenant only to the
extent such proceeds are not used for such redemption, repurchase or other
acquisition of Indebtedness.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
We will not, and will not permit any Restricted Subsidiary to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to
(1) pay dividends or make any other distributions permitted by applicable
law on any Capital Stock of such Restricted Subsidiary owned by us or any
other Restricted Subsidiary,
(2) pay any Indebtedness owed to us or any other Restricted Subsidiary,
(3) make loans or advances to our company or any other Restricted Subsidiary
or
(4) transfer any of our property or assets to ourselves or any other
Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Facility, the Indenture or
any other agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; PROVIDED that
the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(2) existing under or by reason of applicable law or by order of any Gaming
Authority;
(3) existing with respect to any Person or the property or assets of such
Person acquired by us or any Restricted Subsidiary, existing at the time
of such acquisition and not incurred in contemplation thereof, which
encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property
or assets of such Person so acquired;
(4) in the case of clause (4) of the first paragraph of this "Limitation on
Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries" covenant, (A) that restrict in a customary manner the
subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of our company
or any Restricted Subsidiary not otherwise prohibited by the Indenture or
(C) arising or agreed to in the ordinary course of business, not relating
to any Indebtedness, and that do not, individually or in the aggregate,
detract from the value of property or assets of our company or any
Restricted Subsidiary in any manner material to us or any Restricted
Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary; or
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(6) contained in the terms of any Indebtedness or any agreement pursuant to
which such Indebtedness was issued if (A) the encumbrance or restriction
applies only in the event of a payment default or a default with respect
to a financial covenant contained in such Indebtedness or agreement, (B)
the encumbrance or restriction is not materially more disadvantageous to
the Holders of the Notes than is customary in comparable financings (as
determined by us) and (C) we determine that any such encumbrance or
restriction will not materially affect our ability to make principal or
interest payments on the exchange notes).
Nothing contained in this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant shall prevent us or any Restricted
Subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in the "Limitation on Liens" covenant, (2) restricting
the sale or other disposition of property or assets of our company or any of its
Restricted Subsidiaries that secure Indebtedness of our company or any of its
Restricted Subsidiaries or (3) distributing cash flow from Indiana Gaming
Company L.P. in accordance with the provisions of its partnership agreement.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
We will not sell, and will not permit any Restricted Subsidiary, directly or
indirectly, to issue or sell, any shares of Capital Stock of a Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except:
(1) to us or a Wholly Owned Restricted Subsidiary;
(2) issuances of director's qualifying shares or sales to foreign nationals
of shares of Capital Stock of foreign Restricted Subsidiaries, to the
extent required by applicable law; or
(3) if, (i) such issuance or sale is of all the Capital Stock of such
Restricted Subsidiary and (ii) the Net Cash Proceeds of any such issuance
or sale are applied in accordance with clause (A) or (B) of the
"Limitation on Asset Sales" covenant described below.
ADDITIONAL SUBSIDIARY GUARANTEES
If (1) a Restricted Subsidiary acquired or created after the date of the
Indenture has at any time a Fair Market Value of more than $250,000 or (2) any
Subsidiary of our company becomes a borrower or a guarantor under the Credit
Facility, then that Subsidiary must execute a Subsidiary Guarantee and deliver
an opinion of counsel, in accordance with the terms of the Indenture pursuant to
which such Subsidiary will become a Subsidiary Guarantor, on a senior
subordinated basis (pursuant to subordination provisions substantially similar
to those described above under the caption "--Ranking"), of our payment
obligations under the exchange notes and the Indenture; PROVIDED that the
aggregate Fair Market Value of our Restricted Subsidiaries that are not
Subsidiary Guarantors will not at any time exceed $1.0 million.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, our company or any Restricted
Subsidiary; PROVIDED that:
(1) the value of all outstanding Investments owned by us and its Restricted
Subsidiaries in the Restricted Subsidiary being so designated will be
deemed to be an Investment made by us or such Restricted Subsidiary as of
the time of such designation
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(2) the Investment referred to in clause (1) of this proviso would be
permitted under the "Limitation on Restricted Payments" covenant
described above;
(3) no Subsidiary of our company with an interest in Indiana Gaming Company
L.P., may become an Unrestricted Subsidiary; and
(4) such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
Indiana Gaming Company L.P. will initially be designated an Unrestricted
Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED that:
(1) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such designation and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if incurred at such time, have
been permitted to be Incurred (and shall be deemed to have been Incurred)
for all purposes of the Indenture.
We shall designate Indiana Gaming Company L.P. as a Restricted Subsidiary if
we or our Subsidiaries acquire all of the then outstanding Minority Interests in
Indiana Gaming Company L.P.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution of the
Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.
LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
We will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
10% or more of any class of Capital Stock of our company or with any Affiliate
of our company or any Restricted Subsidiary, unless:
(1) such Affiliate Transaction is on fair and reasonable terms that are no
less favorable to us or the relevant Restricted Subsidiary than those
that would have been obtained, at the time of such transaction or, if
such transaction is pursuant to a written agreement, at the time of
execution of the agreement providing therefor, in a comparable
transaction by us or such Subsidiary with a Person that is not such a
holder or an Affiliate; and
(2) we deliver to the Trustee:
(a) with respect to any transaction or series of related transactions the
aggregate amount of which exceeds $2.0 million in value, a resolution
of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing
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The foregoing limitation does not limit, and shall not apply to:
(1) any transaction solely between us and any of our Wholly Owned Restricted
Subsidiaries or solely between Wholly Owned Restricted Subsidiaries;
(2) the payment of reasonable and customary regular fees and indemnities to
our directors who are no our employees;
(3) any payments or other transactions pursuant to any tax-sharing agreement
between us and any other Person with which we file a consolidated tax
return or with which we are part of a consolidated group for tax
purposes;
(4) any sale of shares of our Capital Stock (other than Disqualified Stock);
or
(5) any Restricted Payments not prohibited by the "Limitation on Restricted
Payments" covenant.
LIMITATION ON LIENS
We will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind securing Indebtedness, Attributable Debt or trade payables on any asset now
owned or hereafter acquired, except Permitted Liens.
LIMITATION ON ASSET SALES
We will not, and will not permit any Restricted Subsidiary to, consummate
any Asset Sale, unless (i) the consideration received by us or such Restricted
Subsidiary is at least equal to the fair market value of the assets sold or
disposed of and (ii) at least 75% of the consideration received consists of cash
or Temporary Cash Investments or the assumption of Indebtedness of our company
or any Restricted Subsidiary (other than Indebtedness to us or any Restricted
Subsidiary), PROVIDED that we or such Restricted Subsidiary are irrevocably and
unconditionally released from all liability under such Indebtedness.
Within twelve months after the receipt of any Net Cash Proceeds from one or
more Asset Sales occurring on or after the Closing Date, we shall or shall cause
the relevant Restricted Subsidiary to:
(1) (A) apply an amount equal to such Net Cash Proceeds to permanently repay
Senior Indebtedness of our company or any Subsidiary Guarantor or
Indebtedness of any other Restricted Subsidiary, in each case owing to a
Person other than us or any of our Restricted Subsidiaries; or
(B) invest an equal amount, or the amount not so applied pursuant to
clause (A) (or enter into a definitive agreement committing to so
invest within 12 months after the date of such agreement), in
property or assets (other than current assets) of a nature or type or
that are used in a business (or in a company having property and
assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the
business of, our company and its Restricted Subsidiaries existing on
the date of such investment and
(2) apply (no later than the end of the 12-month period referred to in
clause (1)(B)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (1)) as provided in the following
paragraph of this "Limitation on Asset Sales" covenant.
The amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (1)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
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If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $10.0 million, we must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders (and if required by the terms
of any Indebtedness that is PARI PASSU with the exchange notes ("Pari Passu
Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro rata
basis an aggregate principal amount of exchange notes (and Pari Passu
Indebtedness) equal to the Excess Proceeds on such date, at a purchase price
equal to 100% of the principal amount thereof, plus, in each case, accrued
interest and Additional Interest, if any, to the Payment Date. If the aggregate
principal amount of exchange notes and any such Pari Passu Indebtedness tendered
by holders thereof exceeds the amount of Excess Proceeds, the exchange notes and
Pari Passu Indebtedness shall be purchased on a pro rata basis. Upon the
completion of any such Offers to Purchase, regardless of the amount of exchange
notes validly tendered, the amount of Excess Proceeds shall be reset to zero.
REPURCHASE OF EXCHANGE NOTES IN CONNECTION WITH SALE OF LAWRENCEBURG INTEREST
The Indenture will provide that, if (i) Indiana Gaming Company L.P. is an
Unrestricted Subsidiary and (ii) the amount of Consolidated EBITDA derived from
the Lawrenceburg Casino exceeds 50% of Consolidated EBITDA of our company and
its Restricted Subsidiaries:
(1) we and our Subsidiaries will not, and will not permit any of our
Subsidiaries to, in one or a series of related transactions, sell or
otherwise transfer any of our interest in Indiana Gaming Company L.P.,
whether directly by a sale of such interest or indirectly by the sale,
issuance or transfer of Capital Stock of any Subsidiary of our company
directly or indirectly owning such interest (a "Lawrenceburg Sale") and
(2) as long as we or a Restricted Subsidiary serves as general partner of
Indiana Gaming Company L.P., Indiana Gaming Company L.P. will not engage
in a sale of all or substantially all its assets, by way of merger,
consolidation or otherwise (a "Property Sale"),
unless:
(1) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a PRO FORMA basis to,
such Lawrenceburg Sale or Property Sale;
(2) our Board of Directors determines in good faith that we or such
Subsidiary receives fair market value for such Lawrenceburg Sale or
Property Sale;
(3) our Board of Directors receives a favorable written opinion as to the
fairness of the transaction to us from a financial point of view issued
by an investment banking firm of nationally recognized standing; and
(4) within 120 business days of the date of such Lawrenceburg Sale or
Property Sale, either:
(A) we redeem all of the exchange notes upon not less than 30 days prior
written notice mailed by first-class mail to each Holder's registered
address or
(B) we consummate an irrevocable, unconditional cash offer to purchase at
least an aggregate principal amount (the "Tender Offer Amount") of
exchange notes that, if the we purchased all such exchange notes,
would result in the Debt to EBITDA Ratio being no greater than 3.5 to
1,
in each case, at the purchase price set forth below plus accrued and
unpaid interest and Additional Interest, if any, thereon, to the
repurchase date, if such Lawrenceburg Sale or
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Property Sale occurs during the twelve-month period beginning on June 1
of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
1999.............................................................................. 110.750%
2000.............................................................................. 109.675%
2001.............................................................................. 108.600%
2002.............................................................................. 107.525%
2003.............................................................................. 106.450%
</TABLE>
and, thereafter at the prices set forth under the caption "Optional
Redemption" above.
Upon expiration of the offer described in clause (B) above, we will purchase all
exchange notes properly tendered (on a PRO RATA basis if the principal amount of
Notes tendered exceeds the Tender Offer Amount). After the purchase of all
exchange notes properly tendered, any remaining proceeds of the Lawrenceburg
Sale or Property Sale will be available for general corporate purposes.
Upon the consummation of the offer described in clause (B) above, the
interest rate on all of the remaining outstanding exchange notes will increase
by 0.50% per annum. If we comply with the preceding paragraph of this
"Repurchase of Exchange Notes in Connection with Sale of Lawrenceburg Interest"
covenant with respect to a Lawrenceburg Sale or Property Sale, the provisions of
the "Limitation on Asset Sales" and "Repurchase of Exchange Notes upon a Change
of Control" covenants shall not apply with respect to such Lawrenceburg Sale or
Property Sale.
Following a Lawrenceburg Sale or a Property Sale as described in the first
paragraph of this covenant, clauses (1) and (2) of the second paragraph under
the "Limitation on Indebtedness and Issuances of Preferred Stock" covenant
described above shall be of no further force or effect and neither we nor any of
our Restricted Subsidiaries shall be permitted to incur any Indebtedness
pursuant to such clauses; PROVIDED that, any Indebtedness incurred prior to such
Lawrenceburg Sale or Property Sale under such clauses that remains outstanding
after such Lawrenceburg Sale or Property Sale will not be deemed to be a
violation of this provision or the "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant described above.
The Indenture will also provide that if (i) Indiana Gaming Company L.P. is
an Unrestricted Subsidiary and (ii) the amount of Consolidated EBITDA derived
from the Lawrenceburg casino is less than or equal to 50% of Consolidated EBITDA
of our company and our Restricted Subsidiaries:
(1) we and our Subsidiaries will not, and will not permit any of our
Subsidiaries to, consummate a Lawrenceburg Sale unless we treat such
Lawrenceburg Sale as an "Asset Sale" and comply with the "Limitation on
Asset Sales" covenant described above; and
(2) as long as we or a Restricted Subsidiary serves as general partner of
Indiana Gaming Company L.P., Indiana Gaming Company L.P. will not engage
in a Property Sale unless
(A) the consideration received by us or such Restricted Subsidiary is at
least equal to the fair market value of the assets sold or disposed
of,
(B) at least 75% of the consideration received consists of cash or
Temporary Cash Investments; and
(C) our and any Restricted Subsidiaries' pro rata share of the Net Cash
Proceeds of such Property Sale are distributed to us or any
Restricted Subsidiary of our company and we utilize such Net Cash
Proceeds in accordance with the second and third paragraphs of the
"Limitation or Asset Sales" covenant described above.
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We shall cause distributions from Indiana Gaming Company L.P. to The Indiana
Gaming Company to be promptly distributed to us.
LIMITATION ON SALE-LEASEBACK TRANSACTIONS
We will not, and will not permit any of our Restricted Subsidiaries to,
enter into any sale and leaseback transaction; PROVIDED that we or any
Restricted Subsidiary may enter into a sale and leaseback transaction if:
(1) we or such Restricted Subsidiary, as applicable, could have incurred
Indebtedness in an amount equal to the Attributable Debt relating to such
sale and leaseback transaction under (i) the Interest Coverage Ratio test
in the first paragraph of the "Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant or (ii) clause (9) of the second paragraph of
the "Incurrence of Indebtedness and Issuance of Preferred Stock"
covenant;
(2) the gross cash proceeds of that sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by the
Board of Directors and set forth in an Officers' Certificate delivered to
the Trustee, of the property that is the subject of that sale and
leaseback transaction; and
(3) the transfer of assets in that sale and leaseback transaction is
permitted by, and we apply the proceeds of such transaction in compliance
with, the covenant described above under the caption "--Asset Sales."
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS
We shall not Incur any Indebtedness that is subordinate in right of payment
to any Senior Indebtedness unless such Indebtedness is PARI PASSU with, or
subordinated in right of payment to, the exchange notes; PROVIDED that the
foregoing limitation shall not apply to distinctions between categories of our
Senior Indebtedness that exist by reason of any Liens or Guarantees arising or
created in respect of some but not all such Senior Indebtedness.
LIMITATION ON CERTAIN ACTIVITIES OF INDIANA GAMING COMPANY L.P.
The Indenture provides that as long as we or a Restricted Subsidiary are the
general partner of Indiana Gaming Company L.P., we will not permit Indiana
Gaming Company L.P. to Incur any Indebtedness other than Indebtedness which:
(1) is Non-Recourse Indebtedness; and
(2) by its terms, contains no restrictions of the type prohibited by
"Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries."
The Indenture will provide that as long as we or a Restricted Subsidiary are
a partner of Indiana Gaming Company L.P., we will not permit Indiana Gaming
Company L.P. to amend the provisions of its partnership agreement dealing with
distributions in a manner which is adverse to the Holders of the exchange notes
or the provisions of its partnership agreement with respect to partnership
purpose, which is limited to the operation of the Lawrenceburg Casino.
LIMITATION ON BUSINESS ACTIVITIES
We will not, and will not permit any Subsidiary to, engage in any business
other than the gaming and hotel businesses and such business activities as are
incidental or related or complementary thereto, except to such extent as would
not be material to us and our Subsidiaries taken as a whole.
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LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture prohibits us and the Subsidiary Guarantors from being required
to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended) or from otherwise becoming subject
to regulation under the Investment Company Act.
PAYMENTS FOR CONSENT
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, pay or cause to be paid any consideration to or for the benefit of
any Holder of exchange notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the exchange
notes unless such consideration is offered to be paid and is paid to all Holders
of the exchange notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
REPURCHASE OF EXCHANGE NOTES UPON A CHANGE OF CONTROL
We must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all exchange notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest and Additional Interest, if any, to the Payment Date.
There can be no assurance that we will have sufficient funds available at
the time of any Change of Control to make any debt payment (including
repurchases of Notes) required by the foregoing covenant (as well as may be
contained in any other of our securities which might be outstanding at the
time). The above covenant requiring us to repurchase the exchange notes will,
unless consents are obtained, require us to repay all indebtedness then
outstanding which by its terms would prohibit such exchange note repurchase,
either prior to or concurrently with such exchange note repurchase.
COMMISSION REPORTS AND REPORTS TO HOLDERS
Whether or not we are then required to file reports with the Commission, we
shall file with the Commission all such reports and other information as we
would be required to file with the Commission by Sections 13(a) or 15(d) under
the Securities Exchange Act of 1934 if it were subject thereto. We shall supply
the Trustee and each Holder or shall supply to the Trustee for forwarding to
each such Holder, without cost to such Holder, copies of such reports and other
information.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture:
(1) default in the payment of principal of (or premium, if any, on) any Note
when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise whether or not such payment is prohibited by the
provisions described above under "--Ranking";
(2) default in the payment of interest on any Note when the same becomes due
and payable, and such default continues for a period of 30 days whether
or not such payment is prohibited by the provisions described above under
"--Ranking";
(3) default in the performance or breach of the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or
substantially all of our assets or the failure to make or consummate an
Offer to Purchase in accordance with the "Limitation on Asset Sales" or
"Repurchase of Exchange Notes upon a Change of Control" covenant;
(4) we default in the performance of or breaches any covenant or agreement
in the Indenture or under the exchange notes (other than a default
specified in clause (1), (2) or (3) above) and such default or breach
continues for a period of 30 consecutive days after written notice by
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the Trustee or the Holders of 25% or more in aggregate principal amount
of the exchange notes;
(5) there occurs with respect to any issue or issues of Indebtedness of our
company or any Significant Subsidiary having an outstanding principal
amount of $10.0 million or more in the aggregate for all such issues of
all such Persons, whether such Indebtedness now exists or shall hereafter
be created, (I) an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the
final (but not any interim) fixed maturity and such defaulted payment
shall not have been made, waived or extended within 30 days of such
payment default;
(6) any final judgment or order (not covered by insurance) for the payment
of money in excess of $10.0 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered us or
any Significant Subsidiary and shall not be paid or discharged, and there
shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all
such Persons to exceed $10.0 million during which a stay of enforcement
of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(7) a court having jurisdiction in the premises enters a decree or order for
(A) relief in respect of us or any Significant Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of our company or any Significant Subsidiary or for all or
substantially all of the property and assets of our company or any
Significant Subsidiary or (C) the winding up or liquidation of the
affairs of our company or any Significant Subsidiary and, in each case,
such decree or order shall remain unstayed and in effect for a period of
30 consecutive days;
(8) we or any Significant Subsidiary (A) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (B) consent to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of our company or any
Significant Subsidiary or for all or substantially all of the property
and assets of our company or any Significant Subsidiary or (C) effect any
general assignment for the benefit of creditors;
(9) except as permitted by the Indenture, any Subsidiary Guarantee shall be
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 its Subsidiary Guarantee; or
(10) the revocation, termination, suspension or other cessation of
effectiveness for a period or more than 90 consecutive days of any Gaming
License that results in the cessation or suspension of gaming operations
at the Lawrenceburg Casino or any Material Casino; PROVIDED that any
voluntary relinquishment of or failure to renew after revocation a Gaming
License of a Material Casino if such relinquishment or failure to renew
is, in the reasonable, good faith judgment of our Board of Directors,
evidenced by a resolution of such Board, both desirable in the conduct of
the business of our company and its Subsidiaries, taken as a whole, and
not disadvantageous in any material respect to the holders of the Notes
shall not constitute an Event of Default.
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If an Event of Default (other than an Event of Default specified in clause
(7) or (8) above that occurs with respect to us) occurs and is continuing under
the Indenture, the Trustee or the Holders of at least 25% in aggregate principal
amount of the exchange notes, then outstanding, by written notice to us (and to
the Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest and Additional Interest, if any, on the exchange notes to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest and Additional Interest, if any, shall
be immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in clause (5) above has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (5) shall be remedied or cured by us or the relevant Significant
Subsidiary or waived by the holders of the relevant Indebtedness within 60 days
after the declaration of acceleration with respect thereto. If an Event of
Default specified in clause (7) or (8) above occurs with respect to us, the
principal of, premium, if any, and accrued interest or Additional Interest, if
any, on the exchange notes then outstanding shall IPSO FACTO become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of at least a majority in principal
amount of the outstanding exchange notes by written notice to us and to the
Trustee, may waive all past defaults and rescind and annul a declaration of
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal of, premium, if any, and accrued interest
and Additional Interest, if any, on the exchange notes that have become due
solely by such declaration of acceleration, have been cured or waived and (ii)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. For information as to the waiver of defaults, see
"--Modification and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding exchange notes may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of exchange notes not joining in the
giving of such direction and may take any other action it deems proper that is
not inconsistent with any such direction received from Holders of exchange
notes.
A Holder may not pursue any remedy with respect to the Indenture or the
exchange notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event of
Default;
(2) the Holders of at least 25% in aggregate principal amount of outstanding
exchange notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to the
Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding exchange notes do not give the
Trustee a direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder of an exchange
note to receive payment of the principal of, premium, if any, or accrued
interest and Additional Interest, if any, on, such exchange note or to bring
suit for the enforcement of any such payment, on or after the due date expressed
in the exchange notes, which right shall not be impaired or affected without the
consent of the Holder.
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The Holders of a majority in aggregate principal amount of the exchange
notes then outstanding, by notice to the Trustee, may on behalf of the Holders
of all of the exchange notes waive any existing Default or Event of Default and
its consequences under the Indenture, except a continuing Default or Event of
Default in the payment of the principal of or premium, if any, or interest on
the exchange notes.
The Indenture will require certain of our officers to certify, on or before
a date not more than 90 days after the end of each fiscal year, that a review
has been conducted of the activities of our company and our Restricted
Subsidiaries and our company's and Restricted Subsidiaries' performance under
the Indenture and that we have fulfilled all obligations thereunder, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default and the nature and status thereof. We will also be obligated
to notify the Trustee and the agent under the Credit Facility of any default or
defaults in the performance of any covenants or agreements under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We will not consolidate with, merge with or into, or sell, convey, transfer,
lease or otherwise dispose of all or substantially all of our property and
assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to any Person or permit any Person to merge with
or into us unless:
(1) we shall be the continuing Person, or the Person (if other than us)
formed by such consolidation or into which we are merged or that acquired
or leased our property and assets shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, all of our obligations
on all of the exchange notes and under the Indenture;
(2) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing;
(3) immediately after giving effect to such transaction on a PRO
FORMA basis, we or any Person becoming the successor obligor of the
exchange notes shall have a Consolidated Net Worth equal to or greater
than our Consolidated Net Worth immediately prior to such transaction;
(4) immediately after giving effect to such transaction on a PRO FORMA basis
we, or any Person becoming the successor obligor of the exchange notes,
as the case may be, could Incur at least $1.00 of Indebtedness under the
first paragraph of the "Limitation on Indebtedness and Issuances of
Preferred Stock" covenant; PROVIDED that this clause (4) shall not apply
to a consolidation, merger or sale of all (but not less than all) of our
assets if all Liens and Indebtedness of our company or any Person
becoming the successor obligor on the exchange notes, as the case may be,
and its Restricted Subsidiaries outstanding immediately after such
transaction would have been permitted (and all such Liens and
Indebtedness, other than Liens and Indebtedness of our company and our
Restricted Subsidiaries outstanding immediately prior to the transaction,
shall be deemed to have been Incurred) for all purposes of the Indenture;
and
(5) we deliver to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clauses (3) and
(4)) and opinion of counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided
for herein relating to such transaction have been compiled with;
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PROVIDED, HOWEVER, that:
(1) clauses (3) and (4) above will not apply if, in the good faith
determination of our Board of Directors, whose determination shall be
evidenced by a resolution of the Board of Directors, the principal
purpose of such transaction is to change our state of incorporation and
any such transaction shall not have as one of its purposes the evasion of
the foregoing limitations; and
(2) this "Merger, Consolidation or Sale of Assets" covenant will not apply
to sales of property and assets with respect to which we have complied
with the "Repurchase of Exchange Notes in Connection with Sale of
Lawrenceburg Interest" covenant described above.
In addition, we may not, directly or indirectly, lease all or substantially
all of its properties or assets, in one or more related transactions, to any
other Person. This "Merger, Consolidation or Sale of Assets" covenant will not
apply to a sale, assignment, transfer, conveyance or other disposition of assets
between or among us and any of the Subsidiary Guarantors.
DEFEASANCE
We may, at our option and at any time, elect to have all of its obligations
discharged with respect to the outstanding exchange notes and all obligations of
the Subsidiary Guarantors discharged with respect to their Subsidiary Guarantees
("Legal Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium and Additional
Interest, if any, on such Notes when such payments are due from the trust
referred to below;
(2) our obligations with respect to the exchange notes concerning issuing
temporary exchange notes, registration of exchange notes, mutilated,
destroyed, lost or stolen exchange notes and the maintenance of an office
or agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and us
and the Subsidiary Guarantor's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, we may, at our option and at any time, elect to have the
obligations of our company and the Subsidiary Guarantors released with respect
to certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the exchange 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 exchange notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) we must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the exchange 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, or interest and
premium and Additional Interest, if any, on the outstanding exchange
notes on the stated maturity or on the applicable redemption date, as the
case may be, and we must specify whether the exchange notes are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, we shall have delivered to the Trustee
an opinion of counsel reasonably acceptable to the Trustee confirming
that (a) we have received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the date of the
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Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of the outstanding exchange notes
will not recognize income, gain or loss for federal income tax purposes
as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, we shall have delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding exchange notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which we or any of our
Subsidiaries is a party or by which we or any of our Subsidiaries is
bound;
(6) we must have delivered to the Trustee an opinion of counsel to the
effect that, assuming no intervening bankruptcy of our company or any
Subsidiary Guarantor between the date of deposit and the 91st day
following the deposit and assuming that no Holder is an "insider" of our
company under applicable bankruptcy law, after the 91st day 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;
(7) we must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by us with the intent of preferring the Holders of
exchange notes over our other creditors with the intent of defeating,
hindering, delaying or defrauding our creditors or others; and
(8) we must deliver to the Trustee an Officers' Certificate and an opinion
of counsel, each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
MODIFICATION AND WAIVER
The Indenture may be amended, without the consent of any Holder, to:
(1) cure any ambiguity, defect or inconsistency in the Indenture;
PROVIDED that such amendments do not adversely affect the interests of
the Holders in any material respect;
(2) comply with the provisions described under "Consolidation, Merger and
Sale of Assets;"
(3) comply with any requirements of the Commission in connection with the
qualification of the Indenture under the Trust Indenture Act;
(4) evidence and provide for the acceptance of appointment by a successor
Trustee; or
(5) make any change that, in the good faith opinion of the Board of
Directors, does not materially and adversely affect the rights of any
Holder.
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Modifications and amendments of the Indenture may be made by us and the
Trustee with the consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding exchange notes; PROVIDED, HOWEVER, that no
such modification or amendment may, without the consent of each Holder affected
thereby,
(1) change the Stated Maturity of the principal of, or any installment of
interest on, any exchange note;
(2) reduce the principal amount of, or premium, if any, or interest on, any
exchange note;
(3) change the place or currency of payment of principal of, or premium, if
any, or interest on, any exchange note;
(4) impair the right to institute suit for the enforcement of any payment on
or after the Stated Maturity (or, in the case of a redemption, on or
after the Redemption Date) of any exchange note;
(5) waive a default in the payment of principal of, premium, if any, or
interest on the exchange notes;
(6) modify the subordination provisions in a manner adverse to the Holders;
or
(7) reduce the percentage or aggregate principal amount of outstanding
exchange notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of
certain defaults.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS OR
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of our company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of our company or the Subsidiary Guarantors under the exchange
notes, the Indenture or the Subsidiary Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
exchange notes by accepting an exchange note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the exchange notes. The waiver may not be effective to waive liabilities under
the federal securities laws.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of our company or any Subsidiary
Guarantor, the Indenture limits its right 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 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 Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man 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 Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
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ADDITIONAL INFORMATION
Anyone who receives this Offering Prospectus may obtain a copy of the
Indenture and the related registration rights agreement without charge by
writing to Argosy Gaming Company, 219 Piasa Street, Alton, Illinois 62002,
Attention: General Counsel.
BOOK-ENTRY; DELIVERY AND FORM
Outstanding note offered and sold to qualified institutional buyers in
reliance on Rule 144A ("Rule 144A Notes") and any outstanding notes offered and
sold in offshore transactions in reliance on Regulation S ("Regulation S Notes")
were issued in registered, global form in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof. The outstanding notes were
issued at the closing of the outstanding note's offering only against payment in
immediately available funds.
The Rule 144A Notes are represented by one or more notes in registered,
global form without interest coupons (collectively, the "Rule 144A Global
Notes"). The Regulation S Notes are represented by one or more notes in
registered, global form without interest coupons (collectively, the "Regulation
S Global Notes" and, together with the Rule 144A Global Notes, the "Global
Notes"). The Global Notes are on deposit with the Trustee as custodian for The
Depository Trust Company ("DTC"), in New York, New York, and registered in the
name of DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below. Through and including the 40th
day after the later of the commencement of the issuance of the notes and the
issue date (such period through and including such 40th day, the "Restricted
Period"), beneficial interests in the Regulation S Global Notes may be held only
through the Euroclear System ("Euroclear") and Cedel, S.A. ("Cedel") (as
indirect participants in DTC), unless transferred to a person that takes
delivery through a Rule 144A Global Note in accordance with the certification
requirements described below. Beneficial interests in the Rule 144A Global Notes
may not be exchanged for beneficial interests in the Regulation S Global Notes
at any time except in the limited circumstances described below. See
"--Exchanges between Regulation S Notes and Rule 144A Notes."
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of Notes in certificated
form.
Rule 144A Notes (including beneficial interests in the Rule 144A Global
Notes) will be subject to certain restrictions on transfer and will bear a
restrictive legend as described under "Notice to Investors." Regulation S Notes
will also bear the legend as described under "Notice to Investors." In addition,
transfers of beneficial interests in the Global Notes will be subject to the
applicable rules and procedures of DTC and its direct or indirect participants
(including, if applicable, those of Euroclear and Cedel), which may change from
time to time.
EXCHANGE NOTES
Exchange notes issued in exchange for outstanding notes originally offered
and sold (1) to QIBs in reliance on Rule 144A under the Securities Act or (2) in
reliance on Regulation S under the Securities Act will be represented by a
single, permanent Global Note in definitive, fully registered book-entry form
(the "Exchange Global Note" and together with the Rule 144A Global Note and the
Regulation S Global Note, the "Global Notes"), which will be registered in the
name DTC, or its nominee, on behalf of persons who receive exchange notes
represented thereby for credit to the respective accounts of such persons, or to
such other accounts as they may direct at DTC.
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Exchange notes issued in exchange for outstanding notes will be issued, upon
request, in fully registered form (together with the Certificated Notes, the
"Certificated Notes"), but otherwise such holders will only be entitled to
registration of their respective exchange notes in book-entry form under the
Exchange Global Note.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them. The Company takes no responsibility for
these operations and procedures and urges investors to contact the system or
their participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers (including the Placement Agents), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interests in, and transfers of ownership interests in, each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Placement Agents with portions of the
principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners
of beneficial interest in the Global Notes).
Investors in the Rule 144A Global Notes who are Participants in DTC's system
may hold their interests therein directly through DTC. Investors in the Rule
144A Global Notes who are not Participants may hold their interests therein
indirectly through organizations (including Euroclear and Cedel) which are
Participants in such system. Investors in the Regulation S Global Notes must
initially hold their interests therein through Euroclear or Cedel, if they are
participants in such systems, or indirectly through organizations that are
participants in such systems. After the expiration of the Restricted Period (but
not earlier), investors may also hold interests in the Regulation S Global Notes
through Participants in the DTC system other than Euroclear and Cedel. Euroclear
and Cedel will hold interests in the Regulation S Global Notes on behalf of
their participants through customers' securities accounts in their respective
names on the books of their respective depositories, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator of Euroclear, and
Citibank, N.A., as operator of Cedel. All interests in a Global Note, including
those held through Euroclear or Cedel, may be subject to the procedures and
requirements of DTC. Those interests held through Euroclear or Cedel may also be
subject to the procedures and requirements of such systems. 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 beneficial
interests in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants, the ability of a Person having beneficial interests in
a Global Note to pledge
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such interests to Persons that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests.
Except as described below, owners of interest in the Global Notes will not
have exchange notes registered in their names, will not receive physical
delivery of exchange notes in certificated form and will not be considered the
registered owners or "Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest and premium and
Additional Interest, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, we and the Trustee will
treat the Persons in whose names the exchange notes, including the Global Notes,
are registered as the owners thereof for the purpose of receiving payments and
for all other purposes. Consequently, neither we, the Trustee nor any agent of
the Company or the Trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interest in the Global Notes or for maintaining,
supervising or reviewing any of DTC's records or any Participant's or
Indirect Participant's records relating to the beneficial ownership
interests in the Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of any payment in
respect of securities such as the exchange notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of DTC, the Trustee or our company. Neither we nor the
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Notes, and we and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and Cedel will be effected in accordance with their
respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes described herein, cross-market transfers between the Participants
in DTC, on the one hand, and Euroclear or Cedel participants, on the other hand,
will be effected through DTC in accordance with DTC's rules on behalf of
Euroclear or Cedel, as the case may be, by its respective depositary; however,
such cross-market transactions will require delivery of instructions to
Euroclear or Cedel, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Cedel, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositories for Euroclear or Cedel.
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DTC has advised us that it will take any action permitted to be taken by a
Holder only at the direction of one or more Participants to whose account DTC
has credited the interests in the Global Notes and only in respect of such
portion of the aggregate principal amount of the Notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC reserves the right to exchange the
Global Notes for legended Notes in certificated form, and to distribute such
Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interests in the Rule 144A Global Notes and the
Regulation S Global Notes among participants in DTC, Euroclear and Cedel, they
are under no obligation to perform or to continue to perform such procedures,
and may discontinue such procedures at any time. Neither the Company nor the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies us that it is unwilling or unable to continue as
depositary for the Global Notes and we fail to appoint a successor
depositary or (b) has ceased to be a clearing agency registered under the
Exchange Act;
(2) we, at our option, notify the Trustee in writing that it elects to cause
the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures) and will bear the applicable restrictive legend referred to in
"Notice to Investors," unless that legend is not required by applicable law.
EXCHANGE OF CERTIFICATED NOTES FOR GLOBAL NOTES
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the Trustee a written
certificate (in the form provided in the Indenture) to the effect that such
transfer will comply with the appropriate transfer restrictions applicable to
such Notes. See "Notice to Investors."
EXCHANGES BETWEEN REGULATION S NOTES AND RULE 144A NOTES
Prior to the expiration of the Restricted Period, beneficial interests in
the Regulation S Global Note may be exchanged for beneficial interests in the
Rule 144A Global Note only if:
(1) such exchange occurs in connection with a transfer of the Notes pursuant
to Rule 144A; and
(2) the transferor first delivers to the Trustee a written certificate (in
the form provided in the Indenture) to the effect that the Notes are
being transferred to a Person:
(A) who the transferor reasonably believes to be a qualified
institutional buyer within the meaning of Rule 144A;
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(B) purchasing for its own account or the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A; and
(C) in accordance with all applicable securities laws of the states of
the United States and other jurisdictions.
Beneficial interest in a Rule 144A Global Note may be transferred to a
Person who takes delivery in the form of an interest in the Regulation S Global
Note, whether before or after the expiration of the Restricted Period, only if
the transferor first delivers to the Trustee a written certificate (in the form
provided in the Indenture) to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and
that, if such transfer occurs prior to the expiration of the Restricted Period,
the interest transferred will be held immediately thereafter through Euroclear
or Cedel.
Transfers involving exchanges of beneficial interests between the Regulation
S Global Notes and the Rule 144A Global Notes will be effected in DTC by means
of an instruction originated by the Trustee through the DTC Deposit/Withdraw at
Custodian system. Accordingly, in connection with any such transfer, appropriate
adjustments will be made to reflect a decrease in the principal amount of the
Regulation S Global Note and a corresponding increase in the principal amount of
the Rule 144A Global Note or vice versa, as applicable. Any beneficial interest
in one of the Global Notes that is transferred to a Person who takes delivery in
the form of an interest in the other Global Note will, upon transfer, cease to
be an interest in such Global Note and will become an interest in the other
Global Note and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interest in such
other Global Note for so long as it remains such an interest. The policies and
practices of DTC may prohibit transfers of beneficial interests in the
Regulation S Global Note prior to the expiration of the Restricted Period.
SAME DAY SETTLEMENT AND PAYMENT
We will make payments in respect of the Notes represented by the Global
Notes (including principal, premium, if any, interest and Liquidated Damages, if
any) by wire transfer of immediately available funds to the accounts specified
by the Global Note Holder. We will make all payments of principal, interest and
premium and Additional Interest, if any, with respect to Certificated Notes by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof or, if no such account is specified, by mailing a check to each
such Holder's registered address. The Notes represented by the Global Notes are
expected to be eligible to trade in the PORTAL market and to trade in DTC's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such Notes will, therefore, be required by DTC to be settled in
immediately available funds. We expect that secondary trading in any
Certificated Notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised us that cash received in Euroclear or
Cedel as a result of sales of interests in a Global Note by or through a
Euroclear or Cedel participant to a Participant in DTC will be received with
value on the settlement date of DTC but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
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MATERIAL FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain material United States
federal income and estate tax considerations relating to the exchange by an
initial beneficial owner of the outstanding notes for exchange notes and of the
ownership and disposition of the exchange notes by an initial beneficial owner
of the exchange notes. This discussion is based upon the Internal Revenue Code
of 1986 as amended (the "Code"), existing and proposed Treasury Regulations, and
judicial decisions and administrative interpretations thereunder, as of the date
hereof, all of which are subject to change, possibly with retroactive effect, or
different interpretations. We cannot assure you that the IRS will not challenge
one or more of the tax considerations described herein, and we have not
obtained, nor do we intend to obtain, a ruling from the IRS or an opinion of
counsel with respect to the United States federal tax considerations resulting
from acquiring, holding or disposing of the notes.
In this discussion, we do not purport to address all tax considerations that
may be important to a particular holder in light of the holder's circumstances
(such as the alternative minimum tax provisions of the Code), or to certain
categories of investors (such as certain financial institutions, insurance
companies, tax-exempt organizations, dealers in securities, or persons who hold
the notes as part of a hedge, conversion transaction, straddle or other risk
reduction transaction) that may be subject to special rules. This discussion is
limited to initial holders who hold the notes as capital assets. This discussion
also does not address the tax considerations arising under the laws of any
foreign, state or local jurisdiction.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSIDERATIONS TO YOU OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
NOTES, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX
LAWS.
As used herein, the term "U.S. Holder" means a holder of a note that is:
(1) a citizen or resident of the United States for United States federal
income tax purposes, including an alien individual who is a lawful
permanent resident of the United States or meets the "substantial
presence" test prescribed under the Code;
(2) a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof;
(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or more
United States persons with authority to control all substantial
decisions, or if the trust was in existence on August 20, 1996 and has
elected to continue to be treated as a United States person.
As used herein, the term "Non-U.S. Holder" means a holder of a note (within
the categories of holders addressed in this discussion) that is not a U.S.
Holder.
THE EXCHANGE OFFER
The exchange of outstanding notes for exchange notes pursuant to this
exchange offer should not constitute a taxable disposition of the outstanding
notes for United States federal income tax purposes because the exchange notes
should not be considered to differ materially in kind or extent from the
outstanding notes. Rather, any exchange notes received by you should be treated
as a continuation of your investment in the outstanding notes. As a result,
neither a U.S. Holder nor a Non-U.S. Holder should recognize taxable income,
gain or loss on such exchange for United States federal income tax purposes.
Such holder's holding period for the exchange notes should generally include the
holding
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period for the outstanding notes and such holder's adjusted tax basis in the
exchange notes should generally be the same as such holder's adjusted tax basis
in the outstanding notes for United States federal income tax purposes.
U.S. HOLDERS
INTEREST ON NOTES. We intend to take the position (which is described in
greater detail below) that the notes are not issued with original issue
discount. Accordingly, interest on the notes will be taxable to a U.S. Holder as
ordinary income at the time it is paid or accrued, depending on such holder's
method of tax accounting.
INTEREST INCREASE UPON SALE OF LAWRENCEBURG INTEREST. We intend to take the
position for United States federal income tax purposes that any payments of
increased interest after a partial repurchase of notes in connection with a
Lawrenceburg Sale or a Property Sale, as described above under "Repurchase of
notes in Connection with Sale of Lawrenceburg Interest," should be taxable to a
U.S. Holder as additional interest income when received or accrued, in
accordance with such holder's method of tax accounting. This position is based
in part on the assumption that as of the date of issuance of the outstanding
notes, the possibility that either Additional Interest or increased interest
after the repurchase of notes in connection with the Lawrenceburg Sale or
Property Sale will have to be paid is a "remote" or "incidental" contingency
within the meaning of applicable Treasury regulations. Our determination that
such possibility is a remote or incidental contingency is binding on a U.S.
Holder, unless such holder explicitly discloses to the IRS, on such holder's
return for the year during which the outstanding note was acquired, that such
holder is taking a different position. Regardless of our position, however, the
IRS may take the contrary position that the payment of increased interest after
the repurchase of notes in connection with the Lawrenceburg Sale or Property
Sale is not a remote or incidental contingency, which could cause the notes to
be treated as having been issued with original issue discount. Such contrary
position could affect the timing and character of both the holder's income from
the notes and our deduction with respect to the payments of increased interest
after the repurchase of notes in connection with the Lawrenceburg Sale or
Property Sale.
SALE, EXCHANGE, RETIREMENT OR OTHER TAXABLE DISPOSITION OF THE NOTES. Upon
the sale, exchange, retirement or other taxable disposition of a note, a U.S.
Holder will recognize gain or loss equal to the difference between the amount of
money and fair market value of property received in exchange for the note
(except to the extent attributable to the payment of accrued interest that the
holder has not already included in gross income, which amount generally will be
taxable as ordinary income) and the U.S. Holder's adjusted tax basis in the
note.
A U.S. Holder's adjusted tax basis in a note will generally equal the price
paid by the U.S. Holder for the note, decreased by any repayments of principal
received thereon and increased by the amount of accrued unpaid interest that the
holder has already included in gross income. Gain or loss realized on the sale,
exchange or retirement of a note will be capital gain or loss. For U.S. Holders
who are individuals, the gain generally is taxed at ordinary income tax rates if
the note is held for 12 months or less, and at a maximum statutory federal
income tax rate of 20% if the note is held for more than 12 months.
NON-U.S. HOLDERS
In the following discussion, we summarize the principal United States
federal income and estate tax considerations resulting from the ownership and
disposition of the notes by Non-U.S. Holders.
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INTEREST ON NOTES. Subject to the discussion below of backup withholding,
interest paid on the notes to a Non-U.S. Holder generally will qualify for the
"portfolio interest exemption" and therefore generally will not be subject to
United States federal income tax if:
(1) such interest is not effectively connected with the conduct of a trade
or business within the United States by such Non-U.S. Holder;
(2) the Non-U.S. Holder does not actually or constructively own 10% or more
of the total voting power of all classes of our stock entitled to vote;
(3) the Non-U.S. Holder is not a controlled foreign corporation with respect
to which we are a "related person" within the meaning of the Code;
(4) the Non-U.S. Holder is not a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business;
and
(5) the beneficial owner, under penalty of perjury, certifies that the owner
is not a United States person and provides the owner's name and address.
If certain requirements are satisfied, the certification described in clause
(5) above may be provided by a securities clearing organization, a bank, or
other financial institution that holds customers' securities in the ordinary
course of its trade or business.
Under Treasury Regulations, which generally are effective for payments made
after December 31, 2000, subject to certain transition rules, the certification
described in clause (5) above may also be provided by a qualified intermediary
on behalf of one or more beneficial owners (or other intermediaries), provided
that such intermediary has entered into a withholding agreement with the IRS and
certain other conditions are met. A Non-U.S. Holder that is not exempt from tax
under these rules will be subject to United States federal income tax
withholding at a rate of 30% unless
(1) the interest is effectively connected with the conduct of a United
States trade or business, in which case the interest will be subject to
the United States federal income tax on net income that applies to United
States persons generally (and, with respect to corporate holders and
under certain circumstances, the branch profits tax); or
(2) the rate of withholding is reduced or eliminated by an applicable income
tax treaty; and
(3) in either case, the Non-U.S. Holder provides us with proper
certification as to the holder's exemption from withholding.
GAIN ON DISPOSITION OF THE NOTES. A Non-U.S. Holder generally will not be
subject to United States federal income tax on gain realized on the sale,
exchange or redemption of a note unless:
(1) in the case of an individual Non-U.S. Holder, such holder is present in
the United States for 183 days or more in the year of such sale, exchange
or redemption, and either:
(A) has a "tax home" in the United States and certain other requirements
are met; or
(B) the gain from the disposition is attributable to an office or other
fixed place of business in the United States;
(2) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S.
tax law applicable to certain U.S. expatriates; or
(3) the gain is effectively connected with the conduct of a United States
trade or business of the Non-U.S. Holder.
U.S. FEDERAL ESTATE TAX. A note held by an individual who at the time of
death is not a citizen or resident of the United States (as specially defined
for United States federal estate tax purposes) will not be subject to United
States federal estate tax if interest on the note is exempt from withholding
129
<PAGE>
under the "portfolio interest exemption" rules discussed above for "Non U.S.
Holders--Interest on Notes" (without regard to the certification requirement).
BACKUP WITHHOLDING AND INFORMATION REPORTING.
U.S. HOLDERS. Information reporting will apply to payments of interest on
or the proceeds of the sale or other disposition of the notes made by us with
respect to certain non-corporate U.S. Holders. A U.S. Holder will further be
subject to backup withholding at the rate of 31% with respect to interest,
principal and premium, if any, we pay on a note, unless the holder (1) is an
entity (including corporations, tax-exempt organizations and certain qualified
nominees) that is exempt from withholding and, when required, demonstrates this
fact; or (2) provides us with a correct taxpayer identification number,
certifies that the taxpayer identification number is correct and that the holder
has not been notified by the IRS that it is subject to backup withholding due to
underreporting of interest or dividends, and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under the
backup withholding rules is allowable as a credit against the U.S. Holder's
United States federal income tax liability, provided that the required
information is furnished to IRS.
NON-U.S. HOLDERS. We will, when required, report to the IRS and to each
Non-U.S. Holder the amount of any interest paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld on
such payments. Copies of these information returns may also be made available to
the tax authorities of the country in which the Non-U.S. Holder resides under
the provisions of a specific treaty or agreement.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of interest on or principal of the notes by
us or our agent to a Non-U.S. Holder if the Non-U.S. Holder certifies as to its
Non-U.S. Holder status under penalties of perjury or otherwise establishes an
exemption (provided that neither we nor our agent have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemptions are not
in fact satisfied). The payment of the proceeds on the disposition of notes to
or through the United States office of a United States or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides the certification described above or otherwise establishes an
exemption. The proceeds of the disposition by a Non-U.S. Holder of notes to or
through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if such broker is a U.S. person,
a controlled foreign corporation or a foreign person deriving 50% or more of its
gross income from all sources for certain periods from activities that are
effectively connected with the conduct of a United States trade or business,
information reporting requirements will apply unless such broker has documentary
evidence in its files of the holder's status as a Non-U.S. Holder and has no
actual knowledge to the contrary or unless the holder otherwise establishes an
exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability provided that the required
information is furnished to the IRS.
New Treasury Regulations relating to withholding tax on income paid to
Non-U.S. Holders will generally be effective for payments made after December
31, 2000, subject to certain transition rules. In general, these new regulations
do not significantly alter the substantive withholding and information reporting
requirements, but rather unify current certification procedures and forms, and
clarify reliance standards. The new regulations also alter the procedures for
claiming benefits of an income tax treaty and permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners under some circumstances. On January 15, 1999, the
IRS issued Notice 99-8, proposing certain changes to these new withholding
regulations for non-resident aliens and foreign corporations and providing a
model "qualified intermediary" withholding agreement to be entered into with the
IRS to allow certain institutions to certify on behalf of their non-U.S.
customers or account holders who invest in U.S. securities. We strongly urge
prospective Non-U.S. Holders to
130
<PAGE>
consult their own tax advisors for information on the impact, if any, of these
new withholding regulations.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange 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 exchange 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 exchange notes received in exchange for outstanding
exchange notes where such outstanding exchange notes were acquired as a result
of market-making activities or other trading activities.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange 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 or the purchasers of any such exchange notes. Any broker-dealer
that resells exchange 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 exchange notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of exchange
notes and any commissions or concessions received by 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.
We 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. We have agreed to pay all expenses
incident to the exchange offer other than commissions or concessions of any
brokers or dealers and will indemnify original holders of the outstanding
exchange notes, including any broker-dealers, against certain liabilities,
including certain liabilities under the Securities Act.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Winston &
Strawn, Chicago, Illinois.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1998 and 1997, and for each of the three
years in the period ended December 31, 1998, as set forth in their report. We
have included our consolidated financial statements in the prospectus and
elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
131
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Auditors............................................................................. F-2
Consolidated Balance Sheets as of December 31, 1997 and 1998............................................... F-3
Consolidated Statements of Operations for each of the fiscal years in the three-year period ended December
31, 1998................................................................................................. F-4
Consolidated Statements of Stockholders' Equity for each of the fiscal years in the three-year period ended
December 31, 1998........................................................................................ F-5
Consolidated Statements of Cash Flows for each of the fiscal years in the three-year period ended December
31, 1998................................................................................................. F-6
Notes to Consolidated Financial Statements................................................................. F-7
Condensed Consolidated Balance Sheets as of March 31, 1999 (unaudited)..................................... F-21
Condensed Consolidated Statements of Operations for the three months ended March 31, 1999 and 1998
(unaudited).............................................................................................. F-22
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 1999
(unaudited).............................................................................................. F-23
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 1998
(unaudited).............................................................................................. F-24
Notes to Condensed Consolidated Financial Statements (unaudited)........................................... F-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Argosy Gaming Company
We have audited the accompanying consolidated balance sheets of Argosy
Gaming Company as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Argosy Gaming
Company at December 31, 1998 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 29, 1999
F-2
<PAGE>
ARGOSY GAMING COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................................... $ 89,857 $ 59,354
Accounts receivable, net of allowance for doubtful accounts of $1,936 and $1,624,
respectively.............................................................................. 2,375 2,139
Income taxes receivable..................................................................... 747 1,176
Deferred income taxes....................................................................... 1,471 2,011
Other current assets........................................................................ 4,806 5,303
--------- ---------
Total current assets...................................................................... 99,256 69,983
--------- ---------
Net property and equipment.................................................................. 395,920 390,343
--------- ---------
OTHER ASSETS:
Restricted cash and cash equivalents........................................................ 25,545
Deferred finance costs, net of accumulated amortization of $6,363 and $4,312, respectively.. 8,758 10,809
Goodwill and other intangible assets, net of accumulated amortization of $5,353 and $3,360,
respectively.............................................................................. 51,817 54,689
Other....................................................................................... 7,001 8,487
--------- ---------
Total other assets........................................................................ 67,576 99,530
--------- ---------
Total assets................................................................................ $ 562,752 $ 559,856
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable............................................................................ $ 10,500 $ 12,570
Accrued payroll and related expenses........................................................ 9,857 8,912
Other accrued liabilities................................................................... 34,898 27,870
Accrued interest............................................................................ 4,490 6,299
Current maturities of long-term debt........................................................ 11,640 13,348
--------- ---------
Total current liabilities................................................................. 71,385 68,999
--------- ---------
LONG-TERM DEBT.............................................................................. 412,360 436,442
DEFERRED INCOME TAXES....................................................................... 1,943 1,947
OTHER LONG-TERM OBLIGATIONS................................................................. 201 2,186
MINORITY INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES................................... 30,660 17,619
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 17)
SERIES A CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED, 547
SHARES ISSUED AND OUTSTANDING............................................................. 5,340 --
STOCKHOLDERS' EQUITY:
Common stock, $.01 par; 60,000,000 shares authorized; 25,830,313 and 24,498,333 shares
issued and outstanding at December 31, 1998 and 1997, respectively........................ 258 245
Capital in excess of par.................................................................... 74,484 72,038
Retained (deficit) earnings................................................................. (33,879) (39,620)
--------- ---------
Total stockholders' equity................................................................ 40,863 32,663
--------- ---------
Total liabilities and stockholders' equity.................................................. $ 562,752 $ 559,856
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Casino....................................................................... $ 473,505 $ 319,830 $ 228,388
Admissions................................................................... 16,025 7,895 2,759
Food, beverage and other..................................................... 51,057 34,836 29,212
---------- ---------- ----------
540,587 362,561 260,359
Less promotional allowances.................................................. (33,919) (18,478) (15,542)
---------- ---------- ----------
Net revenues................................................................. 506,668 344,083 244,817
---------- ---------- ----------
COSTS AND EXPENSES:
Casino....................................................................... 221,682 163,935 121,004
Food, beverage and other..................................................... 40,550 29,962 23,769
Other operating expenses..................................................... 26,639 28,695 19,111
Selling, general and administrative.......................................... 96,041 69,725 52,048
Depreciation and amortization................................................ 33,436 33,292 22,416
Development and preopening costs............................................. 509 594 12,365
Lease termination costs...................................................... -- -- 3,508
Referendum expenses.......................................................... -- -- 1,347
Severance expenses........................................................... -- 1,750 --
Write-down of assets held for sale........................................... -- 9,600 --
---------- ---------- ----------
418,857 337,553 255,568
---------- ---------- ----------
Income (loss) from operations................................................ 87,811 6,530 (10,751)
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest income.............................................................. 3,582 5,937 4,235
Interest expense............................................................. (57,487) (47,116) (34,842)
---------- ---------- ----------
(53,905) (41,179) (30,607)
---------- ---------- ----------
Income (loss) before minority interests, income taxes and extraordinary
item....................................................................... 33,906 (34,649) (41,358)
Minority interests........................................................... (26,205) (6,916) 4,879
Income tax (expense) benefit................................................. (1,140) 1,352 12,530
---------- ---------- ----------
Net income (loss) before extraordinary item.................................. 6,561 (40,213) (23,949)
Extraordinary loss on extinguishment of debt (net of income tax benefit of
$594)...................................................................... -- -- (890)
---------- ---------- ----------
Net income (loss)............................................................ 6,561 (40,213) (24,839)
Preferred stock dividends and accretion...................................... (820) -- --
---------- ---------- ----------
Net income (loss) attributable to common stockholders........................ $ 5,741 $ (40,213) $ (24,839)
---------- ---------- ----------
---------- ---------- ----------
Basic net income (loss) per share............................................ $ 0.23 $ (1.65) $ (1.02)
---------- ---------- ----------
---------- ---------- ----------
Diluted net income (loss) per share.......................................... $ 0.23 $ (1.65) $ (1.02)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
CAPITAL IN RETAINED TOTAL
COMMON EXCESS OF EARNINGS STOCKHOLDERS'
SHARES STOCK PAR (DEFICIT) EQUITY
------------ ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995...................... 24,333,333 $ 243 $ 71,865 $ 25,432 $ 97,540
Net loss...................................... -- -- -- (24,839) (24,839)
------------ ----- ------------ ---------- ------------
Balance, December 31, 1996...................... 24,333,333 243 71,865 593 72,701
Restricted Stock issued....................... 165,000 2 173 -- 175
Net loss...................................... -- -- -- (40,213) (40,213)
------------ ----- ------------ ---------- ------------
Balance, December 31, 1997...................... 24,498,333 245 72,038 (39,620) 32,663
Restricted Stock compensation expense......... -- -- 239 -- 239
Issuance of Convertible Preferred Stock and
Warrants.................................... -- -- (235) -- (235)
Preferred Stock conversion.................... 1,331,980 13 2,442 -- 2,455
Net income.................................... -- -- -- 6,561 6,561
Preferred Stock dividends and accretion....... -- -- -- (820) (820)
------------ ----- ------------ ---------- ------------
Balance, December 31, 1998...................... 25,830,313 $ 258 $ 74,484 $ (33,879) $ 40,863
------------ ----- ------------ ---------- ------------
------------ ----- ------------ ---------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
ARGOSY GAMING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).............................................................. $ 6,561 $ (40,213) $ (24,839)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation................................................................. 31,011 31,250 21,501
Amortization................................................................. 4,329 3,968 2,660
Deferred income taxes........................................................ 536 (753) (3,538)
Compensation expense recognized on issuance of stock......................... 239 175 --
Loss (gain) on the disposal of equipment..................................... 789 -- (153)
Minority interests........................................................... 26,205 6,916 (4,879)
Lease termination costs...................................................... -- -- 1,941
Extraordinary item........................................................... -- -- 890
Write-down of assets held for sale........................................... -- 9,600 --
Changes in operating assets and liabilities:
Accounts receivable........................................................ (236) (221) 1,279
Other current assets....................................................... 1,184 3,057 (2,033)
Accounts payable........................................................... (2,070) (2,723) 3,011
Accrued liabilities........................................................ 12,686 10,637 5,614
Income taxes receivable.................................................... 429 9,935 (8,914)
--------- ---------- ----------
Net cash provided by (used in) operating activities........................ 81,663 31,628 (7,460)
--------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of marketable securities............................................... -- -- 1,826
Proceeds from sales of property and equipment................................ -- -- 153
Long-term obligations........................................................ (6,583) (13,586) --
Purchases of property and equipment.......................................... (34,051) (117,444) (97,409)
Other long-term assets....................................................... 908 (543) 171
Restricted cash held by trustees............................................. 25,545 59,006 (84,551)
--------- ---------- ----------
Net cash used in investing activities...................................... (14,181) (72,567) (179,810)
--------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt..................................... -- 25,000 235,000
Proceeds (net of issuance costs) from sale of Convertible Preferred Stock and
Warrants................................................................... 7,365 -- --
Repayment of line of credit.................................................. (45,500)
Payments on installment contracts............................................ (3,514) (4,211) (2,991)
Payments on long-term debt................................................... (3,785) (115) (2,191)
Increase in deferred finance costs........................................... -- (638) (9,716)
Proceeds from (repayment of) partner loans................................... (21,939) 43,938 23,197
Capital contributions from partner........................................... 19,044
Partnership equity distributions............................................. (10,808) (1,514) --
Payment of preferred equity return to partner................................ (3,688) (1,163) --
Other........................................................................ (610) 712 (7,448)
--------- ---------- ----------
Net cash (used in) provided by financing activities........................ (36,979) 62,009 209,395
--------- ---------- ----------
Net increase in cash and cash equivalents...................................... 30,503 21,070 22,125
Cash and cash equivalents, beginning of year................................... 59,354 38,284 16,159
--------- ---------- ----------
Cash and cash equivalents, end of year......................................... $ 89,857 $ 59,354 $ 38,284
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION--Argosy Gaming Company (collectively with its
subsidiaries, "Argosy" or "Company") is engaged in the business of providing
casino style gaming and related entertainment to the public and, through its
subsidiaries or joint ventures, operates riverboat casinos in Alton, Illinois;
Lawrenceburg, Indiana; Riverside, Missouri; Baton Rouge, Louisiana; and Sioux
City, Iowa. Indiana Gaming Company, L.P. ("Indiana Partnership"), a limited
partnership in which the Company is general partner and holds a 57.5%
partnership interest, opened a riverboat casino and related entertainment and
support facilities at a temporary site in Lawrenceburg, Indiana on December 10,
1996. The Partnership opened its permanent pavilion on December 10, 1997, and
its hotel in May 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
consolidated financial statements include the accounts of Argosy and its
controlled subsidiaries and partnerships. All significant intercompany
transactions have been eliminated. Under certain conditions, subsidiaries are
required to obtain approval from state gaming authorities before making
distributions to Argosy.
Certain 1997 and 1996 amounts have been reclassified to conform to the 1998
presentation.
CASH AND CASH EQUIVALENTS--The Company considers cash and all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost.
Leasehold improvements are amortized over the life of the respective lease.
Depreciation is computed on the straight-line method over the following
estimated useful lives:
<TABLE>
<S> <C>
5 to 33
Buildings and shore improvements.............................. years
5 to 20
Riverboats, docks and improvements............................ years
5 to 10
Furniture, fixtures and equipment............................. years
</TABLE>
IMPAIRMENT OF LONG-LIVED ASSETS--When events or circumstances indicate that
the carrying amount of long-lived assets to be held and used might not be
recoverable, the expected future undiscounted cash flows from the assets is
estimated and compared with the carrying amount of the assets. If the sum of the
estimated undiscounted cash flows is less than the carrying amount of the
assets, an impairment loss is recorded. The impairment loss is measured by
comparing the fair value of the assets with their carrying amount. Long-lived
assets that are held for disposal are reported at the lower of the assets'
carrying amount or fair value less costs related to the assets' disposition.
DEFERRED FINANCE COSTS--Deferred finance costs are amortized over the life
of the respective loans using the effective interest method.
GOODWILL AND OTHER INTANGIBLE ASSETS--Goodwill represents the cost in excess
of fair value of net assets acquired, and is amortized over 40 years. Other
intangible assets, primarily payments to cities, are amortized over the lives of
the respective leases or development agreements including extensions.
CASINO REVENUES AND PROMOTIONAL ALLOWANCES--The Company recognizes as casino
revenues the net win from gaming activities, which is the difference between
gaming wins and losses. The retail value of
F-7
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
admissions, hotel rooms, food, beverage and other items which were provided to
customers without charge has been included in revenues, and a corresponding
amount has been deducted as promotional allowances. The estimated direct cost of
providing promotional allowances has been included in costs and expenses as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Admissions...................................................... $ 11,278 $ 6,935 $ 505
Hotel rooms..................................................... 757 -- --
Food, beverage and other........................................ 11,505 7,626 4,054
</TABLE>
ADMISSIONS REVENUE--Admissions revenue is recognized at the time the related
service is performed.
ADVERTISING COSTS--The Company expenses advertising costs as incurred.
Advertising expense was $9,833, $12,475 and $9,192 in 1998, 1997 and 1996,
respectively.
DEVELOPMENT AND PREOPENING COSTS--Development costs incurred in an effort to
identify and develop new gaming locations are expensed as incurred, as there can
be no assurance that such costs, if capitalized, would be realizable. Preopening
costs are expensed as incurred.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
----------- ----------
<S> <C> <C>
Land................................................................. $ 39,002 $ 38,890
Buildings, leasehold and shore improvements.......................... 216,067 189,058
Riverboats, docks and improvements................................... 148,162 149,318
Furniture, fixtures and equipment.................................... 93,868 78,168
Construction in progress............................................. 217 6,695
----------- ----------
497,316 462,129
Less accumulated depreciation and amortization....................... (101,396) (71,786)
----------- ----------
Net property and equipment........................................... $ 395,920 $ 390,343
----------- ----------
----------- ----------
</TABLE>
3. ASSETS HELD FOR SALE
The Company recorded a charge of $9,600 to adjust the carrying value of
certain assets held for sale to their estimated fair value in 1997. These assets
include the original riverboat casino the Company utilized in Alton, Illinois
from September 1991 until May 1993 and a barge utilized as a temporary landing
facility in Lawrenceburg, Indiana until December 10, 1997. The estimated fair
value of the assets was determined through discussions with a broker and
comparison to other riverboats and barges currently available for sale.
F-8
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
3. ASSETS HELD FOR SALE (CONTINUED)
The adjusted carrying value of the boat and barge of approximately $4,300 is
included in other assets in the accompanying balance sheets at December 31, 1998
and 1997.
4. OTHER ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Accrued gaming and admission taxes.................................... $ 12,020 $ 2,386
Installment contracts payable......................................... 2,614 3,288
Slot club liability................................................... 3,667 2,475
Accrued insurance..................................................... 4,529 4,400
Current portion of long-term obligations.............................. -- 4,583
Other................................................................. 12,068 10,738
---------- ----------
$ 34,898 $ 27,870
---------- ----------
---------- ----------
</TABLE>
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
First mortgage notes due June 1, 2004, interest payable semi-annually
at 13.25%........................................................... $ 235,000 $ 235,000
Convertible subordinated notes due June 1, 2001, convertible into
common stock at $17.70 per share, interest payable semi-annually at
12%................................................................. 115,000 115,000
Notes payable, principal and interest payments due quarterly through
September 2015, discounted at 10.5%................................. 7,097 7,656
Notes payable, principal and interest payments due monthly through
December 2001, interest payable at prime + 1% (8.75% at December 31,
1998), secured by gaming vessel and certain equipment............... 21,707 25,000
Loans from partner, principal due in annual installments through 2004,
interest payable at prime + 6% (13.75% at December 31, 1998)........ 45,196 67,134
---------- ----------
424,000 449,790
Less: current maturities.............................................. 11,640 13,348
---------- ----------
Long-term debt, less current maturities............................... $ 412,360 $ 436,442
---------- ----------
---------- ----------
</TABLE>
F-9
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
5. LONG-TERM DEBT (CONTINUED)
On June 5, 1996, the Company issued $235,000 of First Mortgage Notes due
2004 ("Mortgage Notes"). The Mortgage Notes are senior obligations of the
Company secured by substantially all of its assets, except the assets of the
Indiana Partnership, and are guaranteed by substantially all of the Company's
subsidiaries, other than the Indiana and Sioux City partnerships.
The Mortgage Notes contain certain restrictions on the payment of dividends
on the Company's common stock and the occurrence of additional indebtedness, as
well as other covenants customary in senior secured financings. Under terms of
the indenture governing the Mortgage Notes, Argosy is required to make cash
offers to purchase Mortgage Notes, at 101% of their principal amount, at an
amount equal to 50% of the proceeds from certain distributions, above specified
levels, received from the Indiana Partnership.
The Company used a portion of the proceeds from the issuance of the Mortgage
Notes to repay and terminate its senior secured line of credit ("Line of
Credit"). In connection with this early termination of the Line of Credit, the
Company expensed approximately $1,484 of deferred finance costs ($890 net of
tax).
The convertible subordinated notes ("Notes") are convertible into common
stock at any time and may be redeemed by the Company in whole or in part, at
specified percentages of principal plus accrued and unpaid interest to the date
of redemption. The Notes are subordinated to prior payment in full of all senior
indebtedness as defined, including such indebtedness incurred in the future.
Interest expense for the years ended December 31, 1998, 1997, and 1996, was
$57,487 (net of $1,086 capitalized), $47,116 (net of $8,391 capitalized), and
$34,842 (net of $3,033 capitalized), respectively.
Maturities of long-term debt at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1999.............................................................................. $ 11,640
2000.............................................................................. 12,078
2001.............................................................................. 137,406
2002.............................................................................. 8,275
2003.............................................................................. 8,358
Thereafter........................................................................ 246,243
</TABLE>
6. CONVERTIBLE PREFERRED STOCK AND WARRANTS
On June 16, 1998, the Company issued $8,000 of Series A Convertible
Preferred Stock ("Preferred Shares"), together with warrants to purchase an
additional 292,612 shares of Common Stock at $3.89 per share. The Preferred
Shares mature in 2005, and the Company has the right to force conversion and/or
redemption at maturity. A portion of the proceeds was allocated to the warrants
and this discount will be accreted over seven years. The warrants expire in
2003.
The Preferred Shares provide for a 4% dividend per annum, payable in cash
and/or in kind, at the time of conversion or maturity, at the Company's option.
F-10
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
6. CONVERTIBLE PREFERRED STOCK AND WARRANTS (CONTINUED)
The Preferred Shares are convertible at the lower of the fixed initial
strike price ($3.89 per share) or a floating price. The fixed strike price may
be reset downward on March 11, 1999, depending on the then current market price
and is subject to adjustment upon the occurrence of certain events. The floating
price is based on the market price of the Company's common stock. The Preferred
Shares are convertible in increments and become fully convertible on January 10,
1999. The warrants may be exercised at the fixed strike price subject to the
same adjustment provisions.
This transaction provided for put and call options which, subject to certain
restrictions and limitations, allowed for up to an additional $8,000 of
Preferred Shares and Warrants to be issued. In December 1998, the Company
amended its agreement with the holders of the Preferred Shares to terminate both
the holders' right to purchase, and the Company's right to require such holders
to purchase, the additional $8 million tranche of Preferred Shares and related
warrants. The Company paid $625 to amend the agreement, and this amount is
included in preferred stock dividends and accretion in the accompanying
statement of operations for 1998. Through December 31, 1998, 253 Preferred
Shares had been converted into 1,331,980 shares of common stock. Through January
29, 1999, 443 Preferred Shares had been converted into 2,208,201 shares of
common stock.
7. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
NUMERATOR:
Net income (loss)............................... $ 6,561 $ (40,213) $ (24,839)
Preferred stock dividends and accretion......... (820) -- --
------------- ------------- -------------
Numerator for basic and diluted earnings per
share
Net income (loss) attributable to common
stockholders................................ $ 5,741 $ (40,213) $ (24,839)
------------- ------------- -------------
------------- ------------- -------------
DENOMINATOR:
Denominator for basic earnings per share--
Weighted-average shares outstanding........... 24,498,905 24,333,333 24,333,333
Effect of dilutive securities:
Restricted stock.............................. 105,580 -- --
------------- ------------- -------------
Denominator for diluted earnings per
share--adjusted
Weighted-average shares and assumed
conversions................................. 24,604,485 24,333,333 24,333,333
------------- ------------- -------------
------------- ------------- -------------
Basic net income (loss) per share............... $ 0.23 $ (1.65) $ (1.02)
------------- ------------- -------------
------------- ------------- -------------
Diluted net income (loss) per share............. $ 0.23 $ (1.65) $ (1.02)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
F-11
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
7. EARNINGS PER SHARE (CONTINUED)
Employee and directors stock options to purchase 1,592,179 shares of common
stock at prices ranging from $3.13 to $16.75 were not included in the
computation of diluted earnings per share because the options exercise price was
greater than the average market price of the common shares and, therefore, the
effect would be anti-dilutive.
Warrants to purchase 292,612 shares of common stock at $3.89 per share were
outstanding at December 31, 1998, but were not included in the computation of
diluted earnings per share because the exercise price was greater than the
average market price of the common shares and, therefore, the effect would be
anti-dilutive.
Convertible preferred stock (convertible into 1,528,081 weighted-average
shares of common stock at December 31, 1998) was not included in the computation
of diluted earnings as the amount of dividend and accretion recognized during
the year per weighted-average common share obtainable on conversion exceeded
basic earnings per share; thus the effect would be anti-dilutive.
Twelve percent convertible debentures (convertible into 6,497,175 shares of
common stock at $17.70 per share) were outstanding at December 31, 1998, but
were not included in the computation of diluted earnings per share as the net
interest expense per common share obtainable on conversion exceeded basic
earnings per share; thus the effect would be anti-dilutive.
8. INCOME TAXES
Income tax benefit (expense) for the years ended December 31, 1998, 1997 and
1996, consists of the following:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal...................................................... $ -- $ -- $ 7,877
State........................................................ (604) 866 1,117
--------- --------- ---------
(604) 866 8,994
--------- --------- ---------
Deferred:
Federal...................................................... -- -- 2,521
State........................................................ (536) 486 1,015
--------- --------- ---------
(536) 486 3,536
--------- --------- ---------
Income tax benefit (expense)................................... $ (1,140) $ 1,352 $ 12,530
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-12
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
8. INCOME TAXES (CONTINUED)
The provision for income taxes for the years ended December 31, 1998, 1997
and 1996, differs from that computed at the federal statutory corporate tax rate
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate............................................. 35.0% (35.0)% (35.0)%
State income taxes, net of federal benefit......................... 2.2 (2.6) (2.5)
Valuation allowance................................................ (7.8) 38.7 --
Goodwill amortization.............................................. 0.6 0.4 0.5
Minority interest in partnership income............................ (27.0) (6.7) 4.6
Other, net......................................................... 0.4 1.3 2.1
--------- --------- ---------
3.4% (3.9)% (30.3)%
--------- --------- ---------
--------- --------- ---------
</TABLE>
The tax effects of significant temporary differences representing deferred
tax assets and liabilities at December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Basis of assets held for sale......................................... $ 3,739 $ 3,727
Depreciation.......................................................... (14,241) (13,392)
Preopening............................................................ 3,709 4,755
Benefit of net operating loss carryforward............................ 18,357 17,986
Other, net............................................................ 575 1,320
---------- ----------
12,139 14,396
Valuation allowance................................................... (12,611) (14,332)
---------- ----------
Net deferred tax asset (liability).................................... $ (472) $ 64
---------- ----------
---------- ----------
</TABLE>
The valuation allowance relates to deferred tax assets established under SFAS
109 for net operating loss carryforwards of approximately $42,800 and $46,600 at
December 31, 1998 and 1997, respectively. These loss carryforwards, which will
expire through 2012, will be carried forward to future years for possible
utilization.
9. SUPPLEMENTAL CASH FLOW INFORMATION
The Company acquired equipment in the amounts of $2,841, $4,154 and $5,191
in 1998, 1997 and 1996, respectively, which was financed through installment
contracts.
The Company paid $58,356, $51,185 and $33,302 for interest, and $784, $143
and $332 for income taxes in 1998, 1997 and 1996, respectively.
The Company issued 1,331,980 shares of additional common stock upon the
conversion of 253 shares of Preferred Stock.
F-13
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
10. LEASES
Future minimum lease payments for operating leases with initial terms in
excess of one year as of December 31, 1998, are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
- -----------------------------------------------------------------------------------
<S> <C>
1999............................................................................... $ 1,702
2000............................................................................... 1,231
2001............................................................................... 864
2002............................................................................... 450
2003............................................................................... 328
Thereafter......................................................................... 14,948
</TABLE>
Rent expense for the years ended December 31, 1998, 1997 and 1996, was
$4,137, $7,205 and $6,204, respectively.
11. STOCK OPTION PLANS
The Company adopted the Argosy Gaming Company Stock Option Plan, as amended,
("Stock Option Plan"), which provides for the grant of non-qualified stock
options for up to 2,500,000 shares of common stock to key employees of the
Company. These options expire 10 years after their respective grant dates and
become exercisable over a specified vesting period. At December 31, 1998,
options for 843,241 shares are exercisable under the Stock Option Plan. The
weighted average life of outstanding options at December 31, 1998 is
approximately five years.
On November 7, 1997 ("Grant Date"), the Company's board of directors
approved a plan that allowed certain employees to exchange their existing stock
options for an amount of options equal to the number of options to be exchanged
multiplied by a fraction: the numerator of which is $4.25 (closing price on
Grant Date) and the denominator of which is the prior option price. This
exchange of options was finalized during 1998, and options for 625,373 shares of
stock were exchanged for options for 157,524 shares of stock.
The Company also has adopted the Argosy Gaming Company 1993 Directors Stock
Option Plan ("Directors Option Plan"), which provides for a total of 50,000
shares of common stock to be authorized and reserved for issuance. The Directors
Option Plan provides for the grant of non-qualified stock options at fair market
value to non-employee directors of the Company as of the date such individuals
become directors of the Company. These options expire five years after their
respective grant dates and become exercisable over a specified vesting period.
At December 31, 1998 options for 6,000 shares are exercisable under the
Directors' Option Plan.
The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25"), and related interpretations in
accounting for its employee stock options. Under APB 25, when the exercise price
of employee stock options equals or exceeds the market price of the underlying
stock on the date of grant, no compensation expense is recognized.
The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock Based
Compensation." Accordingly, no compensation expense has been recognized for
either stock plan. Had the valuation methods under
F-14
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
11. STOCK OPTION PLANS (CONTINUED)
SFAS 123 been used for the Company's stock option grants, the fiscal 1998 pro
forma net income attributable to common shareholders would have been $5,579 and
the pro forma income per share would have been $0.23. The fair value of each
option was estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: dividend yield of zero; expected
volatility 52.7%; risk-free interest rate of 6% and expected option life of
three years. The fiscal 1997 pro forma net loss would have been $40,336 and the
pro forma loss per share would have been $1.66. The fair value of each option
was estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions: dividend yield of zero; expected volatility
36.5%; risk-free interest rate of 6% and expected option life of five years.
There was no pro forma compensation expense in 1996. These pro forma amounts may
not be representative of future disclosures because the estimated fair value of
the options is amortized to expense over the vesting period and additional
options may be granted in the future.
A summary of stock option activity is as follows:
<TABLE>
<CAPTION>
STOCK OPTION PLAN DIRECTORS OPTION PLAN
----------------------------- -------------------------------
EXERCISE PRICE EXERCISE PRICE
SHARES PER SHARE SHARES PER SHARE
---------- ----------------- --------- --------------------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1995................... 2,415,253 $16.75 - $19.38 21,000 $ 11.50 - $19.00
Forfeited........................................ (10,000) 16.75 -- --
---------- ----------------- --------- --------------------
Outstanding, December 31, 1996................... 2,405,253 16.75 - 19.38 21,000 11.50 - 19.00
Granted.......................................... 406,000 3.13 - 3.44
Forfeited........................................ (744,343) 16.75 - 19.38 -- --
---------- ----------------- --------- --------------------
Outstanding, December 31, 1997................... 2,066,910 3.13 - 19.38 21,000 11.50 - 19.00
Exchange of options.............................. (467,849) 4.25 - 19.38 -- --
Granted.......................................... 232,156 3.31 - 3.44 -- --
Forfeited........................................ (239,038) 4.25 - 19.38 (15,000) 19.00
---------- ----------------- --------- --------------------
Outstanding, December 31, 1998................... 1,592,179 $ 3.13 - $16.75 6,000 $ 11.50
---------- ----------------- --------- --------------------
---------- ----------------- --------- --------------------
</TABLE>
12. RESTRICTED STOCK
The Company issued 165,000 shares of restricted common stock to certain new
employees in 1997. The value of these shares at their respective grant dates
ranged from $3.13 to $3.63. In 1998, 66,000 shares of the restricted stock
vested, and in 2000, 99,000 shares will vest.
Compensation expense of $566 is being amortized over the period from the
date of grant until the respective vesting dates. Compensation expense of $239
and $175 was recognized in 1998 and 1997, respectively.
F-15
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
13. EMPLOYEES BENEFIT PLAN
The Company established a 401(k) defined-contribution plan which covers
substantially all of its full-time employees. Participants can contribute a
portion of their eligible salaries (as defined) subject to maximum limits, as
determined by provisions of the Internal Revenue Code. The Company will match a
portion of participants' contributions in an amount determined annually by the
Company. Expense recognized under the Plan was approximately $1,134, $2,168 and
$1,546 in 1998, 1997 and 1996, respectively.
14. SUBSIDIARY GUARANTORS
On June 5, 1996, the Company issued the Mortgage Notes in a private
placement transaction. In October 1996, the Company exchanged all of the
outstanding privately placed Mortgage Notes for a like amount of identical
Mortgage Notes registered with the Securities and Exchange Commission. The
Mortgage Notes rank senior in right of payment to all existing and future
indebtedness of the Company.
The Mortgage Notes are unconditionally guaranteed, on a joint and several
basis, by the following wholly owned subsidiaries of the Company: Alton Gaming
Company; The Missouri Gaming Company; The St. Louis Gaming Company; Iowa Gaming
Company; Jazz Enterprises, Inc.; Argosy of Louisiana, Inc.; Catfish Queen
Partnership in Commendam; and The Indiana Gaming Company (the "Guarantors"). The
Mortgage Notes are secured, subject to certain prior liens, by a first lien on
(i) substantially all of the assets of the Company including the assets used in
the Company's Alton, Riverside, Baton Rouge and Sioux City operations, (ii) a
pledge of all the capital stock of, and partnership interests in, the Company's
subsidiaries, excluding the Company's partnership interest in its Sioux City
property, (iii) a pledge of the intercompany notes payable to the Company from
its subsidiaries and (iv) an assignment of the proceeds of the management
agreement relating to the Lawrenceburg casino project. The collateral for the
Mortgage Notes does not include assets of the Indiana Partnership.
The following tables present summarized balance sheet information of the
Company as of December 31, 1998 and 1997, and summarized operating statement
information for the years ended December 31, 1998, 1997 and 1996. The column
labeled "Parent Company" represents the holding company for each of the
Company's direct subsidiaries; the column labeled "Guarantors" represents each
of the Company's direct subsidiaries; all of which are wholly owned by the
parent company; and the column labeled "Non-Guarantors" represents the
partnerships which operate the Company's casinos in Sioux City and in
Lawrenceburg. The Company believes that separate financial statements and other
disclosures regarding the Guarantors, except as otherwise required under
Regulation S-X, are not material to investors.
F-16
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
14. SUBSIDIARY GUARANTORS (CONTINUED)
Summarized balance sheet information as of December 31, 1998 and 1997, is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------------------------------
PARENT
COMPANY GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets........................... $ 55,896 $ 22,236 $ 29,585 $ (8,461) $ 99,256
Non-current assets....................... 347,441 360,354 227,439 (471,738) 463,496
---------- ----------- --------------- ------------ ------------
$ 403,337 $ 382,590 $ 257,024 $ (480,199) $ 562,752
---------- ----------- --------------- ------------ ------------
---------- ----------- --------------- ------------ ------------
LIABILITIES AND EQUITY:
Current liabilities...................... $ 7,134 $ 47,507 $ 59,116 $ (42,372) $ 71,385
Non-current liabilities.................. 350,000 269,878 111,208 (285,922) 445,164
Convertible preferred stock.............. 5,340 -- -- -- 5,340
Stockholders' equity..................... 40,863 65,205 86,700 (151,905) 40,863
---------- ----------- --------------- ------------ ------------
$ 403,337 $ 382,590 $ 257,024 $ (480,199) $ 562,752
---------- ----------- --------------- ------------ ------------
---------- ----------- --------------- ------------ ------------
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------------------------
PARENT
COMPANY GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets........................... $ 10,106 $ 27,874 $ 44,581 $ (12,578) $ 69,983
Non-current assets....................... 381,368 387,009 222,577 (501,081) 489,873
---------- ----------- --------------- ------------ ------------
$ 391,474 $ 414,883 $ 267,158 $ (513,659) $ 559,856
---------- ----------- --------------- ------------ ------------
---------- ----------- --------------- ------------ ------------
LIABILITIES AND EQUITY:
Current liabilities...................... $ 8,811 $ 20,595 $ 57,088 $ (17,495) $ 68,999
Non-current liabilities.................. 350,000 348,504 169,605 (409,915) 458,194
Stockholders' equity..................... 32,663 45,784 40,465 (86,249) 32,663
---------- ----------- --------------- ------------ ------------
$ 391,474 $ 414,883 $ 267,158 $ (513,659) $ 559,856
---------- ----------- --------------- ------------ ------------
---------- ----------- --------------- ------------ ------------
</TABLE>
F-17
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
14. SUBSIDIARY GUARANTORS (CONTINUED)
Summarized operating statement information for the years ended December 31,
1998, 1997 and 1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------------
PARENT
COMPANY GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues................................ $ 1,988 $ 230,867 $ 308,246 $ (34,433) $ 506,668
Costs and expenses.......................... 9,984 183,735 227,451 (2,313) 418,857
Net interest (expense) income............... (38,356) 4,067 (18,957) (659) (53,905)
Net income (loss) attributable to common
stockholders.............................. 5,741 27,832 56,285 (84,117) 5,741
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------
PARENT
COMPANY GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues................................ $ 5,795 $ 189,388 $ 158,696 $ (9,796) $ 344,083
Costs and expenses.......................... 23,630 184,818 136,039 (6,934) 337,553
Net interest (expense) income............... (32,145) 2,366 (6,616) (4,784) (41,179)
Net (loss) income........................... (40,213) 8,696 10,599 (19,295) (40,213)
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------
PARENT
COMPANY GUARANTORS NON-GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues................................ $ 4,875 $ 211,319 $ 24,299 $ 4,324 $ 244,817
Costs and expenses.......................... 16,043 209,955 35,552 (5,982) 255,568
Net interest expense........................ (22,177) (7,176) (738) (516) (30,607)
Net (loss) income........................... (24,839) (2,297) (15,718) 18,015 (24,839)
</TABLE>
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments at December
31, 1998, are as follows:
<TABLE>
<CAPTION>
CARRYING
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Cash and cash equivalents............................................. $ 89,857 $ 89,857
First mortgage notes.................................................. 235,000 258,794
Convertible subordinated notes........................................ 115,000 113,131
Other long-term debt.................................................. 74,000 74,000
</TABLE>
The fair value of the first mortgage notes and the convertible subordinated
notes are based on quoted market prices. The Company estimates that the fair
value of the remainder of the Company's long-term debt approximates carrying
value.
F-18
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1998:
Net revenues..................................................... $ 115,700 $ 124,457 $ 133,533 $ 132,978
Income from operations........................................... 15,651 19,390 25,697 27,073
Other expense, net............................................... 13,482 13,363 13,694 13,366
Net income (loss) attributable to common stockholders............ (2,537) 244 4,016 4,018
Net income (loss) per share
Basic.......................................................... (0.10) 0.01 0.17 0.16
Diluted........................................................ (0.10) 0.01 0.15 0.14
<CAPTION>
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1997:
Net revenues..................................................... $ 82,495 $ 87,509 $ 82,351 $ 91,728
Income (loss) from operations (a)................................ 1,961 7,106 933 (3,470)
Other expense, net............................................... 10,460 9,920 9,778 11,021
Net loss......................................................... (9,017) (4,265) (9,623) (17,308)
Basic and diluted net loss per share............................. (0.37) (0.17) (0.39) (0.71)
</TABLE>
- ------------------------
(a) Income from operations includes a charge of $1,750 related to severance
expense for the first quarter of 1997 and a charge of $9,600 for a
write-down of assets held for sale in the fourth quarter of 1997.
17. COMMITMENTS AND CONTINGENT LIABILITIES
LAWRENCEBURG, INDIANA--Under terms of the Lawrenceburg partnership
agreement, after December 10, 1999, each limited partner has the right to sell
its interest to the other partners (pro rata in accordance with their respective
percentage interests). In the event of this occurrence, if the partners cannot
agree on a selling price, the Indiana Partnership will be sold in its entirety.
OTHER--A predecessor entity to the Company ("Predecessor"), as a result of a
certain shareholder loan transaction, could be subject to federal and certain
state income taxes (plus interest and penalties, if any) if it is determined
that it failed to satisfy all of the requirements of the S-Corporation
provisions of the Internal Revenue Code relating to the prohibition concerning a
second class of stock.
An audit is currently being conducted by the Internal Revenue Service
("IRS") of the Company's federal income tax returns for the 1992 and 1993 tax
years and the IRS has identified the S-Corporation status as one of the issues,
although the IRS has yet to make a formal claim of deficiency. If the IRS
successfully challenges the Predecessor's S-Corporation status, the Company
would be required to pay federal and certain state income taxes on the
Predecessor's taxable income from the commencement of its operations until
February 25, 1993 (plus interest and penalties, if any, thereon until the date
of payment). If the Predecessor was required to pay federal and state income
taxes on its taxable earnings through February 25, 1993, such payments could
amount to approximately $13.5 million, including interest through December 31,
1998, but excluding penalties, if any. While the Company believes the
Predecessor has legal authority for its position that it is not subject to
federal
F-19
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
17. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
and certain state income taxes because it met the S-Corporation requirements, no
assurances can be given that the Predecessor's position will be upheld. This
contingent liability could have a material adverse effect on the Company's
results of operations, financial condition and cash flows. No provision has been
made for this contingency in the accompanying consolidated financial statements.
The Company is subject, from time to time, to various legal and regulatory
proceedings, in the ordinary course of business. The Company believes that
current proceedings will not have a material effect on the financial condition
of the Company.
F-20
<PAGE>
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
1998
MARCH 31, ------------
1999
-----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................................................... $ 105,936 $ 89,857
Other current assets................................................................ 9,165 9,399
----------- ------------
Total current assets.............................................................. 115,101 99,256
----------- ------------
NET PROPERTY AND EQUIPMENT............................................................ 392,106 395,920
----------- ------------
OTHER ASSETS:
Goodwill and other intangible assets, net........................................... 51,319 51,817
Other, net.......................................................................... 15,280 15,759
----------- ------------
Total other assets................................................................ 66,599 67,576
----------- ------------
TOTAL ASSETS.......................................................................... $ 573,806 $ 562,752
----------- ------------
----------- ------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities............................................ $ 66,819 $ 57,130
Other current liabilities........................................................... 13,342 14,255
----------- ------------
Total current liabilities......................................................... 80,161 71,385
----------- ------------
LONG-TERM DEBT........................................................................ 407,789 412,360
OTHER LONG-TERM OBLIGATIONS........................................................... 2,148 2,144
MINORITY INTERESTS IN EQUITY OF CONSOLIDATED SUBSIDIARIES............................. 34,518 30,660
SERIES A CONVERTIBLE PREFERRED STOCK, $.01 PAR VALUE 10,000,000 SHARES AUTHORIZED, 547
SHARES ISSUED AND OUTSTANDING AT DECEMBER 31, 1998.................................. -- 5,340
STOCKHOLDERS' EQUITY:
Common stock, $.01 par; 60,000,000 shares authorized; 28,140,326 shares issued and
outstanding at March 31, 1999; 25,830,313 shares issued and outstanding at
December 31, 1998................................................................. 281 258
Capital in excess of par............................................................ 79,894 74,484
Retained deficit.................................................................... (30,985) (33,879)
----------- ------------
Total stockholders' equity........................................................ 49,190 40,863
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................................ $ 573,806 $ 562,752
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-21
<PAGE>
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
REVENUES:
Casino................................................................................ $ 129,128 $ 108,323
Admissions............................................................................ 4,278 3,191
Food, beverage and other.............................................................. 13,593 11,133
----------- -----------
146,999 122,647
Less promotional allowances........................................................... (9,608) (6,947)
----------- -----------
Net revenues............................................................................ 137,391 115,700
----------- -----------
COSTS AND EXPENSES:
Casino................................................................................ 59,450 52,623
Food, beverage and other.............................................................. 9,637 9,349
Other operating expenses.............................................................. 6,588 6,618
Selling, general and administrative................................................... 28,652 23,393
Depreciation and amortization......................................................... 8,473 8,066
----------- -----------
112,800 100,049
----------- -----------
Income from operations.................................................................. 24,591 15,651
----------- -----------
OTHER INCOME (EXPENSE):
Interest income....................................................................... 907 810
Interest expense...................................................................... (14,134) (14,292)
----------- -----------
(13,227) (13,482)
----------- -----------
Income before income taxes and minority interests....................................... 11,364 2,169
Minority interests...................................................................... (7,843) (4,606)
Income tax expense...................................................................... (600) (100)
----------- -----------
Net income (loss)....................................................................... 2,921 (2,537)
Preferred stock dividends and accretion................................................. (27) --
----------- -----------
Net income (loss) attributable to common stockholders................................... $ 2,894 $ (2,537)
----------- -----------
----------- -----------
Basic income (loss) per share........................................................... $ 0.11 $ (0.10)
----------- -----------
----------- -----------
Diluted income (loss) per share......................................................... $ 0.10 $ (0.10)
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-22
<PAGE>
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
CAPITAL IN TOTAL
COMMON EXCESS OF RETAINED STOCKHOLDERS'
SHARES STOCK PAR DEFICIT EQUITY
------------ ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998......................... 25,830,313 $ 258 $ 74,484 $ (33,879) $ 40,863
Restricted Stock compensation expense............ -- -- 66 -- 66
Preferred Stock conversion....................... 2,310,013 23 5,344 -- 5,367
Net income for the three months ended March 31,
1999........................................... -- -- -- 2,921 2,921
Preferred Stock dividends and accretion.......... -- -- -- (27) (27)
------------ ----- ----------- ---------- ------------
Balance, March 31, 1999............................ 28,140,326 $ 281 $ 79,894 $ (30,985) $ 49,190
------------ ----- ----------- ---------- ------------
------------ ----- ----------- ---------- ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-23
<PAGE>
ARGOSY GAMING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 31, MARCH 31,
1999 1998
---------- -----------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................................................... $ 2,921 $ (2,537)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation............................................................................ 7,948 7,438
Amortization............................................................................ 1,038 1,075
Compensation expense recognized on issuance of stock.................................... 66 66
Minority interests...................................................................... 7,843 4,606
Changes in operating assets and liabilities:
Other current assets.................................................................... 173 229
Accounts payable and other current liabilities.......................................... 10,248 10,589
---------- -----------
Net cash provided by operating activities............................................. 30,237 21,466
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment..................................................... (4,130) (15,107)
Decrease in restricted cash held by trustees............................................ -- 8,142
Decrease in long term obligations....................................................... -- (1,247)
---------- -----------
Net cash used in investing activities................................................. (4,130) (8,212)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and installment contracts.................................... (2,113) (1,282)
Repayment of partner loans.............................................................. (3,368) (5,236)
Partnership equity distributions........................................................ (3,424) (1,714)
Payment of preferred equity return to partner........................................... (1,123) (75)
---------- -----------
Net cash used in financing activities................................................. (10,028) (8,307)
---------- -----------
Net increase in cash and cash equivalents................................................. 16,079 4,947
Cash and cash equivalents, beginning of period............................................ 89,857 59,354
---------- -----------
Cash and cash equivalents, end of period.................................................. $ 105,936 $ 64,301
---------- -----------
---------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-24
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
1. BASIS OF PRESENTATION
Argosy Gaming Company (collectively with its subsidiaries, "Argosy" or
"Company") is engaged in the business of providing casino style gaming and
related entertainment to the public and, through its subsidiaries or joint
ventures, operates riverboat casinos in Alton, Illinois; Lawrenceburg, Indiana;
Riverside, Missouri; Baton Rouge, Louisiana; and Sioux City, Iowa. Indiana
Gaming Company, L.P., ("Indiana Partnership") is a limited partnership which
owns the casino in Lawrenceburg, Indiana. The Company is the sole general
partner, holds a 57.5% interest and manages the Indiana Partnership.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. Interim results may not necessarily be indicative of
results which may be expected for any other interim period or for the year as a
whole. For further information, refer to the financial statements and footnotes
thereto for the year ended December 31, 1998, included in the Company's Annual
Report on Form 10-K (File No. 1-11853). The accompanying unaudited condensed
consolidated financial statements contain all adjustments which are, in the
opinion of management, necessary to present fairly the financial position and
the results of operations for the periods indicated. Such adjustments include
only normal recurring accruals. Certain 1998 amounts have been reclassified to
conform to the 1999 financial statement presentation.
As of March 31, 1999 the Company is in a net operating loss position and,
therefore, has recorded a valuation allowance of $11,500 against its deferred
tax assets.
F-25
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
MARCH 31, MARCH 31,
1999 1998
------------- -------------
(UNAUDITED)
<S> <C> <C>
NUMERATOR:
Net income (loss).............................................. $ 2,921 $ (2,537)
Preferred stock dividends and accretion........................ (27) --
------------- -------------
Numerator for basic earnings per share--
Income (loss) attributable to common shareholders............ 2,894 (2,537)
Effect of dilutive securities:
Preferred stock dividends.................................... 27 --
------------- -------------
Numerator for diluted earnings per share--
Income (loss) available to common stockholders after assumed
conversions................................................ $ 2,921 $ (2,537)
DENOMINATOR:
Denominator for basic earnings per share--weighted-average
shares outstanding........................................... 27,114,690 24,333,333
Effect of dilutive securities:
Restricted stock............................................. 68,558 --
Employee stock options....................................... 119,470 --
Preferred stock.............................................. 1,046,624 --
Warrants..................................................... 12,987 --
------------- -------------
Dilutive potential common shares............................... 1,247,639 --
Denominator for diluted earnings per share--adjusted
Weighted-average shares and assumed conversions.............. 28,362,329 24,333,333
------------- -------------
------------- -------------
Basic earnings (loss) per share................................ $ 0.11 $ (0.10)
------------- -------------
------------- -------------
Diluted earnings (loss) per share.............................. $ 0.10 $ (0.10)
------------- -------------
------------- -------------
</TABLE>
Additional employee and directors stock options to purchase 852,024 shares
of common stock at prices ranging from $4.25 to $16.75 were not included in the
computation of diluted earnings per share because the options exercise price was
greater than the average market price of the common shares and, therefore, the
effect would be anti-dilutive.
12% Convertible Debentures (convertible into 6,497,175 shares of common
stock at $17.70 per share) were outstanding at March 31, 1999 but were not
included in the computation of diluted earnings per share as the net interest
expense per common share obtainable on conversion exceeded basic earnings per
share, thus the effect would be anti-dilutive.
F-26
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
3. CONVERTIBLE PREFERRED STOCK AND WARRANTS
On June 16, 1998, the Company issued $8,000 of Series A Convertible
Preferred Stock ("Preferred Shares"), together with warrants to purchase an
additional 292,612 shares of Common Stock at $3.89 per share. The Preferred
Shares mature in 2005, and the Company had the right to force conversion and/or
redemption at maturity. A portion of the proceeds was allocated to the warrants
and this discount was to be accreted over seven years. The warrants expire in
2003.
The Preferred Shares provided for a 4% dividend per annum, payable in cash
and/or in kind, at the time of conversion or maturity, at the Company's option.
The Preferred Shares were convertible at the lower of the fixed initial
strike price ($3.89 per share) or a floating price. The floating price is based
on the market price of the Company's common stock. The warrants may be exercised
at the fixed strike price subject to the same adjustment provisions.
Through March 31, 1999, all 800 Preferred Shares had been converted into
3,641,993 shares of common stock. As of March 31, 1999 no warrants had yet been
converted.
4. COMMITMENTS AND CONTINGENT LIABILITIES
LAWRENCEBURG, INDIANA--Under terms of the Lawrenceburg partnership
agreement, after December 10, 1999, each limited partner has the right to sell
its interest to the other partners (pro rata in accordance with their respective
percentage interests). In the event of this occurrence, if the partners cannot
agree on a selling price, the Indiana Partnership will be sold in its entirety.
OTHER--A predecessor entity to the Company ("Predecessor"), as a result of a
certain shareholder loan transaction, could be subject to federal and certain
state income taxes (plus interest and penalties, if any) if it is determined
that it failed to satisfy all of the requirements of the S-Corporation
provisions of the Internal Revenue Code ("Code") relating to the prohibition
concerning a second class of stock.
An audit is currently being conducted by the Internal Revenue Service
("IRS") of the Company's federal income tax returns for the 1992 and 1993 tax
years and the IRS has identified the S-Corporation status as one of the issues,
although the IRS has yet to make a formal claim of deficiency. If the IRS
successfully challenges the Predecessor's S-Corporation status, the Company
would be required to pay federal and certain state income taxes on the
Predecessor's taxable income from the commencement of its operations until
February 25, 1993 (plus interest and penalties, if any, thereon until the date
of payment). If the Predecessor was required to pay federal and state income
taxes on its taxable earnings through February 25, 1993, such payments could
amount to approximately $13,800, including interest through March 31, 1999, but
excluding penalties, if any. While the Company believes the Predecessor has
legal authority for its position that it is not subject to federal and certain
state income taxes because it met the S-Corporation requirements, no assurances
can be given that the Predecessor's position will be upheld. No provision has
been made for this contingency in the accompanying condensed consolidated
financial statements.
The Company is subject, from time to time, to various legal and regulatory
proceedings, in the ordinary course of business. The Company believes that
current proceedings will not have a material effect on the financial condition
of the Company.
F-27
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
5. SUBSIDIARY GUARANTORS
The Company has issued $235 million First Mortgage Notes, due 2004,
("Mortgage Notes"). The Mortgage Notes rank senior in right of payment to all
existing and future indebtedness of the Company.
The Mortgage Notes are unconditionally guaranteed, on a joint and several
basis, by the following wholly-owned subsidiaries of the Company: Alton Gaming
Company, The Missouri Gaming Company, The St. Louis Gaming Company, Iowa Gaming
Company, Jazz Enterprises, Inc., Argosy of Louisiana, Inc., Catfish Queen
Partnership in Commendam and The Indiana Gaming Company (the "Guarantors"). The
Mortgage Notes are secured, subject to certain prior liens, by a first lien on
(i) substantially all of the assets of the Company including the assets used in
the Company's Alton, Riverside, Baton Rouge and Sioux City operations, (ii) a
pledge of all the capital stock of, and partnership interests in, the Company's
subsidiaries, excluding the Company's partnership interest in its Sioux City
property, (iii) a pledge of the intercompany notes payable to the Company from
its subsidiaries and (iv) an assignment of the proceeds of the management
agreement relating to the Lawrenceburg Casino project. The collateral for the
Mortgage Notes does not include assets of the Indiana Partnership.
The following tables present summarized balance sheet information of the
Company as of March 31, 1999 and December 31, 1998 and summarized operating
statement information for the three months ended March 31, 1999 and 1998. The
column labeled "Parent Company" represents the holding company for each of the
Company's direct subsidiaries, the column labeled "Guarantors" represents each
of the Company's direct subsidiaries, all of which are wholly-owned by the
parent company, and the column labeled "Non-Guarantors" represents the
partnerships which operate the Company's casinos in Sioux City, Iowa and
Lawrenceburg, Indiana. The Company believes that separate financial statements
and other disclosures regarding the Guarantors, except as otherwise required
under Regulation S-X, are not material to investors.
F-28
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Summarized balance sheet information as of March 31, 1999 and December 31,
1998 is as follows:
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------------------------------------------
PARENT NON-
COMPANY GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets............................... $ 70,314 $ 29,315 $ 24,222 $ (8,750) $ 115,101
Non-current assets........................... 350,029 374,589 225,748 (491,661) 458,705
---------- ----------- ----------- ------------ ------------
$ 420,343 $ 403,904 $ 249,970 $ (500,411) $ 573,806
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
LIABILITIES AND EQUITY:
Current liabilities.......................... $ 21,179 $ 68,096 $ 51,599 $ (60,713) $ 80,161
Non-current liabilities...................... 349,974 256,203 102,449 (264,171) 444,455
Stockholders' equity......................... 49,190 79,605 95,922 (175,527) 49,190
---------- ----------- ----------- ------------ ------------
$ 420,343 $ 403,904 $ 249,970 $ (500,411) $ 573,806
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------------------------
PARENT NON-
COMPANY GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Current assets............................... $ 55,896 $ 22,236 $ 29,585 $ (8,461) $ 99,256
Non-current assets........................... 347,441 360,354 227,439 (471,738) 463,496
---------- ----------- ----------- ------------ ------------
$ 403,337 $ 382,590 $ 257,024 $ (480,199) $ 562,752
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
LIABILITIES AND EQUITY:
Current liabilities.......................... $ 7,134 $ 47,507 $ 59,116 $ (42,372) $ 71,385
Non-current liabilities...................... 350,000 269,878 111,208 (285,922) 445,164
Convertible preferred stock.................. 5,340 -- -- -- 5,340
Stockholders' equity......................... 40,863 65,205 86,700 (151,905) 40,863
---------- ----------- ----------- ------------ ------------
$ 403,337 $ 382,590 $ 257,024 $ (480,199) $ 562,752
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-29
<PAGE>
ARGOSY GAMING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Summarized operating statement information for the three months ended March
31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------------------
PARENT NON-
COMPANY GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues..................................... $ 665 $ 62,552 $ 84,837 $ (10,663) $ 137,391
Costs and expenses............................... 5,025 46,600 62,041 (866) 112,800
Net interest expense (income).................... 9,738 (704) 4,193 -- 13,227
Net (loss) income................................ 2,894 9,767 17,278 (27,045) 2,894
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------------------------------
PARENT NON-
COMPANY GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues..................................... $ 167 $ 55,620 $ 65,228 $ (5,315) $ 115,700
Costs and expenses............................... 2,873 48,444 49,505 (773) 100,049
Net interest expense (income).................... 9,536 (1,305) 4,900 351 13,482
Net (loss) income................................ (2,537) 4,547 9,421 (13,968) (2,537)
</TABLE>
F-30
<PAGE>
ARGOSY GAMING COMPANY
OFFER TO EXCHANGE ALL OUTSTANDING 10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
($200,000,000 PRINCIPAL AMOUNT)
FOR
REGISTERED 10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
($200,000,000 PRINCIPAL AMOUNT)
PROSPECTUS
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY INFORMATION OR REPRESENT
ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SECURITIES IN ANY
JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT
AS OF JULY 22, 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Delaware GCL")
empowers a corporation subject to certain limitations, to indemnify its
directors and officers against expenses (including attorneys' fees, judgments,
fines and certain settlements) actually and reasonably incurred by them in
connection with any suit or proceeding to which they are a party so long as they
acted in good faith and in a manner reasonably to be in or not opposed to the
best interests of the corporation, and, with respect to a criminal action or
proceeding, so long as they had no reasonable cause to believe their conduct to
have been unlawful. The Registrant's Certificate of Incorporation and By-laws
provide that the Registrant shall indemnify its directs and such of its
officers, employees and agents as the Board of Directs may determine from time
to time, to the fullest extent permitted by Section 145 of the Delaware GCL:
Section 102 of the Delaware GCL permits a Delaware corporation to include in
its certificate of incorporation a provision eliminating or limiting a
director's liability to a corporation or its stockholders for monetary damages
for breaches of fiduciary duty. The enabling statute provides, however, that
liability for breaches of the duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct, or knowing violation of the law, and
the unlawful purchase or redemption of stock or payment of unlawful dividends or
the receipt of improper personal benefits cannot be eliminated or limited in
this manner. The Registrant's Certificate of Incorporation and By-laws include a
provision which eliminates, to the fullest extent permitted, director liability
for monetary damages for breaches of fiduciary duty.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------
<C> <S>
3.1 Amended and Restated Certificate of Incorporation of the Company
(previously filed with the Securities and Exchange Commission ("SEC")
as an Exhibit to the Company's Registration Statement on Form S-1
(File No. 33-55878) and incorporated herein by reference).
3.2 Amended and Restated By-laws of the Company (previously filed with the
SEC as an Exhibit to the Company's Registration Statement on Form S-1
(File No. 33-55878) and incorporated herein by reference).
4.1 Form of the Company's 13 1/4% First Mortgage Notes due 2004 issued on
June 5, 1996 in the aggregate principal amount of $235,000,000
(previously filed with the SEC as an Exhibit to the Company's
Registration Statement on Form S-4 (File No. 333-7299) and
incorporated herein by reference).
4.2 Indenture dated as of June 5, 1996, by and among the Company, First
National Bank of Commerce, as Trustee, and the Guarantors named
therein, for the Company's $235,000,000 of 13 1/4% First Mortgage
Notes due 2004 (previously filed with the SEC as an Exhibit to the
Company's Registration Statement on Form S-4 (File No. 333-7299) and
incorporated herein by reference).
4.3 First Supplemental Indenture dated as of May 18, 1999, with respect to
the Indenture dated as of June 5, 1996, by and among the Company,
Bank One Trust Company, NA (as successor in interest to First
National Bank of Commerce), as Trustee, and
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------
the Guarantors named therein, for the Company's 13 1/4% First
Mortgage Notes due 2004.
<C> <S>
4.4 Specimen Common Stock Certificate (previously filed with the SEC as an
Exhibit to the Company's Registration Statement on Form S-1 (File No.
33-55878) and incorporated herein by reference).
4.5 Indenture dated as of June 8, 1999 by and among the Company, Bank One
Trust Company, as Trustee, and the Subsidiary Guarantors named
therein, for the Company's 10 3/4% Senior Subordinated Notes due
2009.
4.6 Form of the Company's 10 3/4% Senior Subordinated Notes due 2009 issued
on June 8, 1999 in the aggregate principal amount of $200,000,000
(included in Exhibit 4.22).
4.7 Registration Rights Agreement dated as of June 8, 1999 by and among the
Company, the Subsidiary Guarantors named therein and the Placement
Agents named therein.
4.8 Form of Exchange Agent Agreement between the Company and Bank One Trust
Company, NA.
5 Legal Opinion of Winston & Strawn regarding the validity of the
issuance of the 10 3/4% Senior Subordinated Notes due 2009.
9.1 Pratt Voting Trust Agreement dated as of May 5, 1992 by and between
John Biggs Pratt, Sr. and Stephanie Pratt (previously filed with the
SEC as an Exhibit to the Company's Registration Statement on Form S-1
(File No. 33-55878) and incorporated herein by reference).
10.1 Bond and Easement Agreement dated as of April 18, 1991 by and between
the Alton Riverboat Gambling Partnership and the City of Alton,
Illinois (previously filed with the SEC as an Exhibit to the
Company's Registration Statement on Form S-1 (File No. 33-55878) and
incorporated herein by reference).
10.2 Stock Option Plan (previously filed with the SEC as an Exhibit to the
Company's Registration Statement on Form S-1 (File No. 33-55878) and
incorporated herein by reference).
10.3 Form of Indemnification Agreement (previously filed with the SEC as an
Exhibit to the Company's Registration Statement on Form S-1 (File No.
33-55878) and incorporated herein by reference).
10.4 Director Option Plan (previously filed with the SEC as an Exhibit to
the Company's Registration Statement on Form S-1 (File No. 33-55878)
and incorporated herein by reference).
10.5 Employment Agreement between the Company and Virginia M. McDowell
(previously filed with the SEC as an Exhibit to the Company's Form
10-K for the year ended December 31, 1997 and incorporated herein by
reference).
10.6 Letter Agreement dated as of January 2, 1993 by and between L. Thomas
Lakin and the Alton Riverboat Gambling Partnership (previously filed
with the SEC as an Exhibit to the Company's Registration Statement on
Form S-1 (File No. 33-55878) and incorporated herein by reference).
10.7 Letter Agreement dated March 29, 1995 by and between Floyd C. Warmann
and the Company (previously filed with the SEC as an exhibit to the
Company's Form 10-K
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------
for the year ended December 31, 1994 dated March 31, 1995 and
incorporated herein by reference).
<C> <S>
10.8 Agreement to Purchase Stock dated January 30, 1995 by and among the
Company, Jazz Enterprises, Inc. and the signatory shareholders of
Jazz Enterprises, Inc. (previously filed with the SEC as an exhibit
to the Company's Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference).
10.9 Contract dated June 7, 1993 by and among the City of Riverside,
Missouri, The Missouri Gaming Company and the Company, together with
amendments thereto (previously filed with the SEC as an Exhibit to
the Company's Form 8-K dated March 10, 1994 and incorporated herein
by reference).
10.10 Second Amended and Restated Agreement of Limited Partnership dated
February 21, 1996 of Indiana Gaming Company, L.P. (previously filed
with the SEC as an Exhibit to the Company's Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference).
10.11 Management Agreement dated April 11, 1994 by and between Indiana Gaming
Company L.P. and The Indiana Gaming Company as amended by Amendment
No. 1 to Management Agreement dated February 21, 1996 (previously
filed with the SEC as an Exhibit to the Company's Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference).
10.12 Affirmation of Limited Parent Guaranty of Argosy Gaming Company in
favor of the partners of Indiana Gaming Company, L.P. dated February
21, 1996 (previously filed with the SEC as an Exhibit to the
Company's Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
10.13 Riverboat Gaming Development Agreement between the City of
Lawrenceburg, Indiana and Indiana Gaming Company L.P. dated as of
April 13, 1994 as amended by Amendment Number One to Riverboat
Development Agreement between the City of Lawrenceburg, Indiana and
Indiana Gaming Company L.P. dated as of December 28, 1995 (previously
filed with the SEC as an Exhibit to the Company's Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference).
10.14 Guaranty of Development Agreement dated as of April 13, 1994 by the
Company in favor of the City of Lawrenceburg (previously filed with
the SEC as an Exhibit to the Company's Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference.)
10.15 Form of Surety Bond and Guaranty, dated December 17, 1996, issued to
the Indiana Gaming Commission, as obligee with USF&G, as surety.
(previously filed with the SEC as an Exhibit to the Company's Form
10-K for the year ended December 31, 1996 and incorporated herein by
reference).
10.16 Employment Agreement between the Company and James B. Perry dated as of
April 22, 1999.
10.17 Employment Agreement between the Company and James G. Gulbrandsen.
(previously filed with the SEC as an Exhibit to the Company's Form
10-K for the year ended December 31, 1997 and incorporated herein by
reference).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------
<C> <S>
10.18 Credit Agreement dated as of June 8, 1999 among the Company, Alton
Gaming Company, Argosy of Louisiana, Inc., Catfish Queen Partnership
in Commendam, The Indiana Gaming Company, Iowa Gaming Company, Jazz
Enterprises, Inc. and The Missouri Gaming Company, as Borrowers, the
Lenders named therein and Wells Fargo Bank, National Association, as
Agent Bank.
12 Computation of Ratio of Earnings to Fixed Charges
21 List of the Company's Subsidiaries (previously filed with the SEC as an
Exhibit to the Company's Form 10-K for the year ended December 31,
1998 and incorporated herein by reference).
23.1 Consent of Independent Auditors
23.2 Consent of Winston & Strawn (included in the opinion filed as Exhibit 5
hereto)
24 Powers of Attorney (included on signature pages of this Registration
Statement on Form S-4).
25 Statement of Eligibility and Qualification on Form T-1 under the Trust
Indenture Act of 1939 of Bank One Trust Company, NA, as Trustee under
the Indenture relating to the 10 3/4% Senior Subordinated Notes due
2009.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Instruction Letter.
</TABLE>
(b) Financial Statement Schedules
None.
All schedules are omitted because the required information is not present in
amounts sufficient to require submission of the schedule or because the
information required is included in the financial statements or notes thereto.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of 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
II-4
<PAGE>
a court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 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.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired therein, that was not the subject of and included in the
registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
ARGOSY GAMING COMPANY
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James B. Perry and Dale R. Black as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all post-effective amendments to the 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 each said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President and Chief
/s/ JAMES B. PERRY Executive Officer
- ------------------------------ (Principal Executive July 22, 1999
James B. Perry Officer)
Vice President and Chief
/s/ DALE R. BLACK Financial Officer
- ------------------------------ (Principal Financial July 22, 1999
Dale R. Black Officer and Principal
Account Officer)
/s/ WILLIAM F. CELLINI
- ------------------------------ Director July 22, 1999
William F. Cellini
/s/ EDWARD F. BRENNAN
- ------------------------------ Director July 22, 1999
Edward F. Brennan
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ GEORGE L. BRISTOL
- ------------------------------ Director July 22, 1999
George L. Bristol
/s/ F. LANCE CALLIS
- ------------------------------ Director July 22, 1999
F. Lance Callis
/s/ JIMMY F. GALLAGHER
- ------------------------------ Director July 22, 1999
Jimmy F. Gallagher
/s/ WILLIAM J. MCENERY
- ------------------------------ Director July 22, 1999
William J. McEnery
/s/ JOHN B. PRATT, SR.
- ------------------------------ Director July 22, 1999
John B. Pratt, Sr.
</TABLE>
S-2
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
ALTON GAMING COMPANY
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
ARGOSY OF LOUISIANA, INC.
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
By: Argosy of Louisiana, Inc.
Its: General Partner
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President and Sole
Director (Principal
/s/ JAMES B. PERRY Executive Officer) of
- ------------------------------ Argosy of Louisiana, July 22, 1999
James B. Perry Inc., the general
partner of Catfish Queen
Partnership in Commendam
Treasurer (Principal
Financial Officer and
Principal Accounting
/s/ DALE R. BLACK Officer) of Argosy of
- ------------------------------ Louisiana, Inc., the July 22, 1999
Dale R. Black general partner of
Catfish Queen
Partnership in Commendam
</TABLE>
S-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
THE INDIANA GAMING COMPANY
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
IOWA GAMING COMPANY
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
JAZZ ENTERPRISES, INC.
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Alton, State
of Illinois on July 22, 1999.
<TABLE>
<S> <C> <C>
THE MISSOURI GAMING COMPANY
By: /s/ JAMES B. PERRY
-----------------------------------------
James B. Perry
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons on the dates and
in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ JAMES B. PERRY President and Sole
- ------------------------------ Director (Principal July 22, 1999
James B. Perry Executive Officer)
Treasurer (Principal
/s/ DALE R. BLACK Financial Officer and
- ------------------------------ Principal Accounting July 22, 1999
Dale R. Black Officer)
</TABLE>
S-9
<PAGE>
First Supplemental Indenture
dated as of May 18, 1999
with respect to:
13-1/4% FIRST MORTGAGE NOTES DUE 2004
INDENTURE
Dated as of June 5, 1996
ARGOSY GAMING COMPANY,
as Issuer
THE GUARANTORS NAMED THEREIN
BANK ONE TRUST COMPANY, NA,
as successor Trustee to First National Bank of Commerce
<PAGE>
FIRST SUPPLEMENTAL INDENTURE dated as of May 18, 1999 (this "Supplemental
Indenture") between ARGOSY GAMING COMPANY, a Delaware corporation (the
"Company"), ALTON GAMING COMPANY, an Illinois corporation, ARGOSY OF LOUISIANA,
INC., a Louisiana corporation, CATFISH QUEEN PARTNERSHIP IN COMMENDAM, a
Louisiana partnership, THE INDIANA GAMING COMPANY, an Indiana corporation, IOWA
GAMING COMPANY, an Iowa corporation, JAZZ ENTERPRISES, INC., a Louisiana
corporation, THE MISSOURI GAMING COMPANY, a Missouri corporation and THE ST.
LOUIS GAMING COMPANY, a Missouri corporation, as Guarantors (the "Guarantors")
and BANK ONE TRUST COMPANY, NA, a national banking association organized under
the laws of the United States, as trustee (the "Trustee") for the securities
issued under the Indenture dated as of June 5, 1996 (the "Indenture") among the
Company, the Guarantors and the Trustee, as successor trustee to First National
Bank of Commerce.
RECITALS
A. Pursuant to and in accordance with the terms of the Indenture dated
as of June 5, 1996, the Company established and issued debt securities
denominated as the "13-1/4% First Mortgage Notes due 2004" (the "Notes") and
entered into the related security documents (the "Security Documents"). Notes in
the aggregate principal amount of $234,976,000 are outstanding on the date of
this Supplemental Indenture.
B. In accordance with Section 10.2 of the Indenture, the Company has
obtained the written consent of the holders of Notes representing not less than
85% in principal amount of the outstanding Notes to certain amendments to the
Indenture and Security Documents.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually covenanted and agreed as follows:
AGREEMENTS
Section 1. DEFINED TERMS. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Indenture.
Section 2. CONDITION TO EFFECTIVENESS, OPERATIVE DATE. This
Supplemental Indenture shall become effective as of the date hereof. The
terms of this Supplemental Indenture will become operative only upon
acceptance by the Company for payment of tendered Notes pursuant to the terms
of the Company's Offer to Purchase and Consent Solicitation Statement dated
May 5, 1999, as such offer may be amended from time to time. The date that
this Supplemental Indenture becomes operative shall be denominated herein as
the "Operative Date."
2
<PAGE>
Section 3. AMENDMENT TO INDENTURE.
(a) The Indenture is hereby amended by deleting therefrom the following
provisions in their entirety:
<TABLE>
<CAPTION>
------------------------- -------------------------------------------------
EXISTING SECTION NUMBER CAPTION
------------------------- -------------------------------------------------
<S> <C>
Section 5.3 Limitation on Restricted Payments
------------------------- -------------------------------------------------
Section 5.5 Payment of Taxes and Other Claims
------------------------- -------------------------------------------------
Section 5.6 Maintenance of Insurance
------------------------- -------------------------------------------------
Section 5.8 Reports
------------------------- -------------------------------------------------
Section 5.9 Waiver of Stay, Extension or Usury Laws
------------------------- -------------------------------------------------
Section 5.10 Limitation on Transactions with Affiliates
------------------------- -------------------------------------------------
Section 5.11 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock
------------------------- -------------------------------------------------
Section 5.12 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries
------------------------- -------------------------------------------------
Section 5.13 Limitation on Liens Securing Indebtedness
------------------------- -------------------------------------------------
Section 5.14 Limitation on Sale of Assets and Subsidiary Stock
------------------------- -------------------------------------------------
Section 5.15 Limitation on Use of Proceeds
------------------------- -------------------------------------------------
Section 5.16 Repurchase of Notes on Certain Project Delays
------------------------- -------------------------------------------------
Section 5.17 Repurchase of Notes in Connection with Sale of
Lawrenceburg Interest
------------------------- -------------------------------------------------
Section 5.18 Repurchase of Notes in Connection with
Repayment of Lawrenceburg Investment
------------------------- -------------------------------------------------
Section 5.19 Repurchase of Notes on Loss of Material Casino
------------------------ --------------------------------------------------
Section 5.20 Limitation on Activities of The Indiana
Gaming Company and Indiana Gaming L.P.
------------------------- -------------------------------------------------
Section 5.21 Limitation on Lines of Business
------------------------- -------------------------------------------------
Section 5.22 Limitation on Status as Investment Company
------------------------- -------------------------------------------------
Section 5.23 Future Subsidiary Guarantors
------------------------- -------------------------------------------------
Section 5.24 Rule 144A Information Requirement;
------------------------- -------------------------------------------------
Section 6.1 Limitation on Merger, Sale or Consolidation
------------------------- -------------------------------------------------
Section 13.1 Guarantee
------------------------- -------------------------------------------------
Section 13.2 Execution and Delivery of Guarantee
------------------------- -------------------------------------------------
Section 13.3 Certain Bankruptcy Events
------------------------- -------------------------------------------------
Section 13.4 Release of Guarantee
------------------------- -------------------------------------------------
Section 13.5 Future Guarantors
------------------------- -------------------------------------------------
</TABLE>
(b) The Indenture is hereby amended by deleting therefrom subsections
(b) and (c) of Section 5.7 captioned "Compliance Certificate; Notice of
Default."
(c) The Indenture is hereby amended by deleting therefrom subsections
(6), (7) and (9) of Section 7.1 captioned "Events of Default."
3
<PAGE>
(d) Each of the following provisions of the Indenture is hereby
renumbered as indicated below:
<TABLE>
<CAPTION>
- ------------------------ -------------------- ----------------------------------
EXISTING SECTION NUMBER NEW SECTION NUMBER CAPTION
<S> <C> <C>
- ------------------------ -------------------- ----------------------------------
5.4 5.3 Corporate Existence
- ------------------------ -------------------- ----------------------------------
5.7 5.4 Compliance Certificate; Notice of
Default"
- ------------------------ -------------------- ----------------------------------
7.1(8) 7.1(6)
- ------------------------ -------------------- ----------------------------------
14.1 13.1 TIA Controls
- ------------------------ -------------------- ----------------------------------
14.2 13.2 Notices
- ------------------------ -------------------- ----------------------------------
14.3 13.3 Communications by Holders with
Other Holders
- ------------------------ -------------------- ----------------------------------
14.4 13.4 Certificate and Opinion as to
Conditions Precedent
- ------------------------ -------------------- ----------------------------------
14.5 13.5 Statements Required in Certificate
or Opinion
- ------------------------ -------------------- ----------------------------------
14.6 13.6 Rules by Trustee, Paying Agent,
Registrar
- ------------------------ -------------------- ----------------------------------
14.7 13.7 Legal Holidays
- ------------------------ -------------------- ----------------------------------
14.8 13.8 Governing Law
- ------------------------ -------------------- ----------------------------------
14.9 13.9 No Adverse Interpretation of Other
Agreements
- ------------------------ -------------------- ----------------------------------
14.10 13.10 No Recourse against Others
- ------------------------ -------------------- ----------------------------------
14.11 13.11 Successors
- ------------------------ -------------------- ----------------------------------
14.12 13.12 Duplicate Originals
- ------------------------ -------------------- ----------------------------------
14.13 13.13 Severability
- ------------------------ -------------------- ----------------------------------
14.14 13.14 Table of Contents, Headings, Etc.
- ------------------------ -------------------- ----------------------------------
</TABLE>
(e) Any definitions used exclusively in the deleted provisions of the
Indenture set forth in paragraphs (a), (b) and (c) of this Section 3 are hereby
deleted in their entirety from the Indenture.
Section 4. CONSENT TO CREATION OF ADDITIONAL LIENS. In accordance with
Section 10.2 of the Indenture, the Trustee hereby consents to the creation of
additional liens on the collateral securing the Company's obligations under the
Notes in favor of the lenders under the Company's contemplated new credit
facility.
Section 5. EFFECTIVE DATE AND OPERATIVE DATE OF THIS SUPPLEMENTAL
INDENTURE. This Supplemental Indenture shall be effective as of the date hereof
and shall be operative as of the Operative Date.
Section 6. INDENTURE RATIFIED. Except as hereby otherwise expressly
provided, the Indenture is in all respects ratified and confirmed, and all the
terms, provisions and conditions thereof shall be and remain in full force and
effect.
4
<PAGE>
Section 7. COUNTERPARTS. This Supplemental Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 8. SUPPLEMENTAL INDENTURE IS AN AMENDMENT TO INDENTURE. This
Supplemental Indenture is an amendment to the Indenture. The Indenture and
this Supplemental Indenture shall be read together from and after the
Operative Date.
Section 9. GOVERNING LAW. This Supplemental Indenture shall be
governed by and construed in accordance with the internal laws of the State
of New York.
[signature pages follow]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
ARGOSY GAMING COMPANY, as Issuer
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
ALTON GAMING COMPANY, as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
ARGOSY OF LOUISIANA, INC., as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
CATFISH QUEEN PARTNERSHIP
IN COMMENDAM, as Guarantor
By: ARGOSY OF LOUISIANA, INC.,
its General Partner
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
THE INDIANA GAMING COMPANY, as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
6
<PAGE>
IOWA GAMING COMPANY, as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
JAZZ ENTERPRISES, INC. , as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
THE MISSOURI GAMING COMPANY, as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
THE ST. LOUIS GAMING COMPANY, as Guarantor
By: /s/ James B. Perry
----------------------------------
Name: James B. Perry
Title: President and Chief Executive
Officer
BANK ONE TRUST COMPANY, NA, as Trustee
By: /s/ Denis L. Milliner
----------------------------------
Name: Denis L. Milliner
Title: Vice President and Trust
Officer
7
<PAGE>
===============================================================================
ARGOSY GAMING COMPANY
AS ISSUER
AND
THE SUBSIDIARY GUARANTORS
NAMED HEREIN
10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
--------------------
INDENTURE
DATED AS OF JUNE 8, 1999
--------------------
--------------------
BANK ONE TRUST COMPANY, NA
AS TRUSTEE
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
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Section 1.01. Definitions...........................................................................1
Section 1.02. Other Definitions....................................................................19
Section 1.03. Incorporation by Reference of Trust Indenture Act....................................19
Section 1.04. Rules of Construction................................................................20
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating......................................................................20
Section 2.02. Execution and Authentication.........................................................21
Section 2.03. Registrar and Paying Agent...........................................................21
Section 2.04. Paying Agent to Hold Money in Trust..................................................22
Section 2.05. Holder Lists.........................................................................22
Section 2.06. Transfer and Exchange................................................................22
Section 2.07. Replacement Notes....................................................................33
Section 2.08. Outstanding Notes....................................................................33
Section 2.09. Treasury Notes.......................................................................34
Section 2.10. Temporary Notes......................................................................34
Section 2.11. Cancellation.........................................................................34
Section 2.12. Defaulted Interest...................................................................34
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee...................................................................34
Section 3.02. Selection of Notes to Be Redeemed....................................................35
Section 3.03. Notice of Redemption.................................................................35
Section 3.04. Effect of Notice of Redemption.......................................................36
Section 3.05. Deposit of Redemption Price..........................................................36
Section 3.06. Notes Redeemed in Part...............................................................36
Section 3.07. Optional Redemption..................................................................36
Section 3.08. Gaming Redemption....................................................................37
Section 3.09. Mandatory Redemption.................................................................37
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.....................................................................38
Section 4.02. Maintenance of Office or Agency......................................................38
Section 4.03. Commission Reports and Reports to Holders............................................38
Section 4.04. Compliance Certificate...............................................................39
Section 4.05. Taxes................................................................................39
Section 4.06. Stay, Extension and Usury Laws.......................................................40
Section 4.07. Limitation on Indebtedness and Issuances of Preferred Stock..........................40
Section 4.08 Limitation on Restricted Payments....................................................42
Section 4.09. Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.........................................................................44
Section 4.10. Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries......45
Section 4.11. Additional Subsidiary Guarantees.....................................................45
Section 4.12. Designation of Restricted and Unrestricted Subsidiaries..............................45
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Section 4.13. Limitation on Transactions with Shareholders and Affiliates..........................46
Section 4.14. Limitation on Liens..................................................................46
Section 4.15. Limitation on Asset Sales............................................................46
Section 4.16. Repurchase of Notes in Connection with Sale of Lawrenceburg Interest.................47
Section 4.17. Limitation on Sale-Leaseback Transactions............................................49
Section 4.18. Limitation on Senior Subordinated Indebtedness.......................................49
Section 4.19. Limitation on Certain Activities of Indiana Gaming Company L.P.......................49
Section 4.20. Limitation on Business Activities....................................................49
Section 4.21. Limitation on Status as Investment Company...........................................49
Section 4.22. Payments for Consent.................................................................49
Section 4.23. Offer to Repurchase Upon Change of Control...........................................50
Section 4.24. Corporate Existence..................................................................50
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.............................................50
Section 5.02. Successor Corporation Substituted....................................................51
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default....................................................................51
Section 6.02. Acceleration.........................................................................53
Section 6.03. Other Remedies.......................................................................53
Section 6.04. Waiver of Past Defaults..............................................................53
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...........................................................54
Section 6.09. Trustee May File Proofs of Claim.....................................................55
Section 6.10. Priorities...........................................................................55
Section 6.11. Undertaking for Costs................................................................55
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee....................................................................56
Section 7.02. Rights of Trustee....................................................................57
Section 7.03. Individual Rights of Trustee.........................................................57
Section 7.04. Trustee's Disclaimer.................................................................57
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
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
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.............................60
Section 8.02. Legal Defeasance and Discharge.......................................................61
Section 8.03. Covenant Defeasance..................................................................61
Section 8.04. Conditions to Legal or Covenant Defeasance...........................................61
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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........................................................................63
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes..................................................64
Section 9.02. With Consent of Holders of Notes.....................................................64
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......................................................66
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.............................................................66
Section 10.02. Liquidation; Dissolution; Bankruptcy.................................................67
Section 10.03. Default on Designated Senior Indebtedness............................................67
Section 10.04. Acceleration of Notes................................................................68
Section 10.05. When Distribution Must Be Paid Over..................................................68
Section 10.06. Notice by Company....................................................................68
Section 10.07. Subrogation..........................................................................68
Section 10.08. Relative Rights......................................................................69
Section 10.09. Subordination May Not Be Impaired by Company.........................................69
Section 10.10. Distribution or Notice to Representative.............................................69
Section 10.11. Rights of Trustee and Paying Agent...................................................70
Section 10.12. Authorization to Effect Subordination................................................70
Section 10.13. Amendments...........................................................................70
ARTICLE 11
SUBSIDIARY GUARANTEES
Section 11.01. Subsidiary Guarantee.................................................................70
Section 11.02. Subordination of Subsidiary Guarantee................................................71
Section 11.03. Limitation on Subsidiary Guarantor Liability.........................................71
Section 11.04. Execution and Delivery of Subsidiary Guarantee.......................................72
Section 11.05. Subsidiary Guarantors May Consolidate, etc., on Certain Terms........................72
Section 11.06. Releases Following Sale of Assets....................................................73
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.........................................................73
Section 12.02. Notices..............................................................................73
Section 12.03. Communication by Holders of Notes with Other Holders of Notes........................75
Section 12.04. Certificate and Opinion as to Conditions Precedent...................................75
Section 12.05. Statements Required in Certificate or Opinion........................................75
Section 12.06. Rules by Trustee and Agents..........................................................75
Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders.............75
Section 12.08. Governing Law........................................................................76
Section 12.09. No Adverse Interpretation of Other Agreements........................................76
Section 12.10. Successors...........................................................................76
Section 12.12. Severability.........................................................................76
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Section 12.12. Counterpart Originals................................................................76
Section 12.13. Table of Contents, Headings, etc.....................................................76
EXHIBITS
Exhibit A FORM OF NOTE AND SUBSIDIARY GUARANTEE
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 SUPPLEMENTAL INDENTURE TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
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INDENTURE dated as of June 8, 1999 among Argosy Gaming Company, a
Delaware corporation (the "Company"), the Subsidiary Guarantors listed on the
signature page hereto and Bank One Trust Company, NA, a national banking
association, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10 3/4% Senior
Subordinated Notes due 2009 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A GLOBAL NOTE" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or assumed in connection with
an Asset Acquisition by a Restricted Subsidiary; PROVIDED that Indebtedness of
such Person which is redeemed, defeased, retired or otherwise repaid at the time
of or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"ADDITIONAL INTEREST" means all additional interest then owing pursuant
to the Registration Rights Agreement.
"ADDITIONAL NOTES" means additional Notes (other than the Initial
Notes) issued under this Indenture in accordance with Section 2.02 and subject
to compliance with Article 4 hereof, as part of the same series as the Initial
Notes.
"ADJUSTED CONSOLIDATED NET INCOME" means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period determined in conformity with GAAP; PROVIDED that the following items
shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income of any Person that is not a Restricted
Subsidiary, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any of its Restricted Subsidiaries
by such Person during such period; (ii) the net income (or loss) of any Person
prior to the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by the
Company or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) solely for purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (C) of the first paragraph of Section 4.08, any amount paid or accrued as
dividends on Preferred Stock of the Company owned by Persons other than the
Company and any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses, including any premium, fees and expenses payable in
connection with the offering of the Notes, the repurchase of the First Mortgage
Notes, the redemption of the Company's 12% Convertible Subordinated Notes due
2001 and the initial establishment of the Credit Facility; (vii) any non
<PAGE>cash impairment loss determined in accordance with GAAP related to the
carrying value of (A) the long-lived assets associated with the Belle of
Baton Rouge Casino or (B) other assets owned by the Company or its Restricted
Subsidiaries as of the date of the Indenture that are recorded in the
ordinary course of business and are being used by the Company or have been
replaced by other comparable assets of the Company or its Restricted
Subsidiaries; and (viii) the cumulative effect of a change in accounting
principles.
"AFFILIATE" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"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 ACQUISITION" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries, PROVIDED that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
investment or (ii) an acquisition by the Company or any of its Restricted
Subsidiaries of the property and assets of any Person other than the Company or
any of its Restricted Subsidiaries that constitute substantially all of a
division or line of business of such Person; PROVIDED that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such acquisition.
"ASSET DISPOSITION" means the sale or other disposition by the Company
or any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"ASSET SALE" means any sale, transfer or other disposition (including
by way of merger, consolidation or sale-leaseback transaction) in one
transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock of or other
Investment in an Unrestricted Subsidiary) that is outside the ordinary course of
business of the Company or any of its Restricted Subsidiaries, in each case,
other than a sale of all or substantially all of the assets of the Company in
compliance with Article 5 hereof; PROVIDED that "Asset Sale" shall not include:
(a) sales or other dispositions of inventory, receivables and other current
assets in the ordinary course of business; (b) sales, transfers or other
dispositions of (1) assets constituting a Restricted Payment permitted to be
made under Section 4.08 or (2) Investments permitted pursuant to clause (vi) of
the definition of Permitted Investments; (c) sales or other dispositions of
assets for consideration at least equal to the fair market value of the assets
sold or disposed of, to the extent that the consideration received are invested
in accordance with clause (B) of Section 4.15; (d) the sale or other transfer of
any of the Company's or any Restricted Subsidiary's interest in Indiana Gaming
Company L.P., which transaction is governed by Section 4.16 hereof; (e) sales,
transfers or other dispositions of assets with a Fair Market Value not in excess
of $1.0 million in any transaction or
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series of related transactions; or (f) sales, transfers or other dispositions
of furniture, fixtures or equipment that has become worn out, obsolete or
damaged or otherwise unsuitable for use in connection with the business of
the Company or its Restricted Subsidiaries.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"AVERAGE LIFE" means, at any date of determination with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
(A) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (B) the amount
of such principal payment by (ii) the sum of all such principal payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BELLE OF BATON ROUGE CASINO" means the Belle of Baton Rouge Casino and
the related Catfish Town entertainment facility.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"BROKER-DEALER" has the meaning set forth in the Registration Rights
Agreement.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"CAPITALIZED LEASE" means, as applied to any Person, any lease of any
property (whether real personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"CAPITALIZED LEASE OBLIGATIONS" means the discounted present value of
the rental obligations under a Capitalized Lease.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the full faith and credit
of 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 six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of
$500,000,000 and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii) above
and (v) commercial paper having the highest rating obtainable from either
Moody's Investors
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Service, Inc. or Standard & Poor's Corporation and, in each case, maturing
within six months after the date of acquisition.
"CEDEL" means Cedel Bank, SA.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act) other than a group comprised of one or more Excluded Persons
becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 40% of the total voting power of the Voting Stock of
the Company on a fully diluted basis; (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination by the Board of Directors
for election by the Company's stockholders was approved by a vote of at least
two-thirds of the members of the Board of Directors then in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office;
(iii) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or assets of the
Company and its Subsidiaries taken as a whole to any "person" (as that term is
used in Section 13(d)(3) of the Exchange Act); or (iv) the adoption of a plan
relating to the liquidation or dissolution of the Company.
"CLOSING DATE" means the date on which the Notes are originally issued
under the Indenture.
"COMPANY" means Argosy Gaming Company, a Delaware corporation.
"CONSOLIDATED EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income: (i) Consolidated Interest
Expense, (ii) income taxes (other than income taxes (either positive or
negative) attributable to extraordinary and non-recurring gains or losses or
sales of assets); (iii) depreciation expense; (iv) amortization expense; and (v)
all other non-cash items reducing Adjusted Consolidated Net Income (other than
items that will require cash payments and for which an accrual or reserve is, or
is required by GAAP to be, made), less all non-cash items increasing Adjusted
Consolidated Net Income (other than normal recurring accruals of revenue in the
ordinary course of business), all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; PROVIDED that,
if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary,
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to (A) the amount of the Adjusted
Consolidated Net Income attributable to such Restricted Subsidiary multiplied by
(B) the percentage ownership interest in the income of such Restricted
Subsidiary not owned on the last day of such period by the Company or any of its
Restricted Subsidiaries.
"CONSOLIDATED INDEBTEDNESS" means with respect to any Person at any
date of determination (without duplication): (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, PLUS (ii) the total
amount of Indebtedness of any other Person, to the extent that such Indebtedness
has been Guaranteed by the referent Person or one or more of its Restricted
Subsidiaries, PLUS (iii) the aggregate liquidation value of all Disqualified
Stock of such Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance with
GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the aggregate
amount of: (i) interest in respect of Indebtedness of the Company and its
Consolidated Subsidiaries (including, without limitation, amortization of
original issue discount on any such Indebtedness, the interest portion of any
deferred payment obligation and imputed interest with respect to Attributable
Debt, calculated in accordance with the effective interest method of accounting;
all commissions, discounts and other fees and charges owed
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with respect to letters of credit and bankers' acceptance financing; the net
costs associated with Interest Rate Agreements); PROVIDED, HOWEVER, that
"Consolidated Interest Expense" shall not include interest in respect of (A)
Indebtedness of Indiana Gaming Company L.P. outstanding on the date of the
Indenture that is owed to any minority partner of Indiana Gaming Company
L.P., (B) Indebtedness of Indiana Gaming Company L.P. that is incurred after
the date of the Indenture if such Indebtedness is owed to any minority
partner of Indiana Gaming Company L.P. to the extent that Indiana Gaming
Company L.P. concurrently incurs Indebtedness to The Indiana Gaming Company
on a pro rata basis, based on The Indiana Gaming Company's percentage
interest in Indiana Gaming Company L.P.; and (C) the Indiana Gaming Company
L.P. minority partners' pro rata portion, based on such partners' percentage
interest in Indiana Gaming Company L.P., of Indebtedness of Indiana Gaming
Company L.P. (1) owed to third parties and (2) owed to any minority partner
of Indiana Gaming Company L.P. and incurred after the date of the Indenture
to the extent that such Indebtedness is not excluded from Consolidated
Interest Expense pursuant to clause (B) above; (ii) all but the principal
component of rentals in respect of Capitalized Lease Obligations paid,
accrued or scheduled to be paid or to be accrued by the Company and its
Restricted Subsidiaries during such period; (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of
its Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries, whether or not such Guarantee or Lien is called upon; and (iv)
the product of (a) all dividends, whether paid or accrued and whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Capital Stock payable solely
in Capital Stock of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) 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 tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP; EXCLUDING, HOWEVER, (A) any amount of such interest of
any Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof (but only in the same proportion as
the net income of such Restricted Subsidiary is excluded from the calculation
of Adjusted Consolidated Net Income pursuant to clause (iii) of the
definition thereof) and (B) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Notes,
the repurchase of the First Mortgage Notes, redemption of Convertible
Subordinated Notes and the initial establishment of the Credit Facility, all
as determined on a consolidated basis (without taking into account
Unrestricted Subsidiaries) in conformity with GAAP.
"CONSOLIDATED NET WORTH" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 135 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Disqualified Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"CONSOLIDATED SUBSIDIARIES" means, for any Person, each Subsidiary of
such Person (whether existing on the date of the Indenture or created or
acquired thereafter) the financial statements of which are consolidated for
financial statement reporting purposes with the financial statements of such
Person in accordance with GAAP.
"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.
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"CREDIT FACILITY" means the Credit Agreement dated the date of the
Indenture, among the Company, the Subsidiary Guarantors, and Wells Fargo
Bank, N.A., as administrative agent bank and the lenders referred to therein,
together with any agreements, instruments and documents executed or delivered
pursuant to or in connection with such Credit Facility (including, without
limitation, any Guarantees and security documents), in each case as such
Credit Facility or such agreements, instruments or documents may be amended,
supplemented, extended, renewed, refinanced or otherwise modified from time
to time.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"CUSTODIAN" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"DEBT TO EBITDA RATIO" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Consolidated Indebtedness of the Company and its
Restricted Subsidiaries as of such Transaction Date to (ii) the aggregate
amount of Consolidated EBITDA of the Company and its Restricted Subsidiaries
for the then most recent four fiscal quarters prior to such Transaction Date
(the "Four Quarter Period") for which reports have been filed with the
Commission or provided to the Trustee. In making the foregoing calculation:
(A) PRO FORMA effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving PRO FORMA effect to the application of
proceeds of any Asset Disposition) that occur during the period (the
"Reference Period") commencing on the first day of the Four Quarter Period
and ending on the Transaction Date as if they had occurred and such proceeds
had been applied on the first day of such Reference Period; and (B) PRO FORMA
effect shall be given to asset dispositions and asset acquisitions (including
giving PRO FORMA effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into the Company or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on
the first day of such Reference Period; PROVIDED that to the extent that
clause (A) or (B) of this sentence requires that PRO FORMA effect be given to
an Asset Acquisition or Asset Disposition, such PRO FORMA calculation shall
be based upon the four full fiscal quarters immediately preceding the
Transaction Date of the Person, or division or line of business of the
Person, that is acquired or disposed for which financial information is
available.
"DEFAULT" means any event that is, or after notice or passage of
time 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,
substantially 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 the 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.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) any Indebtedness
outstanding under the Credit Facility (except that any Indebtedness which
represents a partial refinancing of Indebtedness theretofore outstanding
pursuant to the Credit Facility, rather than a complete refinancing thereof,
shall only constitute Designated Senior Indebtedness if such partial
refinancing meets the requirements of clause (ii) below) and
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(ii) any other Senior Indebtedness that, at the date of determination, has an
aggregate principal amount outstanding of at least $20 million and that had
been specifically designated by the Company as "Designated Senior
Indebtedness."
"DISQUALIFIED STOCK" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Notes, (ii) redeemable at the option of
the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Notes or (iii) convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having
a scheduled maturity prior to the Stated Maturity of the Notes; PROVIDED that
any Capital Stock that would not contribute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the Stated Maturity of the
Notes shall not constitute Disqualified Stock if the "asset sale" or "change
of control" provisions applicable to such Capital Stock are no more favorable
to the holders of such Capital Stock than the provisions contained in
Sections 4.15 and 4.23 hereof and such Capital Stock specifically provides
that such Person will not repurchase or redeem any such stock pursuant to
such provision prior to the Company's repurchase of such Notes as are
required to be repurchased pursuant to Sections 4.15 and 4.23.
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"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.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth
in the Registration Rights Agreement.
"EXCLUDED PERSONS" means William F. Cellini, F. Lance Callis, Jimmy
F. Gallagher, William J. McEnery, John B. Pratt, Sr., James S. Connors and
Stephanie Pratt, each of such person's immediate family or a trust or similar
entity existing solely for the benefit of such person or such person's
immediate family.
"FAIR MARKET VALUE" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to
buy, as determined in good faith by the Board of Directors, whose
determination shall be conclusive if evidenced by a resolution of the Board
of Directors.
"FIRST MORTGAGE NOTES" means the Company's 13 1/4% First Mortgage
Notes due 2004.
"FF&E INDEBTEDNESS" means any Indebtedness of the Company or any of
its Restricted Subsidiaries that is Incurred to finance the acquisition or
lease after the date of the Indenture of furniture, fixtures or equipment
("FF&E") used directly in the operation of any of the Company's Material
Casinos and secured solely by a Lien on such FF&E, which Indebtedness has a
principal amount not to exceed 100% of the cost of the FF&E so purchased or
leased.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
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Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved
by a significant segment of the accounting profession. All ratios and
computations contained or referred to in the Indenture shall be computed in
conformity with GAAP applied on a consistent basis.
"GAMING AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of the United States or
foreign government, any state province or any city or other political
subdivision, or any officer of official thereof, including the Illinois
Gaming Board, the Indiana Gaming Commission, the Iowa Racing and Gaming
Commission, the Louisiana Gaming Control Board, the Missouri 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 or other
authorization required to own, lease, operate or otherwise conduct the
present and future gaming activities of the Company and its Subsidiaries.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"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 direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person: (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services (unless such purchase arrangements are on arm's-length
terms and are entered into in the ordinary course of business), to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); PROVIDED that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business; EXCLUDING, HOWEVER, (A) Indebtedness of Indiana
Gaming Company L.P. outstanding on the date of the Indenture that is owed to
any minority partner of Indiana Gaming Company L.P., (B) Indebtedness of
Indiana Gaming L.P. that is incurred after the date of the Indenture if such
Indebtedness is owed to any minority partner of Indiana Gaming Company L.P.
to the extent that Indiana Gaming Company L.P. concurrently incurs
Indebtedness to the Indiana Gaming Company on a pro rata basis, based on The
Indiana Gaming Company's percentage interest in Indiana Gaming Company L.P.
and (C) the Indiana Gaming Company L.P. minority partners' pro rata portion,
based on such partners' percentage interest in Indiana Gaming Company L.P.,
of Indebtedness of Indiana Gaming Company L.P. (1) owed to third parties and
(2) owed to any minority partner of Indiana Gaming Company L.P. and incurred
after the date of the Indenture to the extent that such Indebtedness is not
excluded from Consolidated Interest Expense pursuant to clause (B) above. The
term "Guarantee" used as a verb has a corresponding meaning.
"HOLDER" means a Person in whose name a Note is registered.
"IAI GLOBAL NOTE" means the global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and
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registered in the name of the Depositary or its nominee that will be issued
in a denomination equal to the outstanding principal amount of the Notes sold
to Institutional Accredited Investors.
"INCUR" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to,
or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an "Incurrence" of Acquired Indebtedness; PROVIDED
that neither the accrual of interest nor the accretion of original issue
discount shall be considered an Incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication): (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto, but excluding
obligations with respect to letters of credit (including trade letters of
credit) securing obligations (other than obligations described in this
definition) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (iv) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services, which
purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables; (v) all Capitalized Lease Obligations;
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person; PROVIDED
that the amount of such Indebtedness shall be the lesser of (A) the Fair
Market Value of such asset at such date of determination and (B) the amount
of such Indebtedness; (vii) all Indebtedness of other Persons Guaranteed by
such Person to the extent such Indebtedness is Guaranteed by such Person; and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and, with
respect to contingent obligations, the maximum liability upon the occurrence
of the contingency giving rise to the obligation, PROVIDED (A) that the
amount outstanding at any time of any Indebtedness issued with original issue
discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at
such time as determined in conformity with GAAP, (B) that money borrowed and
set aside at the time of the Incurrence of any Indebtedness in order to
prefund the payment of the interest on such Indebtedness shall not be deemed
to be "Indebtedness" so long as such money is held to secure the payment of
such interest and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDIANA GAMING COMPANY" means the Indiana Gaming Company, an
Indiana corporation and wholly owned subsidiary of the Company, which holds a
57.5% interest in Indiana Gaming Company L.P.
"INDIANA GAMING COMPANY L.P." means the Indiana Gaming Company L.P.,
an Indiana limited partnership, that owns and operates the Lawrenceburg
Casino.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"INITIAL NOTES" means the initial $200.0 million aggregate principal
amount of Notes issued under this Indenture on the date hereof.
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"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"INTEREST COVERAGE RATIO" means, on any Transaction Date, the ratio
of (i) the aggregate amount of Consolidated EBITDA of the Company and its
Restricted Subsidiaries for the then most recent four fiscal quarters prior
to such Transaction Date for which reports have been filed with the
Commission or provided to the Trustee (the "Four Quarter Period") to (ii) the
aggregate Consolidated Interest Expense of the Company and its Restricted
Subsidiaries during such Four Quarter Period. In making the foregoing
calculation: (A) PRO FORMA effect shall be given to any Indebtedness Incurred
or repaid during the period (the "Reference Period") commencing on the first
day of the Four Quarter Period and ending on the Transaction Date (other than
Indebtedness Incurred or repaid under a revolving credit or similar
arrangement to the extent of the commitment thereunder (or under any
predecessor revolving credit or similar arrangement) in effect on the last
day of such Four Quarter Period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of the
Company, to remain outstanding for a period in excess of 12 months from the
date of the Incurrence thereof), in each case as if such Indebtedness had
been Incurred or repaid on the first day of such Reference Period (and pro
forma effect shall be given to eliminate interest attributable to the
Indebtedness represented by the First Mortgage Notes upon the funding on the
date of the Indenture of a special purpose account with the trustee for the
First Mortgage Notes and any other Indebtedness which has been defeased
either pursuant to a "covenant defeasance" or "legal defeasance" in
accordance with the instrument under which it was incurred); (B) Consolidated
Interest Expense attributable to interest on any Indebtedness (whether
existing or being Incurred) computed on a PRO FORMA basis and bearing a
floating interest rate shall be computed as if the rate in effect on the
Transaction Date (taking into account any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months or, if shorter, at least equal to the remaining term of
such Indebtedness) had been the applicable rate for the entire period; (C)
PRO FORMA effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving PRO FORMA effect to the application of proceeds of any
Asset Disposition) that occur during such Reference Period as if they had
occurred and such proceeds had been applied on the first day of such
Reference Period; and (D) PRO FORMA effect shall be given to asset
dispositions and asset acquisitions (including giving PRO FORMA effect to the
application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or
into the Company or any Restricted Subsidiary during such Reference Period
and that would have constituted Asset Dispositions or Asset Acquisitions had
such transactions occurred when such Person was a Restricted Subsidiary as if
such asset dispositions or asset acquisitions were Asset Dispositions or
Asset Acquisitions that occurred on the first day of such Reference Period;
PROVIDED that to the extent that clause (C) or (D) of this sentence requires
that PRO FORMA effect be given to an Asset Acquisition or Asset Disposition,
such PRO FORMA calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line
of business of the Person, that is acquired or disposed for which financial
information is available.
"INTEREST RATE AGREEMENT" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement, option or future contract or
other similar agreement or arrangement.
"INVESTMENT" in any Person means any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way of
Guarantee or similar arrangement; but excluding advances to customers,
suppliers or contractors in the ordinary course of business that are, in
conformity with GAAP, recorded as accounts receivable or prepaid items on the
balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase or acquisition of Capital
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Stock, bonds, notes, debentures or other similar instruments issued by, such
Person and shall include: (i) the designation of a Restricted Subsidiary as
an Unrestricted Subsidiary and (ii) the retention of the Capital Stock (or
any other Investment) by the Company or any of its Restricted Subsidiaries,
of (or in) any Person that has ceased to be a Restricted Subsidiary,
including without limitation, by reason of any transaction permitted by
clause (iii) of Section 4.10. For purposes of the definition of "Unrestricted
Subsidiaries" and Section 4.08 hereof, the amount of or a reduction in an
Investment shall be equal to the fair market value thereof at the time such
Investment is made or reduced.
"LAWRENCEBURG CASINO" means the Company's hotel and casino located
in Lawrenceburg, Indiana.
"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 any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (inducing, without limitation, any conditional
sale or other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"MATERIAL CASINO" means any gaming establishment possessing at least
400 slot machines and at least 20 table games.
"MINORITY INTERESTS" means the partnership interests, including
common and preferred equity interests of, and the associated partner loans
to, Indiana Gaming Company L.P. of the partners of Indiana Gaming Company
L.P. other than the Company and its Restricted Subsidiaries.
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"NET CASH PROCEEDS" means: (i) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of (A) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale, (B) provisions for all taxes
(whether or not such taxes will actually be paid or are payable) as a result of
such Asset Sale without regard to the consolidated results of operations of the
Company and its Restricted Subsidiaries, taken as a whole, (C) payments made to
repay Indebtedness or any other obligation outstanding at the time of such Asset
Sale that either (1) is secured by a Lien on the property or assets sold or (2)
is required to be paid as a result of such sale and (D) appropriate amounts to
be provided by the Company or any Restricted Subsidiary as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP and
(ii) with respect to any issuance or sale of Capital Stock, the proceeds of such
issuance or sale in the form of cash or cash equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents and proceeds from the conversion of other property
received when converted to
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cash or cash equivalents, net of attorney's fees, accountants' fees,
underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"NON-RECOURSE INDEBTEDNESS" means Indebtedness: (i) as to which
neither the Company nor any of its Restricted Subsidiaries (A) provides
credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness) or (B) is directly or
indirectly liable as a guarantor or otherwise (other than the Indiana Gaming
Company solely in its capacity as general partner of Indiana Gaming L.P.);
(ii) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and (iii) as to which
the lenders have been notified in writing that they will not have any
recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"NOTES" has the meaning assigned to it in the preamble to this
Indenture, and shall include the Initial Notes and the Additional Notes,
which shall be treated as a single class for all purposes under this
Indenture.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFER TO PURCHASE" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata basis;
(ii) the purchase price and the date of purchase (which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date such notice
is mailed) (the "Payment Date"); (iii) that any Note not tendered will
continue to accrue interest pursuant to its terms; (iv) that, unless the
Company defaults in the payment of the purchase price, any Note accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest on
and after the Payment Date; (v) that Holders electing to have a Note
purchased pursuant to the Offer to Purchase will be required to surrender the
Note, together with the form entitled "Option of the Holder to Elect
Purchase" on the reverse side of the Note completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the
Business Day immediately preceding the Payment Date; (vi) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the third Business Day immediately
preceding the Payment Date, a telegram, facsimile transmission or letter
setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) 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; PROVIDED that
each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company
shall (i) accept for payment on a pro rata basis Notes or portions thereof
tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof
so accepted; and (iii) deliver, or cause to be delivered, to the Trustee all
Notes or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered, PROVIDED that each
Note purchased and each new Note issued shall be in a principal amount of
$1,000 or integral multiples thereof. The Company will publicly announce the
results of an Offer to Purchase as soon as practicable after the Payment
Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The
Company will comply with Rule 14e-l under the
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Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the
Company is required to repurchase Notes pursuant to an Offer to Purchase.
"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, the Secretary or any
Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 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 DTC, shall include Euroclear and Cedel).
"PERMITTED INVESTMENTS" means: (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
investment, become a Restricted Subsidiary or be merged or consolidated with
or into or transfer or convey all or substantially all its assets to, the
Company or a Restricted Subsidiary; PROVIDED that such person's primary
business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such Investment; (ii)
Temporary Cash Investments; (iii) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses in accordance with GAAP; (iv) stock, obligations or
securities received in satisfaction of judgments; (v) Interest Rate
Agreements and Currency Agreements designed solely to protect the Company or
its Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vi) Investments in any Person the primary business
of which is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries; PROVIDED that at the time of such
Investment the aggregate amount of such Investments pursuant to this clause
(vi) does not exceed $15.0 million; (vii) any purchase of less than 100% of
the then outstanding Minority Interests in Indiana Gaming Company L.P.;
PROVIDED, that at the time of such Investment (A) no Default or Event of
Default shall have occurred and be continuing and (B) either (1) the Company
could Incur at least $1.00 of Indebtedness under the first paragraph of
Section 4.07 or (2) without regard to whether the Company could incur any
amount of Indebtedness, the Company would have been permitted to make a
Restricted Payment pursuant to clause (C) of the first paragraph of Section
4.08 equal to the amount of the proposed expenditure for such purchase of the
Minority Interests; (viii) Investments in an Unrestricted Subsidiary which
are used to develop a hotel to be used in connection with a Material Casino;
PROVIDED that at the time of such Investment the aggregate amount of such
Investments pursuant to this clause (viii) does not exceed $10.0 million; and
(ix) early retirement of Indebtedness outstanding on the date of the
Indenture owed to former shareholders of Jazz Enterprises Inc.
"PERMITTED JUNIOR SECURITIES" means: (i) Equity Interests in the
Company or any Subsidiary Guarantor or (ii) debt securities that are
subordinated to all Senior Indebtedness and any debt securities issued in
exchange for Senior Indebtedness to substantially the same extent as, or to a
greater extent than, the Notes and the Subsidiary Guarantees are subordinated
to Senior Indebtedness under the Indenture.
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"PERMITTED LENDER" means (i) the lenders under the Credit Facility,
(ii) any affiliate of any lender under the Credit Facility, (iii) any
commercial bank, savings bank or loan association having a combined capital
and surplus of at least $100.0 million, (iv) any other financial institution,
including a mutual fund or other fund, having total assets of at least $250.0
million and (v) any other Person that qualifies as a "qualified institutional
buyer" pursuant to Rule 144A under the Securities Act, any purchaser of
Indebtedness pursuant to Regulation S under the Securities Act and any
purchaser of Indebtedness that is registered under the Securities Act.
"PERMITTED LIENS" means (i) Liens securing obligations under Senior
Indebtedness that is permitted to be incurred pursuant to the Indenture
including, without limitation, the Credit Facility; (ii) Liens existing on the
Closing Date; (iii) Liens granted after the Closing Date on any assets or
Capital Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders; (iv) Liens for taxes, assessments, governmental charges or claims
that are being contested in good faith by appropriate legal proceedings promptly
instituted and diligently conducted and for which a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made; (v) statutory and common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made; (vi) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (vii) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (viii) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of the Company or any of its Restricted Subsidiaries; (ix)
Liens (including extensions and renewals thereof) upon real or personal property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness Incurred, in accordance with Section
4.07 hereof, to finance the cost (including the cost of improvement or
construction) of the item of property or assets subject thereto and such Lien is
created prior to, at the time of or within six months after the later of the
acquisition, the completion of construction or the commencement of full
operation of such property (b) the principal amount of the Indebtedness secured
by such Lien does not exceed 100% of such cost and (c) any such Lien shall not
extend to or cover any property or assets other than such item of property or
assets and any improvements on such item; (x) leases or subleases granted to
others that do not materially interfere with the ordinary course of business of
the Company and its Restricted Subsidiaries, taken as a whole; (xi) Liens
encumbering property or assets under construction arising from progress or
partial payments by a customer of the Company or its Restricted Subsidiaries
relating to such property or assets; (xii) any interest or title of a lessor in
the property subject to any Capitalized Lease or operating lease; (xiii) Liens
arising from filing Uniform Commercial Code financing statements regarding
leases; (xiv) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes or becomes
a part of, any Restricted Subsidiary, provided that such Liens do not extend to
or cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired; (xv) Liens in favor of the Company
or any Restricted Subsidiary, other than Liens securing intercompany
Indebtedness incurred under clause (3) of the second paragraph of Section 4.07
hereof; (xvi) Liens arising from the rendering of a final judgment or order
against the Company or any Restricted Subsidiary that does not give rise to an
Event of Default; (xvii) Liens securing reimbursement obligations with respect
to letters of credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof; (xviii) Liens in favor
of customs and revenue authorities arising as a matter of law to secure payment
of customs duties in connection with the importation of goods; (xix) Liens
encumbering customary
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initial deposits and margin deposits, and other Liens that are within the
general parameters customary in the industry and incurred in the ordinary
course of business, in each case, securing Indebtedness under Interest Rate
Agreements and Currency Agreements and forward contracts, options, future
contracts, futures options or similar agreements or arrangements designed
solely to protect the Company or any of its Restricted Subsidiaries from
fluctuations in interest rates, currencies or the price of commodities; (xx)
Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company or any
of its Restricted Subsidiaries in the ordinary course of business in
accordance with the past practices of the Company and its Restricted
Subsidiaries prior to the Closing Date; (xxi) Liens on or sales of
receivables; (xxii) Liens securing obligations under Currency Agreements and
Interest Rate Agreements entered into in the ordinary course of business; and
(xxiii) Liens in addition to the foregoing incurred in the ordinary course of
business provided that the amount of the obligations secured by such Liens
does not exceed in the aggregate $5.0 million at any one time outstanding and
that (A) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (B) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof in the
operation of the business by the Company or any of its Subsidiaries.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of
the assets of any such entity, subdivision or business).
"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.
"PUBLIC EQUITY OFFERING" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of June 8, 1999, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time and, with respect to any
Additional Notes, one or more registration rights agreements between the
Company and the other parties thereto, as such agreement(s) may be amended,
modified or supplemented from time to time, relating to rights given by the
Company to the purchasers of Additional Notes to register such Additional
Notes under the Securities Act.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL NOTE" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"REPRESENTATIVE" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"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
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<PAGE>
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.
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private
Placement Legend.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, and its successors.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR INDEBTEDNESS" means the following obligations of the Company
or a Subsidiary Guarantor, whether outstanding on the Closing Date or
thereafter Incurred: (i) all Indebtedness and all other monetary obligations
(including, without limitation, expenses, fees, principal, interest
reimbursement obligations under letters of credit and indemnities payable in
connection therewith) of the Company or a Subsidiary Guarantor under (or in
respect of) the Credit Facility or any Interest Rate Agreement or Currency
Agreement relating to the Indebtedness under the Credit Facility and (ii) all
other Indebtedness and all other monetary obligations of the Company or a
Subsidiary Guarantor (other than the Notes), including principal and interest
on such Indebtedness, unless such Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such Indebtedness is issued,
is on a parity with, or subordinated in right of payment to, the Notes or any
Subsidiary Guarantee. Notwithstanding anything to the contrary in clauses (i)
and (ii) above, Senior Indebtedness shall not include: (a) any Indebtedness
of the Company that, when Incurred, was without recourse to the Company, (b)
any Indebtedness of the Company to a Subsidiary of the Company, or to a joint
venture in which the Company has an interest, (c) any Indebtedness of the
Company, to the extent not permitted by Section 4.07 or 4.18 hereof, (d) any
repurchase, redemption or other obligation in respect of Disqualified Stock,
(e) any Indebtedness to any employee of the Company or any of its
Subsidiaries, (f) any liability for taxes owed or owing by the Company or any
of its Subsidiaries or (g) any Trade Payables.
"SENIOR SUBORDINATED OBLIGATIONS" means any principal of, premium,
if any, or interest on, or the redemption or the acquisition of, the Notes
payable pursuant to the terms of the Notes or the Subsidiary Guarantees or
upon acceleration, including any amounts received upon the exercise of rights
of rescission or other rights of action (including claims for damages) or
otherwise, to the extent relating to the redemption or purchase price of the
Notes and the Subsidiary Guarantees or amounts corresponding to such
principal, premium, if any, or interest on the Notes.
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<PAGE>
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means, at any date of determination, any
Subsidiary that, together with its Subsidiaries: (i) for the most recent fiscal
year of the Company, accounted for more than 10% of the consolidated revenues of
the Company and its Subsidiaries or (ii) as of the end of such fiscal year, was
the owner of more than 10% of the consolidated assets of the Company and its
Subsidiaries, all as set forth on the most recently available consolidated
financial statements of the Company for such fiscal year.
"SPECIAL INTEREST" means additional interest payable on the Notes as
set forth in clause (4) of Section 4.16 hereof.
"STATED MATURITY" means (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person..
"SUBSIDIARY GUARANTEE" means any Guarantee by each Subsidiary Guarantor
of the Company's payment obligations under this Indenture and on the Notes,
executed pursuant to the provisions of this Indenture.
"SUBSIDIARY GUARANTORS" means (i) each Restricted Subsidiary of the
Company and (ii) any other Subsidiary of the Company that executes a Subsidiary
Guarantee pursuant Section 4.11.
"TEMPORARY CASH INVESTMENT" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof; (ii) demand deposit accounts, time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $100.0 million (or the foreign currency equivalent thereof and has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor; (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank or trust
company meeting the qualifications described in clause (ii) above; (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P; (v) securities with
maturities of one year or less from the date of acquisition issued or fully and
conditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's; and (vi) other dollar denominated
securities issued by any Person incorporated in the United States rated at least
"A" or the equivalent by S&P or at least "A2" or the equivalent by Moody's and
in each case either (A) maturing not more than one year after
17
<PAGE>
the date of acquisition or (B) which are subject to a repricing arrangement
(such as a Dutch auction) not more than one year after the date of
acquisition (and reprices at least yearly thereafter) which the Person making
the investment believes in good faith will permit such Person to sell such
security at par in connection with such repricing mechanism.
"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.
"TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
"TRANSACTION DATE" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"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 GLOBAL NOTE" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means: (i) any Subsidiary of the Company that
at the time of determination shall be designated an Unrestricted Subsidiary by
the Board of Directors in the manner provided below, and (ii) any Subsidiary of
an Unrestricted Subsidiary; PROVIDED that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (1) to subscribe for additional Equity Interests or (2) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of the Company or any of its Restricted Subsidiaries. If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under the "Incurrence of Indebtedness and Issuance of Preferred Stock"
covenant described below, the Company shall be in default of such covenant.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the 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 at any time
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<PAGE>
prior to the Stated Maturity of the Notes, and shall also include a
depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of
interest on or principal of any such U. S. Government Obligation held by such
custodian for the account of the holder of a 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 U. S. Government
Obligation or the specific payment of interest on or principal of the U.S.
Governmental Obligation evidenced by such depository receipt.
"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, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness 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 of such Indebtedness.
"WHOLLY OWNED" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"ASSET SALE"................................. 4.15
"AUTHENTICATION ORDER"....................... 2.02
"BANKRUPTCY LAW"............................. 4.01
"COVENANT DEFEASANCE"........................ 8.03
"EVENT OF DEFAULT"........................... 6.01
"EXCESS PROCEEDS"............................ 4.15
"LAWRENCEBURG SALE".......................... 4.16
"LEGAL DEFEASANCE"........................... 8.02
"PARI PASSU INDEBTEDNESS".................... 4.15
"PAYING AGENT"............................... 2.03
"PAYMENT BLOCKAGE NOTICE".................... 10.03
"PROPERTY SALE".............................. 4.16
"REGISTRAR".................................. 2.03
"RESTRICTED PAYMENTS"........................ 4.08
"TENDER OFFER AMOUNT"........................ 4.16
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
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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;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the Notes and the Subsidiary Guarantees means the Company
and the Subsidiary Guarantors, respectively, and any successor obligor upon the
Notes and the Subsidiary 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:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) 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
Subsidiary 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.
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<PAGE>
(b) GLOBAL NOTES. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate 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
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
SECTION 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 Initial Notes plus the aggregate principal amount stated in paragraph 4 of
any Additional Notes permitted to be issued under this Indenture. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof. The Trustee may appoint an
authenticating agent acceptable to the Company to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in 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
Company may act as its own Registrar or 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.
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<PAGE>
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
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, 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). The Trustee,
the Registrar and the Company shall provide a current list of all Holders to any
Gaming Authority upon demand.
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, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 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
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accordance with the provisions of this Indenture and the Applicable
Procedures. Beneficial interests in the Restricted Global Notes shall be
subject to restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act. Transfers of beneficial interests
in the Global Notes also shall require compliance with either subparagraph
(i) or (ii) below, as applicable, as well as one or more of the other
following subparagraphs, as applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
PROVIDED, HOWEVER, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than a Placement Agent). 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 (B)(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; and
(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.
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(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 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.
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.
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(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 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
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the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO
UNRESTRICTED DEFINITIVE NOTES. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES TO
UNRESTRICTED DEFINITIVE NOTES. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
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
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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;
(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.
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(ii) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive
Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive
Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of Exhibit
B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
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
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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 its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
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:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
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(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
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) LEGENDS. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form:
"THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
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ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR OR PROVISION), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO ARGOSY GAMING COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS OF TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER
IS IN COMPLIANCE WITH THE SECURITIES ACT OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE EVIDENCED HEREBY, PRIOR TO THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTES EVIDENCED
HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO BANK ONE TRUST COMPANY, NA, AS TRUSTEE (OR SUCCESSOR TRUSTEE
AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS, OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER
OF THE NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR UPON ANY
TRANSFER OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES
ACT (OR SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT."
(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.
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(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 THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED 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 ARGOSY GAMING COMPANY."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled 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, 4.15, 4.23 and
9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part
or upon the order of any Gaming Authority.
(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.
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(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 canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note. If a Note is replaced pursuant to Section 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.
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SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, amendment, supplement, 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, amendment, supplement, 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
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. Subject to Section 2.07, 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 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, a
reasonable time prior to the redemption notice period set forth in Section 3.03
below or such other time as shall be required by order of any applicable Gaming
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Authority, 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 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 in
accordance with any other method the Trustee considers fair and appropriate. 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 4.15 hereof, at least 30 days but
not more than 60 days before a redemption date or such other time as shall be
required by order of any applicable Gaming Authority, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
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
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(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 pursuant to Section 3.01, an
Officers' 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
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 surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to June 1, 2004. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional or Special Interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on June 1
of the years indicated below:
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004......................................... 105.375%
2005......................................... 103.583%
2006......................................... 101.792%
2007 and thereafter.......................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to June 1, 2002, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes with the net
proceeds of a Public Equity Offering at a redemption price equal to 110.750% of
the aggregate principal amount thereof plus accrued and unpaid Additional or
Special Interest thereon, if any; provided that at least 65% in aggregate
principal amount of the Notes originally issued remain outstanding immediately
after the occurrence of such redemption and that such redemption occurs within
60 days of the date of the closing of such Public Equity Offering.
(c) 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. GAMING REDEMPTION
(a) Notwithstanding any other provision of this Indenture, if any
Gaming Authority: (1) requests or requires a holder or beneficial owner of Notes
to appear before, submit to the jurisdiction of or provide information to, such
Gaming Authority and such holder or beneficial owner either refuses to do so or
otherwise fails to comply with such request or requirement within a reasonable
period of time; or (2) determines that any holder or beneficial owner of Notes
is not suitable or qualified with respect to beneficial ownership of the Notes,
then the Company may: (1) require that such holder or beneficial owner dispose
of its Notes within 30 days (or such earlier date as required by the Gaming
Authority) of (A) termination of the 30-day period described above for the
holder or beneficial owner to apply for a license, qualification or finding of
suitability or (B) the receipt of the notice from the Gaming Authority that the
holder or beneficial owner will not be licensed, qualified or found suitable; or
(2) redeem the Notes of such holder or beneficial owner at a price equal to the
lesser of (A) the price at which such holder or beneficial owner acquired such
Notes or (B) the Fair Market Value of such Notes or, if the Notes are listed on
a national securities exchange, the last reported sale price on the date the
Company notifies such holder or beneficial owner of the redemption.
(b) Immediately upon a determination that a holder or beneficial owner
will not be licensed, qualified or found suitable, the holder or beneficial
owner will have no further rights (1) to exercise any right conferred by the
Notes, directly or indirectly, through any trustee, nominee or any other Person
or entity, or (2) to receive any interest or other distribution or payment with
respect to the Notes or any remuneration in any form from the Company for
services rendered or otherwise, except the redemption price of the Notes. The
holder or beneficial owner applying for a licenses, qualification or finding of
suitability must pay all costs of the licensure or investigation for such
qualification or finding of suitability.
SECTION 3.09. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
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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 and Special Interest, if
any, 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 Additional Interest, 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 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 Additional
or Special Interest, if any, (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.
SECTION 4.03. COMMISSION REPORTS AND REPORTS TO HOLDERS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the
Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the SEC on Form 8-K
if the Company were required to file such reports, in each case, within the
time periods specified in the SEC's rules and regulations. In addition,
following consummation of the Exchange Offer, whether or not required by the
rules and regulations of the SEC,
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the Company shall file a copy of all such information and reports with the
SEC for public availability within the time periods specified in the SEC's
rules and regulations (unless the SEC will not accept such a filing) and make
such information available to securities analysts and prospective investors
upon request. The Company shall at all times comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company and the
Subsidiary Guarantors 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, except for
such information as has been filed pursuant to the SEC's electronic data
gathering and retrieving system.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company 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 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.
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SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company 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 (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. LIMITATION ON INDEBTEDNESS AND ISSUANCES OF PREFERRED STOCK
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes and
any guarantees thereof issued on the Closing Date and other Indebtedness
existing on the Closing Date) and the Company shall not issue any
Disqualified Stock and shall not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; PROVIDED that the Company may Incur
Indebtedness or issue Disqualified Stock and the Company's Restricted
Subsidiaries may Incur Indebtedness or issue Disqualified Stock or preferred
stock if, after giving effect to the Incurrence of such Indebtedness or the
issuance of such Disqualified Stock or preferred stock and the receipt and
application of the proceeds therefrom, the Interest Coverage Ratio would be
greater than 2.0:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the
following:
(i) Subject to the provisions of Section 4.16(c), Indebtedness
and letters of credit under the Credit Facility in an
aggregate principal amount at any one time outstanding
under this clause (1) (with letters of credit being deemed
to have a principal amount equal to the maximum potential
liability of the Company and its Subsidiaries thereunder)
not to exceed $275.0 million less any amount of such
Indebtedness permanently repaid as provided in Section 4.15
hereof;
(ii) Subject to the provisions of Section 4.16(c), Indebtedness
in an aggregate principal amount at any one time
outstanding under this clause (ii) not to exceed $150.0
million less any amount of such Indebtedness permanently
repaid as provided under Section 4.15; PROVIDED that: (A)
the initial borrowing under the agreement governing such
Indebtedness is used exclusively to purchase at least 29.0%
of the then-outstanding interests of Indiana Gaming Company
L.P.; (B) all of the initial lenders or purchasers of such
Indebtedness are Permitted Lenders; (C) at the time of the
initial borrowing under the agreement governing such
Indebtedness, after giving pro forma effect to the issuance
of all Indebtedness which is outstanding as of the date of
determination pursuant to the Credit Facility and which may
otherwise be incurred under such Credit Facility, the
Interest Coverage Ratio would be at least 1.5 to 1; and
(D) such Indebtedness is not issued with any equity or cash
flow participations.
(iii) Indebtedness owed to the Company evidenced by a promissory
note or to any Restricted Subsidiary; PROVIDED that: (A) if
the Company or any Subsidiary Guarantor is the obligor on
such Indebtedness and the payee is not the Company or a
Subsidiary Guarantor, such Indebtedness must be expressly
subordinated to the prior payment in full in cash of all
Senior Subordinated Obligations with respect to the Notes,
in the case of the Company, or the Subsidiary Guarantee, in
the case of a Subsidiary Guarantor and (B) any event which
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results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or another
Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted
by this clause (iii);
(iv) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding
Indebtedness Incurred under clauses (vi), (vii), (ix) and
(x) of this paragraph, and any refinancings thereof in an
amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses);
PROVIDED that Indebtedness the proceeds of which are used
to refinance or refund the Notes or Indebtedness that is
PARI PASSU with, or subordinated in right of payment to,
the Notes shall only be permitted under this clause (iv)
if: (A) in case the Notes are refinanced in part or the
Indebtedness to be refinanced is PARI PASSU with the Notes,
such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new
Indebtedness is outstanding, is expressly made PARI
PASSU with, or subordinate in right of payment to, the
remaining Notes, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the
Notes, such new Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which
such new Indebtedness is issued or remains outstanding,
is expressly made subordinate in right of payment to the
Notes at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes and (C) such new
Indebtedness, determined as of the date of Incurrence of
such new Indebtedness, does not mature prior to the
Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness
is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; and PROVIDED
FURTHER that in no event may Indebtedness of the Company
that is PARI PASSU or subordinated in right of payment to
the Notes be refinanced by means of any Indebtedness of
any Restricted Subsidiary pursuant to this clause (iv);
(v) Indebtedness (A) in respect of performance, surety or
appeal bonds provided in the ordinary course of business,
(B) under Currency Agreements and Interest Rate
Agreements; PROVIDED that such agreements (1) are
designed solely to protect the Company or its Restricted
Subsidiaries against fluctuations in foreign currency
exchange rates or interest rates and (2) do not increase
the Indebtedness of the obligor outstanding at any time
other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of
fees, indemnities and compensation payable thereunder;
and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit,
surety bonds or performance bonds securing any
obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in any case
Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary (other than
Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such
acquisition), in a principal amount not to exceed the
gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such
disposition;
(vi) the incurrence by the Company and the Subsidiary Guarantors
of Indebtedness represented by the Notes and the related
Subsidiary Guarantees to be issued on the date of the
Indenture and the Exchange Notes and the related
Subsidiary Guarantees to be issued pursuant to the
Registration Rights Agreement;
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(vii) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered
in an Offer to Purchase made as a result of a Change in
Control or (B) deposited to defease the Notes pursuant to
Article 8;
(viii) Guarantees of Indebtedness of the Company or a Restricted
Subsidiary by the Company or any of the Subsidiary
Guarantors that was permitted to be incurred by another
provision of this covenant;
(ix) FF&E Indebtedness, provided that the amount of such
Indebtedness in the aggregate outstanding at any time,
including all refinancings, replacements and refundings
thereof, shall not exceed $5.0 million multiplied by the
number of Material Casinos then operated by the Company
or its Restricted Subsidiaries; and
(x) Indebtedness of the Company (in addition to Indebtedness
permitted under clauses (i) through (ix) above) in an
aggregate principal amount outstanding at any time
(together with refinancings thereof) not to exceed $15.0
million.
(b) Notwithstanding any other provision of this Section 4.07, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary
may Incur pursuant to this Section 4.07 shall not be deemed to be exceeded,
with respect to any outstanding Indebtedness, due solely to the result of
fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.07, (1) Indebtedness incurred under the
Credit Facility on or prior to the Closing Date shall be treated as Incurred
pursuant to clause (i) of the second paragraph of this Section 4.07, (2)
Guarantees, Liens or obligations with respect to letters of credit supporting
Indebtedness which is included in the determination of such particular amount
shall not be included and (3) any Liens granted pursuant to the equal and
ratable provisions referred to in Section 4.14 hereof shall not be treated as
Indebtedness.
(d) For purposes of determining compliance with this Section 4.07,
in the event that an item of Indebtedness meets the criteria of more than one
of the types of Indebtedness described in the above clauses (other than
Indebtedness referred to in clause (1) of the preceding sentence), the
Company, in its sole discretion, shall classify, and from time to time may
reclassify, such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses.
SECTION 4.08 LIMITATION ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on or with respect to the Company's or any Restricted
Subsidiary's Capital Stock (other than dividends or distributions payable
solely in shares of its Capital Stock (other than Disqualified Stock) or in
options, warrants or other rights to acquire shares of such Capital Stock)
held by Persons other than the Company or any of its Restricted Subsidiaries;
(ii) purchase, redeem, retire or otherwise acquire for value any shares of
Capital Stock of the Company or any Subsidiary of the Company (including
options, warrants or other rights to acquire such shares of Capital Stock)
held by any Person; (iii) make any voluntary or optional principal payment,
or voluntary or optional redemption, repurchase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company or a
Subsidiary Guarantor that is subordinated in right of payment to the Notes or
any Subsidiary Guarantee, as the case may be; or (iv) make any Investment,
other than a Permitted Investment, in any Person (such payments or any other
actions described in clauses (i) through (iv) above being collectively
"Restricted Payments"); if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing, (B) the Company could not Incur at least $1.00
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<PAGE>
of Indebtedness under the first paragraph of Section 4.07 hereof or (C) the
aggregate amount of all Restricted Payments, together with the amount of any
Investment that was made pursuant to clause (vii)(B)(2) of the definition of
"Permitted Investments" (the amount of any Restricted Payment with a Fair
Market Value in excess of $1.0 million, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination shall
be conclusive and evidenced by a resolution of the Board of Directors), made
after the Closing Date shall exceed the sum of: (1) 50% of the aggregate
amount of the Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on
a cumulative basis during the period (taken as one accounting period)
beginning on the first day of the fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter preceding
the Transaction Date for which reports have been filed with the Commission or
provided to the Trustee; PLUS (2) the aggregate Net Cash Proceeds received by
the Company after the Closing Date from the issuance and sale permitted by
the Indenture of its Capital Stock (other than Disqualified Stock) to a
Person who is not a Subsidiary of the Company, including an issuance or sale
permitted by the Indenture of Indebtedness of the Company for cash subsequent
to the Closing Date upon the conversion of such Indebtedness into Capital
Stock (other than Disqualified Stock) of the Company, or from the issuance to
a Person who is not a Subsidiary of the Company of any options, warrants or
other rights to acquire Capital Stock of the Company (in each case, exclusive
of any Disqualified Stock or any options, warrants or other rights that are
redeemable at the option of the holder, or are required to be redeemed, prior
to the Stated Maturity of the Notes); PLUS (3) an amount equal to the net
reduction in Investments treated as Restricted Payments in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company
or any Restricted Subsidiary or from the Net Cash Proceeds from the sale of
any such Investment (except, in each case, to the extent any such payment or
proceeds are included in the calculation of Adjusted Consolidated Net Income
and except, in each case, for any such sale that is not included in the
definition of "Asset Sales"), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in
the definition of "Investments"), not to exceed, in each case, the amount of
Investments previously made by the Company or any Restricted Subsidiary in
such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (i) the
payment of any dividend within 60 days after the date of declaration thereof
if, at said date of declaration, such payment would comply with the foregoing
paragraph; (ii) the redemption, repurchase, defeasance or other acquisition
or retirement for value of Indebtedness that is subordinated in right of
payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred
under clause (iv) of the second paragraph of Section 4.07; (iii) the
repurchase, redemption or other acquisition of Capital Stock of the Company
or an Unrestricted Subsidiary (or options, warrants or other rights to
acquire such Capital Stock) in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock); (iv) the making of any principal payment or the
repurchase, redemption, retirement, defeasance or other acquisition for value
of Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the provisions
of the Indenture applicable to mergers, consolidations and transfers of all
or substantially all of the property and assets of the Company; (vi) pro rata
dividends or distributions on Common Stock of Restricted Subsidiaries held by
minority stockholders; (vii) the redemption or repurchase of any debt or
equity securities of the Company or any Restricted Subsidiary required by,
and in accordance with any order of any Gaming Authority, PROVIDED, that the
Company has used its reasonable best efforts to effect a disposition of such
securities to a third-party and has been unable
43
<PAGE>
to do so; or (viii) other Restricted Payments in an aggregate amount not to
exceed $15.0 million PROVIDED that, except in the case of clauses (i) and
(iii), no Default or Event of Default shall have occurred and be continuing
or occur as a consequence of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding
paragraph (other than the Restricted Payment referred to in clause (ii)
thereof, an exchange of Capital Stock for Capital Stock or Indebtedness
referred to in clause (iii) or (iv) thereof), the Net Cash Proceeds from any
issuance of Capital Stock referred to in clauses (iii) and (iv), and any
Investment that is made pursuant to clause (vii)(B)(2) of the definition of
Permitted Investments shall be included in calculating whether the conditions
of clause (C) of the first paragraph of this Section 4.08 have been met with
respect to any subsequent Restricted Payments. In the event the proceeds of
an issuance of Capital Stock of the Company are used for the redemption,
repurchase or other acquisition of the Notes, or Indebtedness that is PARI
PASSU with the Notes, then the Net Cash Proceeds of such issuance shall be
included in clause (C) of the first paragraph of this Section 4.08 only to
the extent such proceeds are not used for such redemption, repurchase or
other acquisition of Indebtedness.
SECTION 4.09. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES
The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to: (i) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted Subsidiary owned by the Company or any other Restricted
Subsidiary; (ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary; (iii) make loans or advances to the Company or any
other Restricted Subsidiary; or (iv) transfer any of its property or assets
to the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Facility, the
Indenture or any other agreements in effect on the Closing Date, and any
extensions, refinancings, renewals or replacements of such agreements;
PROVIDED that the encumbrances and restrictions in any such extensions,
refinancings, renewals or replacements are no less favorable in any material
respect to the Holders than those encumbrances or restrictions that are then
in effect and that are being extended, refinanced, renewed or replaced; (ii)
existing under or by reason of applicable law or by order of any Gaming
Authority; (iii) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted Subsidiary,
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person
or the property or assets of any Person other than such Person or the
property or assets of such Person so acquired; (iv) in the case of clause
(iv) of the first paragraph of this Section 4.09, (A) that restrict in a
customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset, (B) existing by virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by the
Indenture or (C) arising or agreed to in the ordinary course of business, not
relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or any Restricted
Subsidiary; (v) with respect to a Restricted Subsidiary and imposed pursuant
to an agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary; or (vi) contained in the terms of any Indebtedness or
any agreement pursuant to which such Indebtedness was issued if (A) the
encumbrance or restriction applies only in the event of a payment default or
a default with respect to a financial covenant contained in such Indebtedness
or agreement, (B) the encumbrance or restriction is not materially more
disadvantageous to the Holders of the Notes than is customary in comparable
financings (as determined by
44
<PAGE>
the Company) and (C) the Company determines that any such encumbrance or
restriction will not materially affect the Company's ability to make
principal or interest payments on the Notes).
Nothing contained in this Section 4.09 shall prevent the Company or
any Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in Section 4.14, (2) restricting the
sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries or (3) distributing cash flow from Indiana Gaming
Company L.P. in accordance with the provisions of its partnership agreement.
SECTION 4.10. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES
The Company shall not sell, and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights
to purchase shares of such Capital Stock) except: (i) to the Company or a
Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying
shares or sales to foreign nationals of shares of Capital Stock of foreign
Restricted Subsidiaries, to the extent required by applicable law; or (iii)
if, (A) such issuance or sale is of all the Capital Stock of such Restricted
Subsidiary and (B) the Net Cash Proceeds of any such issuance or sale are
applied in accordance with clause (i)(A) or (i)(B) of Section 4.15.
SECTION 4.11. ADDITIONAL SUBSIDIARY GUARANTEES
If (i) a Restricted Subsidiary acquired or created after the date of
the Indenture has at any time a Fair Market Value of more than $250,000 or
(ii) any Subsidiary of the Company becomes a borrower or a guarantor under
the Credit Facility, then that Subsidiary must execute a Subsidiary Guarantee
and deliver an opinion of counsel, in accordance with the terms of the
Indenture pursuant to which such Subsidiary will become a Subsidiary
Guarantor, on a senior subordinated basis (pursuant to the subordination
provisions described below under Article 10 hereof), of the Company's payment
obligations under the Notes and the Indenture; PROVIDED that the aggregate
Fair Market Value of Restricted Subsidiaries of the Company that are not
Subsidiary Guarantors will not at any time exceed $1.0 million.
SECTION 4.12. DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary
(including any newly acquired or newly formed Subsidiary of the Company) to
be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock
of, or owns or holds any Lien on any property of, the Company or any
Restricted Subsidiary; PROVIDED that: (i) the value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the
Restricted Subsidiary being so designated will be deemed to be an Investment
made by the Company or such Restricted Subsidiary as of the time of such
designation; (ii) the Investment referred to in clause (i) of this Section
4.12 would be permitted under Section 4.08 hereof; (iii) no Subsidiary of the
Company with an interest in Indiana Gaming Company L.P., may become an
Unrestricted Subsidiary; and (iv) such Restricted Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Indiana Gaming Company L.P.
will initially be designated an Unrestricted Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; PROVIDED that: (i) no Default or Event of Default
shall have occurred and be continuing at the time of or after giving effect
to such designation and (ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such designation would, if incurred
at such time, have been permitted to be Incurred (and shall be deemed to have
been Incurred) for all purposes of the Indenture.
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<PAGE>
The Company shall designate Indiana Gaming Company L.P. as a
Restricted Subsidiary if the Company or its Subsidiaries acquire all of the
then outstanding Minority Interests in Indiana Gaming Company L.P. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
SECTION 4.13. LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any
holder (or any Affiliate of such holder) of 10% or more of any class of
Capital Stock of the Company or with any Affiliate of the Company or any
Restricted Subsidiary, unless: (i) such Affiliate transaction is on fair and
reasonable terms that are no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been obtained, at the time
of such transaction or, if such transaction is pursuant to a written
agreement, at the time of execution of the agreement providing therefor, in a
comparable transaction by the Company or such Subsidiary with a Person that
is not such a holder or an Affiliate; and (ii) the Company delivers to the
Trustee: (a) with respect to any transaction or series of related
transactions the aggregate amount of which exceeds $2.0 million in value, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate transaction complies with this covenant and
that such Affiliate transaction has been approved by a majority of the
disinterested members of the Board of Directors; and (b) with respect to any
Affiliate transaction or series of related Affiliate transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing.
The foregoing limitation does not limit, and shall not apply to: (i)
any transaction solely between the Company and any of its Wholly Owned
Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries; (ii) the payment of reasonable and customary regular fees and
indemnities to directors of the Company who are not employees of the Company;
(iii) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes; (4) any sale of shares of Capital Stock
(other than Disqualified Stock) of the Company; or (5) any Restricted
Payments not prohibited by Section 4.08 hereof.
SECTION 4.14. LIMITATION ON 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 of any kind securing Indebtedness, Attributable Debt or trade
payables on any asset now owned or hereafter acquired, except Permitted Liens.
SECTION 4.15. LIMITATION ON ASSET SALES
The Company shall not, and shall not permit any Restricted
Subsidiary to, consummate any Asset Sale, unless (i) the consideration
received by the Company or such Restricted Subsidiary is at least equal to
the fair market value of the assets sold or disposed of and (ii) at least 75%
of the consideration received consists of cash or Temporary Cash Investments
or the assumption of Indebtedness of the Company or any Restricted Subsidiary
(other than Indebtedness to the Company or any Restricted Subsidiary),
PROVIDED that the Company or such Restricted Subsidiary is irrevocably and
unconditionally released from all liability under such Indebtedness.
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Within twelve months after the receipt of any Net Cash Proceeds from
one or more Asset Sales occurring on or after the Closing Date, the Company
shall or shall cause the relevant Restricted Subsidiary to: (i) (A) apply an
amount equal to such Net Cash Proceeds to permanently repay Senior
Indebtedness of the Company or any Subsidiary Guarantor or Indebtedness of
any other Restricted Subsidiary, in each case owing to a Person other than
the Company or any of its Restricted Subsidiaries; or (B) invest an equal
amount, or the amount not so applied pursuant to clause (A) (or enter into a
definitive agreement committing to so invest within 12 months after the date
of such agreement), in property or assets (other than current assets) of a
nature or type or that are used in a business (or in a company having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business
of, the Company and its Restricted Subsidiaries existing on the date of such
investment and (ii) apply (no later than the end of the 12-month period
referred to in clause (i)(B)) such excess Net Cash Proceeds (to the extent
not applied pursuant to clause (i)) as provided in the following paragraph of
this Section 4.15. The amount of such excess Net Cash Proceeds required to be
applied (or to be committed to be applied) during such 12-month period as set
forth in clause (i) of the preceding sentence and not applied as so required
by the end of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant
to this Section 4.15 totals at least $10.0 million, the Company must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders (and if required by the
terms of any Indebtedness that is PARI PASSU with the Notes ("Pari Passu
Indebtedness"), from the holders of such Pari Passu Indebtedness) on a pro
rata basis an aggregate principal amount of Notes (and Pari Passu
Indebtedness) equal to the Excess Proceeds on such date, at a purchase price
equal to 100% of the principal amount thereof, plus, in each case, accrued
interest and Additional or Special Interest, if any, to the Payment Date. If
the aggregate principal amount of Notes and any such Pari Passu Indebtedness
tendered by holders thereof exceeds the amount of Excess Proceeds, the Notes
and Pari Passu Indebtedness shall be purchased on a pro rata basis. Upon the
completion of any such Offers to Purchase, regardless of the amount of Notes
validly tendered, the amount of Excess Proceeds shall be reset to zero.
SECTION 4.16. REPURCHASE OF NOTES IN CONNECTION WITH SALE OF LAWRENCEBURG
INTEREST
(a) As long as Indiana Gaming Company L.P. is an Unrestricted
Subsidiary and the amount of Consolidated EBITDA derived from the
Lawrenceburg Casino exceeds 50% of Consolidated EBITDA of the Company and its
Restricted Subsidiaries: (i) the Company and its Subsidiaries shall not, and
shall not permit any of their Subsidiaries to, in one or a series of related
transactions, sell or otherwise transfer any of the Company's interest in
Indiana Gaming Company L.P., whether directly by a sale of such interest or
indirectly by the sale, issuance or transfer of Capital Stock of any
Subsidiary of the Company directly or indirectly owning such interest (a
"Lawrenceburg Sale") and (ii) as long as the Company or Restricted Subsidiary
serves as general partner of Indiana Gaming Company L.P., Indiana Gaming
Company L.P. shall not engage in a sale of all or substantially all its
assets, by way of merger, consolidation or otherwise (a "Property Sale"),
unless: (A) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a PRO FORMA
basis to, such Lawrenceburg Sale or Property Sale; (B) the Board of Directors
of the Company determines in good faith that the Company or such Subsidiary
receives fair market value for such Lawrenceburg Sale or Property Sale; (C)
the Board of Directors of the Company receives a favorable written opinion as
to the fairness of the transaction to the Company from a financial point of
view issued by an investment banking firm of nationally recognized standing;
and (D) within 120 business days of the date of such Lawrenceburg Sale or
Property Sale, either: (1) the Company redeems all of the Notes upon not less
than 30 days prior written notice mailed by first-class mail to each holder's
registered address or (2) the Company consummates an irrevocable,
unconditional cash offer to purchase at least an aggregate
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<PAGE>
principal amount (the "Tender Offer Amount") of Notes that, if the Company
purchased all such Notes, would result in the Debt to EBITDA Ratio being no
greater than 3.5 to 1, in each case, at the purchase price set forth below
plus accrued and unpaid interest and Additional or Special Interest, if any,
thereon, to the repurchase date, if such Lawrenceburg Sale or Property Sale
occurs during the twelve-month period beginning on June 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999........................................... 110.750%
2000........................................... 109.675%
2001........................................... 108.600%
2002........................................... 107.525%
2003........................................... 106.450%
</TABLE>
and, thereafter at the prices set forth in Section 3.07 hereof.
(b) Upon expiration of the offer described in clause (2)(ii)(B)(2)
above, the Company will purchase all Notes properly tendered (on a PRO RATA
basis if the principal amount of Notes tendered exceeds the Tender Offer
Amount). After the purchase of all Notes properly tendered, any remaining
proceeds of the Lawrenceburg Sale or Property Sale will be available for
general corporate purposes. Upon the consummation of the offer described in
clause (2)(ii)(B)(2) above, the interest rate on all of the remaining
outstanding Notes will increase by 0.50% per annum. If the Company complies
with the preceding paragraph of this Section 4.16 with respect to a
Lawrenceburg Sale or Property Sale, the provisions of Sections 4.15 and 4.23
shall not apply with respect to such Lawrenceburg Sale or Property Sale.
(c) In the event the Company is obligated to repurchase Notes
pursuant to this Section 4.16(a), clauses (1) and (2) of the second paragraph
of Section 4.07 hereof shall be of no further force or effect and none of the
Company nor any of its Restricted Subsidiaries shall be permitted to incur
any Indebtedness pursuant to such clauses; PROVIDED that, any Indebtedness
incurred prior to such Lawrenceburg Sale or Property Sale under such clauses
that remain outstanding after such Lawrenceburg Sale or Property Sale shall
not be deemed to be a violation of this Section or Section 4.07 hereof.
(d) As long as Indiana Gaming Company L.P. is an Unrestricted
Subsidiary and the amount of Consolidated EBITDA derived from the
Lawrenceburg Casino is less than or equal to 50% of Consolidated EBITDA of
the Company and its Restricted Subsidiaries: (i) the Company and its
Subsidiaries will not, and will not permit any of their Subsidiaries to,
consummate a Lawrenceburg Sale unless the Company treats such Lawrenceburg
Sale as an "Asset Sale" and complies with Section 4.15 hereof; and (ii) as
long as the Company or a Restricted Subsidiary serves as general partner of
Indiana Gaming Company L.P., Indiana Gaming Company L.P. will not engage in a
Property Sale unless (1) the consideration received by the Company or such
Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of, (2) at least 75% of the consideration received
consists of cash or Temporary Cash Investments; and (3) the Company's and any
Restricted Subsidiaries' pro rata share of the Net Cash Proceeds of such
Property Sale are distributed to the Company or any Restricted Subsidiary of
the Company and the Company utilizes such Net Cash Proceeds received by it in
accordance with the second and third paragraphs of Section 4.15 hereof. The
Company shall cause distributions from Indiana Gaming Company L.P. to The
Indiana Gaming Company to be promptly distributed to the Company.
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SECTION 4.17. LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if: (i) the Company or such Restricted Subsidiary, as applicable,
could have incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction under (i) the Interest
Coverage Ratio test in the first paragraph of Section 4.07 hereof or (ii)
clause (ix) of the second paragraph of Section 4.07 hereof; (ii) the gross
cash proceeds of that sale and leaseback transaction are at least equal to
the fair market value, as determined in good faith by the Board of Directors
and set forth in an Officers' Certificate delivered to the Trustee, of the
property that is the subject of that sale and leaseback transaction; and
(iii) the transfer of assets in that sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with Section 4.15.
SECTION 4.18. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS
The Company shall not Incur any Indebtedness that is subordinate in
right of payment to any Senior Indebtedness unless such Indebtedness is PARI
PASSU with, or subordinated in right of payment to, the Notes; PROVIDED that
the foregoing limitation shall not apply to distinctions between categories
of Senior Indebtedness of the Company that exist by reason of any Liens or
Guarantees arising or created in respect of some but not all such Senior
Indebtedness.
SECTION 4.19. LIMITATION ON CERTAIN ACTIVITIES OF INDIANA GAMING COMPANY
L.P.
(a) As long as the Company or a Restricted Subsidiary is the general
partner of Indiana Gaming Company L.P., the Company shall not, and a
Restricted Subsidiary shall not permit Indiana Gaming Company L.P. to Incur
any Indebtedness other than Indebtedness which: (A) is Non-Recourse
Indebtedness and (B) by its terms, contains no restrictions of the type
prohibited by Section 4.09.
(b) As long as the Company or a Restricted Subsidiary is a partner
of Indiana Gaming Company L.P., the Company shall not permit Indiana Gaming
Company L.P. to amend the provisions of its partnership agreement dealing
with distributions in a manner which is adverse to the holders of the Notes
or the provision of its partnership agreement with respect to partnership
purpose, which is limited to the operation of the Lawrenceburg Casino.
SECTION 4.20. LIMITATION ON BUSINESS ACTIVITIES
The Company shall not, and shall not permit any Subsidiary to,
engage in any business other than the gaming and hotel businesses and such
business activities as are incidental or related or complementary thereto,
except to such extent as would not be material to the Company and its
Subsidiaries taken as a whole.
SECTION 4.21. LIMITATION ON STATUS AS INVESTMENT COMPANY
The Company shall not, and shall not permit any Subsidiary Guarantor
to take any action that may require either the Company or any Subsidiary
Guarantor to register as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended) or from otherwise becoming
subject to regulation under the Investment Company Act.
SECTION 4.22. PAYMENTS FOR CONSENT
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or
for the benefit of any Holder of Notes for or as an inducement
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to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid and is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.23. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Within 30 days of the occurrence of a Change of Control, the Company
shall commence and consummate an Offer to Purchase all Notes then
outstanding, at a purchase price equal to 101% of the principal amount
thereof, plus accrued interest and Additional or Special Interest, if any, to
the Payment Date.
SECTION 4.24. 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 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.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of
its property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to any Person or permit any
Person to merge with or into the Company unless: (i) the Company shall be the
continuing Person, or the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or that acquired or leased
such property and assets of the Company shall be a corporation organized and
validly existing under the laws of the United States of America or any
jurisdiction thereof and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, all of the obligations of the Company
on all of the Notes and under the Indenture; (ii) immediately after giving
effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; (iii) immediately after giving effect to such
transaction on a PRO FORMA basis, the Company or any Person becoming the
successor obligor of the Notes shall have a Consolidated Net Worth equal to
or greater than the Consolidated Net Worth of the Company immediately prior
to such transaction; (iv) immediately after giving effect to such transaction
on a PRO FORMA basis the Company, or any Person becoming the successor
obligor of the Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.07; PROVIDED that this
clause (iv) shall not apply to a consolidation, merger or sale of all (but
not less than all) of the assets of the Company if all Liens and Indebtedness
of the Company or any Person becoming the successor obligor on the Notes, as
the case may be, and its Restricted Subsidiaries outstanding immediately
after such transaction would have been permitted (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the
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transaction, shall be deemed to have been Incurred) for all purposes of the
Indenture; and (v) the Company delivers to the Trustee an Officers'
Certificate (attaching the arithmetic computations to demonstrate compliance
with clauses (iii) and (iv)) and opinion of counsel, in each case stating
that such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been compiled with; PROVIDED,
HOWEVER, that: (A) clauses (iii) and (iv) above will not apply if, in the
good faith determination of the Board of Directors of the Company, whose
determination shall be evidenced by a resolution of the Board of Directors,
the principal purpose of such transaction is to change the state of
incorporation of the Company and any such transaction shall not have as one
of its purposes the evasion of the foregoing limitations; and (B) this
Section 5.01 shall not apply to property and assets the Company sells
pursuant to Section 4.16 hereof.
In addition, the Company may not, directly or indirectly, lease all
or substantially all of its properties or assets, in one or more related
transactions, to any other Person. This Section 5.01 shall not apply to a
sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of the Subsidiary Guarantors.
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
Each of the following constitutes an Event of Default:
(a) default in the payment of principal of or premium, if any, on
any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise whether or not such payment is
prohibited by Article 10;
(b) default in the payment of interest on any Note when the same
becomes due and payable, or Additional or Special Interest, if any, and such
default continues for a period of 30 days whether or not such payment is
prohibited by Article 10;
(c) failure by the Company or any of its Subsidiaries to comply with
any of the provisions of Section 4.07, 4.15, 4.23 or 5.01 hereof;
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(d) failure by the Company or any of its Restricted Subsidiaries to
observe or perform any covenant or agreement in this Indenture or the Notes
(other than a default under clause (a), (b), or (c) of this Section 6.01) for
30 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes (including Additional Notes,
if any) then outstanding voting as a single class;
(e) the occurrence with respect to any issue or issues of
Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10.0 million or more in the aggregate for
all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (i) an event of default that has caused the
holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (ii) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not
have been made, waived or extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10.0 million in the aggregate for all such
final judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged,
and there shall be any period of 60 consecutive days following entry of the
final judgment or order that causes the aggregate amount for all such final
judgments or orders outstanding and not paid or discharged against all such
Persons to exceed $10.0 million during which a stay of enforcement of such
final judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant Subsidiary
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Company or any Significant Subsidiary or for all or substantially all of
the property and assets of the Company or any Significant Subsidiary or (C)
the winding up or liquidation of the affairs of the Company or any
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days;
(h) the Company or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any
general assignment for the benefit of creditors;
(i) except as permitted by the Indenture, any Subsidiary Guarantee
shall be 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 its Subsidiary Guarantee; or
(j) the revocation, termination, suspension or other cessation of
effectiveness for a period or more than 90 consecutive days of any Gaming
License that results in the cessation or suspension of gaming operations at
the Lawrenceburg Casino or any Material Casino; PROVIDED that any voluntary
relinquishment of or failure to renew after revocation a Gaming License of a
Material Casino if such relinquishment or failure to renew is, in the
reasonable, good faith judgment of the Board of Directors of the Company,
evidenced by a resolution of such Board, both desirable in the conduct of the
business of
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the Company and its Subsidiaries, taken as a whole, and not disadvantageous
in any material respect to the holders of the Notes shall not constitute an
Event of Default.
SECTION 6.02. ACCELERATION
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 that occurs with respect to the Company)
occurs and is continuing under the Indenture, the Trustee or the Holders of
at least 25% in aggregate principal amount of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by
the Holders), may, and the Trustee at the request of such Holders shall,
declare the principal of, premium, if any, and accrued interest and
Additional or Special Interest, if any, on the Notes to be immediately due
and payable. Upon a declaration of acceleration, such principal of, premium,
if any, and accrued interest and Additional or Special Interest, if any,
shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (e) of Section
6.01 has occurred and is continuing, such declaration of acceleration shall
be automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to clause (e) of Section 6.01 shall be
remedied or cured by the Company or the relevant Significant Subsidiary or
waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in clause (g) or (h) of Section 6.01 occurs with respect to the
Company, the principal of, premium, if any, and accrued interest or
Additional or Special Interest, if any, on the Notes then outstanding shall
IPSO FACTO become and be immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder. The Holders of at
least a majority in principal amount of the outstanding Notes by written
notice to the Company and to the Trustee, may waive all past defaults and
rescind and annul a declaration of acceleration and its consequences if (i)
all existing Events of Default, other than the nonpayment of the principal
of, premium, if any, and accrued interest and Additional or Special Interest,
if any, on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
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 and Additional or Special Interest, if any, 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.
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, Additional or Special Interest,
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
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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, but subject
to Article 10 hereof, the right of any Holder of a Note to receive payment of
principal, premium, if any, and interest on the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer 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, 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.
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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 Sections 6.08 and 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, 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, if any and
interest, respectively; and
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
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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 person would exercise or use under the circumstances in the conduct
of such person's 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 appear on their face
to 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
(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.
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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.
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 has or acquires any
conflicting interest within the meaning of the TIA and the Notes are in
default, it must eliminate such conflict within 90 days if the default to
which such conflicting interest relates has not been cured or duly waived or
otherwise eliminated before the end of such 90-day period, 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.
In connection with the transfer or exchange of Notes by the Trustee
pursuant to Section 2.06 hereof, the Trustee shall obtain a certificate in
the form of Exhibit B or Exhibit C to this Indenture, as the case may be,
and, if Item 3(d) on
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Exhibit B is checked, shall obtain a certificate in the form of Exhibit D to
the Indenture and an Opinion of Counsel referenced therein. The Trustee shall
have no responsibility to inquire further or to investigate whether the
matters included in any such certification or opinion are true or correct.
The Trustee shall have no responsibility to determine whether the conditions
of this Indenture or the Notes governing transfer or exchange of Notes have
been followed and shall have no responsibility to seek or obtain any Opinions
of Counsel in connection with any transfer or exchange of Notes other than as
set forth in this Section 7.04. The Trustee shall have no responsibility to
inquire whether the Company has complied with any covenant of Article 4,
other than deliver of the certificate stated in Section 4.04(a).
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 and the
agent bank under the Credit Facility (the "Agent Bank"), 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. The
name and address of the Agent Bank for purposes of this Section 7.05 is Wells
Fargo Bank, N.A., One East First Street, Reno, Nevada 89501, Attention: Casey
Potter. Any change in the identity or address of the Agent Bank shall be
effective only if the Trustee receives written notice of the change,
specifically providing that the change is effective for any notices to the
Agent Bank under the Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Trustee shall promptly notify the Agent
Bank in accordance with this Section of such acceleration.
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 or
as agreed to in writing from time to time. 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 for ordinary and extraordinary services,
disbursements and expenses of the Trustee's agents and counsel.
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
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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; PROVIDED that the Company
will not be required to pay such fees and expenses if it assumes the
Trustee's defense and there is no conflict of interest between the Company
and the Trustee in connection with such defense. The Company need not
reimburse any expense or indemnify any loss or liability to the extent
incurred by the Trustee through its gross negligence, bad faith or willful
misconduct.
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(g) or (h) 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.
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 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.
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.
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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 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 who has been a
Holder for at least six months, fails to comply with Section 7.10, such
Holder 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. 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.
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 8.
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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: (a) the rights of Holders of outstanding Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, interest,
premium and Additional or Special Interest, if any, on such Notes when such
payments are due, (b) the Company's obligations with respect to such Notes
under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's and the
Subsidiary Guarantors' obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, 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 4.03(a), 4.04,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19,
4.20, 4.21, 4.22 and 4.23 hereof and clause (iv) of Section 5.01 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, amendment, 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 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(c) 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:
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(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States 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 on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance had
not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be used to defease the Notes pursuant to this Article
8 concurrently with such incurrence) or insofar as Sections 6.01(g) or
6.01(h) hereof is concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) 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 this 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;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, assuming no intervening bankruptcy of the Company
or any Subsidiary between the date of deposit and the 91st day following the
deposit and assuming that no Holder is an "insider" of the Company under
applicable bankruptcy law, after the 91st day 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;
(g) 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 preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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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 8 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 look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in 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
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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
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without the consent of any Holder of a
Note:
(a) cure any ambiguity, defect or inconsistency in the Indenture;
PROVIDED that such amendments do not adversely affect the interests of the
Holders in any material respect;
(b) comply with the provisions of Article 5 hereof;
(c) comply with any requirements of the SEC in connection with
the qualification of the Indenture under the Trust Indenture Act;
(d) evidence and provide for the acceptance of appointment by a
successor Trustee; or
(e) make any change that, in the good faith opinion of the Board
of Directors, does not materially and adversely affect the rights of any Holder;
(f) to provide for uncertificated Notes in addition to or in
place of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially and
adversely affect the rights of any Holder;
(g) to provide for the issuance of Additional Notes in
accordance with the limitations set forth in this Indenture as of the date
hereof; or
(h) to allow any Subsidiary Guarantor to execute a supplemental
indenture and/or a Subsidiary Guarantee with respect to the Notes.
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 Company and
the Subsidiary 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, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
(including Section 4.15 and 4.23 hereof), the Subsidiary Guarantees and the
Notes with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding voting as a single class (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
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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 Subsidiary Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then
outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Notes). 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 voting
as a single class 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) change the Stated Maturity of the principal of, or any installment
of interest on, any Note;
(b) reduce the principal amount of, or premium, if any, or interest on,
any Note;
(c) change the place or currency of payment of principal of, or premium,
if any, or interest on, any Note;
(d) impair Holders' right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption, on
or after the Redemption Date) of any Note;
(e) waive a Default or Event of Default in the payment of principal of
or premium, interest or Additional or Special Interest, if any, 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 then outstanding Notes
(including Additional Notes, if any) and a waiver of the payment default that
resulted from such acceleration);
(f) modify Article 10 in any manner adverse to the Holders; or
(g) reduce the principal amount or percentage of Notes whose Holders
must consent to an amendment, supplement or waiver hereunder.
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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.
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 12.04 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
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the payment of the Senior Subordinated Obligations will, to the extent set
forth herein, be subordinated in right of payment to the prior payment in
full, in cash or cash equivalents, of all Obligations due in respect of
existing and future Senior Indebtedness (whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Indebtedness.
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SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation
or dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property,
in an assignment for the benefit of creditors or any marshaling of the
Company's assets and liabilities:
(i) holders of Senior Indebtedness will be entitled to
receive payment in full in cash or cash equivalents of all
Obligations due in respect of Senior Indebtedness (including, with
respect to Designated Senior Indebtedness, any interest accruing
after the commencement of any proceeding described below at the rate
specified in the applicable Designated Senior Indebtedness whether
or not interest is an allowed claim enforceable against the Company
in such proceeding) before the Holders of Notes will be entitled to
receive any payment on account of Senior Subordinated Obligations or
any payment to acquire any of the Notes for cash, property or
securities, or any distribution with respect to the Notes of any
cash, property or securities (except that Holders of Notes may
receive and retain (A) Permitted Junior Securities and (B) payments
made from the trust described in Article 8 hereof), in the event of
any distribution to creditors of the Company: (1) in a liquidation
or dissolution of the Company; (2) in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the
Company or its property; (3) in an assignment for the benefit of
creditors; or (4) in any marshaling of the Company's assets and
liabilities.
(ii) until all Obligations due with respect to Senior
Indebtedness (including, with respect to Designated Senior
Indebtedness, any interest accruing after the commencement of any
proceeding described before at the rate specified in the applicable
Designated Senior Indebtedness whether or not interest is an allowed
claim enforceable against the Company in such proceeding) are paid
in full in cash or cash equivalents, any such distribution to which
Holders would be entitled shall be made to the holders of Senior
Indebtedness (except that Holders may receive and retain (A)
Permitted Junior Securities and (B) payments made from the trust
described in Article 8 hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR INDEBTEDNESS.
(a) The Company and the Subsidiary Guarantors may not make any
payment in respect of any Senior Subordinated Obligations (except in (A)
Permitted Junior Securities or (B) from the trust described in Article 8
hereof) nor may any amounts be set aside or deposited pursuant to Article 8
if:
(i) a payment default on Designated Senior Indebtedness
occurs and is continuing beyond any applicable grace period; or
(ii) any other default occurs and is continuing on any
series of Designated Senior Indebtedness that permits holders of that
series of Designated Senior Indebtedness to accelerate its maturity
and the Trustee receives a notice of such default (a "Payment Blockage
Notice") from the trustee or other representative for the holders of
any Designated Senior Indebtedness, or the holders of at least a
majority of the outstanding principal amount of such Designated Senior
Indebtedness. No new Payment Blockage Notice may be delivered unless
and until: (A) 360 days have elapsed since the delivery of the
immediately prior Payment Blockage Notice; and (B) all scheduled
payments of principal, interest and premium and Additional or Special
Interest, if any, on the Notes that have come due have been paid in
full in cash. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
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(b) Payments on the Notes and the Subsidiary Guarantees may and
shall be resumed:
(i) in the case of a payment default, upon the date on
which such default is cured or waived; and
(ii) in case of a nonpayment default, the earlier of the
date on which such nonpayment default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is
received.
(c) Notwithstanding the foregoing, the Company will be permitted to
redeem any Notes to the extent required to do so by any Gaming Authority as
described in Section 3.08 hereof.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Indebtedness of
the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Senior Subordinated Obligations with respect to the Notes at a time when
the Trustee or such Holder, as applicable, has actual knowledge that such
payment is prohibited by Section 10.03 hereof, such payment shall be held by
the Trustee or such Holder, in trust for the benefit of, and shall be paid
forthwith over and delivered, upon written request, to, the holders of Senior
Indebtedness as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness
may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior
Indebtedness remaining unpaid to the extent necessary to pay such Obligations
in full in accordance with their terms, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness, and shall not
be liable to any such holders if the Trustee shall pay over or distribute to
or on behalf of Holders or the Company or any other Person money or assets to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article 10, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee, holders of Senior
Indebtedness and the Paying Agent of any facts known to the Company that
would cause a payment of any Senior Subordinated Obligations with respect to
the Notes to violate this Article 10, but failure to give such notice shall
not affect the subordination of the Notes to the Senior Indebtedness as
provided in this Article 10.
SECTION 10.07. SUBROGATION.
Subject to the payment in full, in cash or cash equivalents, of all
Senior Indebtedness, the Holders of Notes shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Notes shall be paid in full, in cash or cash equivalents, and
for the purpose of such
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subrogation no payments or distributions to the holders of Senior
Indebtedness by or on behalf of the Holders by virtue of this Article 10,
which otherwise would have been made to the Holders, shall, as between the
Company and the Holders, be deemed to be payment by the Company to holders or
on account of the Senior Indebtedness, it being understood that the
provisions of this Article 10 are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders
of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 10 shall have been
applied, pursuant to the provisions of this Article 10, to the payment of all
amounts payable under the Senior Indebtedness, then the Holders shall be
entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of the
Senior Indebtedness in full, in cash or cash equivalents.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes,
the obligation of the Company, which is absolute and unconditional,
to pay principal of and interest on the Notes in accordance with
their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to
holders of Senior Indebtedness; or
(iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior
Indebtedness to receive distributions and payments otherwise payable
to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of
or interest on a Note on the due date, the failure is still a Default or
Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of
the Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders
of Senior Indebtedness, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company referred
to in this Article 10, the Trustee and the Holders of Notes shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction
or upon any certificate of such Representative or of the liquidating trustee
or agent or other Person making any distribution to the Trustee or to the
Holders of Notes for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Senior
Subordinated Obligations with respect to the Notes to violate this Article 10.
Only the Company or a Representative may give the notice. Nothing in this
Article 10 shall impair the claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Indebtedness.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to this Article 11, each of the Subsidiary 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 Subsidiary Guarantors shall
be jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
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The Subsidiary 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 Subsidiary
Guarantor. Each Subsidiary 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
Subsidiary 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 Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary 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 Subsidiary Guarantor further agrees that, as between the Subsidiary
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 Subsidiary 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 Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee pursuant to this Article 11 shall be junior and subordinated to the
Senior Indebtedness of such Subsidiary Guarantor on the same basis as the Notes
are junior and subordinated to Senior Indebtedness of the Company, as if and to
the same extent the same provisions were set out in this Article 11. For the
purposes of the foregoing sentence, but without limiting the generality thereof,
the Trustee and the Holders shall have the right to receive and/or retain
payments by any of the Subsidiary Guarantors only at such times as they may
receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof, and are subject to the same turnover
provisions.
SECTION 11.03. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Subsidiary 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 Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Subsidiary Guarantors hereby
irrevocably agree that the obligations of such Subsidiary Guarantor will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of such Subsidiary Guarantor that are relevant under such laws, and
after giving effect to any collections from,
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rights to receive contribution from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under this Article 11, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Subsidiary Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Subsidiary
Guarantor by an Officer thereof.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.11 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Subsidiary Guarantees in accordance with Section 4.11 hereof
and this Article 11, to the extent applicable.
SECTION 11.05. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
Except as otherwise provided in Section 11.06, no Subsidiary Guarantor
may consolidate with or merge with or into (whether or not such Subsidiary
Guarantor is the surviving Person) another Person whether or not affiliated with
such Subsidiary Guarantor unless:
(a) subject to Section 11.06 hereof, the Person formed by or surviving
any such consolidation or merger (if other than a Subsidiary Guarantor or the
Company) unconditionally assumes all the obligations of such Subsidiary
Guarantor, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, the Indenture and the Subsidiary
Guarantee on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
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
Subsidiary 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 Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor Person thereupon
may cause to be signed any or all of the Subsidiary Guarantees to be endorsed
upon all of the
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Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this
Indenture as the Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Subsidiary
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 Subsidiary Guarantor with
or into the Company or another Subsidiary Guarantor, or shall prevent any sale
or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Subsidiary Guarantor, in
each case to a Person that is not (either before or after giving effect to such
transactions) a Restricted Subsidiary of the Company, then such Subsidiary
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 Subsidiary
Guarantor) 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 Subsidiary
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee; PROVIDED that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.15 hereof. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in accordance
with the provisions of this Indenture, including without limitation Section 4.15
hereof, the Trustee shall execute any documents reasonably required in order to
evidence the release of any Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Subsidiary Guarantor
under this Indenture as provided in this Article 11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. 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 12.02. NOTICES.
Any notice or communication by the Company, any Subsidiary 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:
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If to the Company and/or any Subsidiary Guarantor:
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002-6232
Telecopier No.: (618) 474-7420
Attention: General Counsel
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Telecopier No.: (312) 558-5700
Attention: Joseph A. Walsh, Jr.
If to the Trustee:
Bank One Trust Company, NA
100 East Broad Street
8th Floor
Columbus, OH 43215
Telecopier No.: (614) 248-5195
Attention: Corporate Trust Administration
The Company, any Subsidiary 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.
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SECTION 12.03. 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 12.04. 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 12.05 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 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 12.05. 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 12.06. 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 12.07. 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 Subsidiary Guarantor, as such, shall have any
liability for any obligations of the Company or such Subsidiary Guarantor under
the Notes, the Subsidiary 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.
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SECTION 12.08. 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 GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. 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.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors. All agreements of each Subsidiary Guarantor in this Indenture
shall bind its successors, except as otherwise provided in Section 11.05.
SECTION 12.12. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. 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 12.13. 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]
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SIGNATURES
Dated as of June 8, 1999 ARGOSY GAMING COMPANY
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Vice President and Chief Financial Officer
ALTON GAMING COMPANY
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
ARGOSY OF LOUISIANA, INC.
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
By: ARGOSY OF LOUISIANA, INC.
its General Partner
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
THE INDIANA GAMING COMPANY
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
IOWA GAMING COMPANY
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
S-1
<PAGE>
JAZZ ENTERPRISES, INC.
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
THE MISSOURI GAMING COMPANY
By: /s/ Dale R. Black
----------------------------------------
Dale R. Black
Treasurer
BANK ONE TRUST COMPANY, NA
By: /s/ Denis Milliner
----------------------------------------
Denis Milliner
Vice President
S-2
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EXHIBIT A
[Face of Note]
- -------------------------------------------------------------------------------
CUSIP/CINS
------------
10 3/4% Senior Subordinated Notes due 2009
No. ___ $
ARGOSY GAMING COMPANY
promises to pay to
------------------------------------------------------------
or registered assigns,
the principal sum of
----------------------------------------------------------
Dollars on June 1, 2009.
Interest Payment Dates: June 1 and December 1
Record Dates: May 15 and November 15
Dated: June 8, 1999
ARGOSY GAMING COMPANY
By:
---------------------------
Name:
Title:
This is one of the Global Notes referred to
in the within-mentioned Indenture:
BANK ONE TRUST COMPANY, NA
as Trustee
By:
----------------------------------
Authorized Signatory
- -------------------------------------------------------------------------------
A-1
<PAGE>
[Back of Note]
10 3/4% Senior Subordinated Notes due 2009
[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 THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED 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 ARGOSY GAMING
COMPANY.](1)
[THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR
TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR OR
PROVISION), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO ARGOSY GAMING
COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (E) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS OF TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE EVIDENCED HEREBY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE EVIDENCED HEREBY, PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE NOTES EVIDENCED HEREBY UNDER RULE 144(K) UNDER
THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO
- -------------------
(1) This legend should be included on the Global Notes and omitted from
Definitive Notes.
A-2
<PAGE>
BANK ONE TRUST COMPANY, NA, AS TRUSTEE (OR SUCCESSOR TRUSTEE AS APPLICABLE).
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A
PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS,
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR UPON ANY TRANSFER OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.](2)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Argosy Gaming Company, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 10
3/4% per annum from June 8, 1999 until maturity. The Company will pay interest
semi-annually in arrears on June 1 and December 1 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 December 1, 1999. 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 equal to 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 Additional or Special Interest, if any,
(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) to the Persons who are registered Holders of Notes
at the close of business on the May 15 or November 15 next preceding the
Interest Payment Date, even if such Notes are canceled 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, 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 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 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.
- -------------------
(2) This legend should be included on the Restricted Global Notes and
Restricted Definitive Notes and omitted from Unrestricted Global Notes and
Unrestricted Definitive Notes.
A-3
<PAGE>
3. PAYING AGENT AND REGISTRAR. Initially, Bank One Trust Company, NA,
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.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of June 8, 1999 ("Indenture") between the Company and the Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 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
Initial Notes are obligations of the Company limited to $200.0 million in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this paragraph 5, the
Company shall not have the option to redeem the Notes pursuant to this paragraph
5 prior to June 1, 2004. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Additional or Special Interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on June 1
of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004.................................... 105.375%
2005.................................... 103.583%
2006.................................... 101.792%
2007 and thereafter..................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
paragraph 5, at any time prior to June 1, 2002, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes with
the net proceeds of a Public Equity Offering at a redemption price equal to
110.750% of the aggregate principal amount thereof plus accrued and unpaid
Additional or Special Interest thereon, if any; provided that at least 65% in
aggregate principal amount of the Notes originally issued remain outstanding
immediately after the occurrence of such redemption and that such redemption
occurs within 60 days of the date of the closing of such Public Equity Offering.
(c) Any redemption pursuant to this paragraph 5 shall be made pursuant
to the provisions of Article 3 of the Indenture.
6. GAMING REDEMPTION
(a) Notwithstanding any other provision of this Indenture, if any
Gaming Authority: (i) requests or requires a holder or beneficial owner of Notes
to appear before, submit to the jurisdiction of or provide information to, such
Gaming Authority and such holder or beneficial owner either refuses to do so or
otherwise fails to comply with such request or requirement within a reasonable
period of time; or (ii) determines that any holder or beneficial owner of Notes
is not suitable or qualified with respect to beneficial ownership of the Notes,
then the Company may: (1) require that such holder or beneficial owner dispose
of its Notes within 30 days (or such earlier date as required by the Gaming
Authority) of (A) termination of the 30-day period described above for the
holder or beneficial owner to apply for a license, qualification or finding of
suitability or (B) the receipt of the notice from the Gaming
A-4
<PAGE>
Authority that the holder or beneficial owner will not be licensed, qualified
or found suitable; or (2) redeem the Notes of such holder or beneficial owner
at a price equal to the lesser of (A) the price at which such holder or
beneficial owner acquired such Notes or (B) the Fair Market Value of such
Notes or, if the Notes are listed on a national securities exchange, the last
reported sale price on the date the Company notifies such holder or
beneficial owner of the redemption.
(b) Immediately upon a determination that a holder or beneficial owner
will not be licensed, qualified or found suitable, the holder or beneficial
owner will have no further rights (i) to exercise any right conferred by the
Notes, directly or indirectly, through any trustee, nominee or any other Person
or entity, or (ii) to receive any interest or other distribution or payment with
respect to the Notes or any remuneration in any form from the Company for
services rendered or otherwise, except the redemption price of the Notes. The
holder or beneficial owner applying for a licenses, qualification or finding of
suitability must pay all costs of the licensure or investigation for such
qualification or finding of suitability.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
8. OFFERS TO PURCHASE.
(a) CHANGE OF CONTROL. Within 30 days of the occurrence of a Change of
Control, the Company shall commence and consummate an Offer to Purchase for all
Notes then outstanding, at a purchase price equal to 101% of the principal
amount thereof, plus accrued interest and Additional or Special Interest, if
any, to the Payment Date.
(b) ASSET SALE. The Company shall not, and shall not permit any
Restricted Subsidiary to, consummate any Asset Sale, unless (i) the
consideration received by the Company or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of and (ii) at
least 75% of the consideration received consists of cash or Temporary Cash
Investments or the assumption of Indebtedness of the Company or any Restricted
Subsidiary (other than Indebtedness to the Company or any Restricted
Subsidiary), PROVIDED that the Company or such Restricted Subsidiary is
irrevocably and unconditionally released from all liability under such
Indebtedness.
Within twelve months after the receipt of any Net Cash Proceeds from
one or more Asset Sales occurring on or after the Closing Date, the Company
shall or shall cause the relevant Restricted Subsidiary to: (i) (A) apply an
amount equal to such Net Cash Proceeds to permanently repay Senior Indebtedness
of the Company or any Subsidiary Guarantor or Indebtedness of any other
Restricted Subsidiary, in each case owing to a Person other than the Company or
any of its Restricted Subsidiaries; or (B) invest an equal amount, or the amount
not so applied pursuant to clause (A) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such agreement), in
property or assets (other than current assets) of a nature or type or that are
used in a business (or in a company having property and assets of a nature or
type, or engaged in a business) similar or related to the nature or type of the
property and assets of, or the business of, the Company and its Restricted
Subsidiaries existing on the date of such investment and (ii) apply (no later
than the end of the 12-month period referred to in clause (i)(B)) such excess
Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as provided
in the following paragraph of this paragraph 8(b). The amount of such excess Net
Cash Proceeds required to be applied (or to be committed to be applied) during
such 12-month period as set forth in clause (i) of the preceding sentence and
not applied as so required by the end of such period shall constitute "Excess
Proceeds."
A-5
<PAGE>
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
paragraph 8(b) totals at least $10.0 million, the Company must commence, not
later than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders (and if required by the terms of any Pari Passu
Indebtedness, from the holders of such Pari Passu Indebtedness) on a pro rata
basis an aggregate principal amount of Notes (and Pari Passu Indebtedness) equal
to the Excess Proceeds on such date, at a purchase price equal to 100% of the
principal amount thereof, plus, in each case, accrued interest and Additional or
Special Interest, if any, to the Payment Date. If the aggregate principal amount
of Notes and any such Pari Passu Indebtedness tendered by holders thereof
exceeds the amount of Excess Proceeds, the Notes and Pari Passu Indebtedness
shall be purchased on a pro rata basis. Upon the completion of any such Offers
to Purchase, regardless of the amount of Notes validly tendered, the amount of
Excess Proceeds shall be reset to zero.
9. REPURCHASE OF NOTES IN CONNECTION WITH SALE OF LAWRENCEBURG INTEREST
(a) As long as Indiana Gaming Company L.P. is an Unrestricted
Subsidiary and the amount of Consolidated EBITDA derived from the Lawrenceburg
Casino exceeds 50% of Consolidated EBITDA of the Company and its Restricted
Subsidiaries: (i) the Company and its Subsidiaries shall not, and shall not
permit any of their Subsidiaries to, in one or a series of related transactions,
sell or otherwise transfer any of the Company's interest in Indiana Gaming
Company L.P., whether directly by a sale of such interest or indirectly by the
sale, issuance or transfer of Capital Stock of any Subsidiary of the Company
directly or indirectly owning such interest (a "Lawrenceburg Sale") and (ii) as
long as the Company or Restricted Subsidiary serves as general partner of
Indiana Gaming Company L.P., Indiana Gaming Company L.P. shall not engage in a
sale of all or substantially all its assets, by way of merger, consolidation or
otherwise (a "Property Sale"), unless: (A) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving
effect on a PRO FORMA basis to, such Lawrenceburg Sale or Property Sale; (B) the
Board of Directors of the Company determines in good faith that the Company or
such Subsidiary receives fair market value for such Lawrenceburg Sale or
Property Sale; (C) the Board of Directors of the Company receives a favorable
written opinion as to the fairness of the transaction to the Company from a
financial point of view issued by an investment banking firm of nationally
recognized standing; and (D) within 120 business days of the date of such
Lawrenceburg Sale or Property Sale, either: (1) the Company redeems all of the
Notes upon not less than 30 days prior written notice mailed by first-class mail
to each holder's registered address or (2) the Company consummates an
irrevocable, unconditional cash offer to purchase at least an aggregate
principal amount (the "Tender Offer Amount") of Notes that, if the Company
purchased all such Notes, would result in the Debt to EBITDA Ratio being no
greater than 3.5 to 1, in each case, at the purchase price set forth below plus
accrued and unpaid interest and Additional or Special Interest, if any, thereon,
to the repurchase date, if such Lawrenceburg Sale or Property Sale occurs during
the twelve-month period beginning on June 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
1999................................. 110.750%
2000................................. 109.675%
2001................................. 108.600%
2002................................. 107.525%
2003................................. 106.450%
</TABLE>
and, thereafter at the prices set forth in Section 3.07 of the
Indenture.
A-6
<PAGE>
(b) Upon expiration of the offer described in clause (2)(ii)(B)(2)
above, the Company will purchase all Notes properly tendered (on a PRO RATA
basis if the principal amount of Notes tendered exceeds the Tender Offer
Amount). After the purchase of all Notes properly tendered, any remaining
proceeds of the Lawrenceburg Sale or Property Sale will be available for general
corporate purposes. Upon the consummation of the offer described in clause
(2)(ii)(B)(2) above, the interest rate on all of the remaining outstanding Notes
will increase by 0.50% per annum. If the Company complies with the subparagraph
(a) of this paragraph 9 with respect to a Lawrenceburg Sale or Property Sale,
the provisions of Sections 4.15 and 4.23 of the Indenture shall not apply with
respect to such Lawrenceburg Sale or Property Sale.
(c) In the event the Company is obligated to repurchase Notes pursuant
to this paragraph 9, clauses (1) and (2) of the second paragraph of Section 4.07
of the Indenture shall be of no further force or effect and none of the Company
nor any of its Restricted Subsidiaries shall be permitted to incur any
Indebtedness pursuant to such clauses; PROVIDED that, any Indebtedness incurred
prior to such Lawrenceburg Sale or Property Sale under such clauses that remain
outstanding after such Lawrenceburg Sale or Property Sale shall not be deemed to
be a violation of this paragraph or Section 4.07 of the Indenture.
(d) As long as Indiana Gaming Company L.P. is an Unrestricted
Subsidiary and the amount of Consolidated EBITDA derived from the Lawrenceburg
Casino is less than or equal to 50% of Consolidated EBITDA of the Company and
its Restricted Subsidiaries: (i) the Company and its Subsidiaries will not, and
will not permit any of their Subsidiaries to, consummate a Lawrenceburg Sale
unless the Company treats such Lawrenceburg Sale as an "Asset Sale" and complies
with Section 4.15 of the Indenture; and (ii) as long as the Company or a
Restricted Subsidiary serves as general partner of Indiana Gaming Company L.P.,
Indiana Gaming Company L.P. will not engage in a Property Sale unless (1) the
consideration received by the Company or such Restricted Subsidiary is at least
equal to the fair market value of the assets sold or disposed of, (2) at least
75% of the consideration received consists of cash or Temporary Cash
Investments; and (3) the Company's and any Restricted Subsidiaries' pro rata
share of the Net Cash Proceeds of such Property Sale are distributed to the
Company or any Restricted Subsidiary of the Company and the Company utilizes
such Net Cash Proceeds received by it in accordance with the second and third
paragraphs of Section 4.15 of the Indenture. The Company shall cause
distributions from Indiana Gaming Company L.P. to The Indiana Gaming Company to
be promptly distributed to the Company.
10. 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.
11. 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
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The 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.
A-7
<PAGE>
12. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
13. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture, the Subsidiary 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 Additional Notes, if any, voting as a
single class, and any existing default or compliance with any provision of the
Indenture, the Subsidiary Guarantees or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
and Additional Notes, if any, voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Subsidiary Guarantees or the Notes may
be amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Subsidiary 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 or that does not adversely affect the legal rights under
the Indenture of any such Holder, to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act, to provide for the Issuance of Additional Notes in accordance
with the limitations set forth in the Indenture, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Subsidiary Guarantee
with respect to the Notes.
14. DEFAULTS AND REMEDIES. Each of the following constitutes an Event
of Default: (a) default in the payment of principal of or premium, if any, on
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise whether or not such payment is prohibited by Article 10
of the Indenture; (b) default in the payment of interest on any Note when the
same becomes due and payable, or Additional or Special Interest, if any, and
such default continues for a period of 30 days whether or not such payment is
prohibited by Article 10 of the Indenture; (c) failure by the Company or any of
its Subsidiaries to comply with any of the provisions of Section 4.07, 4.15,
4.23 or 5.01 of the Indenture; (d) failure by the Company or any of its
Restricted Subsidiaries to observe or perform any covenant or agreement in the
Indenture or this Note (other than a default under clause (a), (b), or (c) of
this paragraph 14) for 30 days after notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes (including
Additional Notes, if any) then outstanding voting as a single class; (e) the
occurrence with respect to any issue or issues of Indebtedness of the Company or
any Significant Subsidiary having an outstanding principal amount of $10.0
million or more in the aggregate for all such issues of all such Persons,
whether such Indebtedness now exists or shall hereafter be created, (i) an event
of default that has caused the holder thereof to declare such Indebtedness to be
due and payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 30 days of such acceleration and/or (ii) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within 30 days of such
payment default; (f) any final judgment or order (not covered by insurance) for
the payment of money in excess of $10.0 million in the aggregate for all such
final judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments
or orders outstanding and not paid or discharged against all such Persons to
exceed $10.0 million during which a stay of enforcement of such final judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of the Company or any Significant Subsidiary in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (B) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
A-8
<PAGE>
assets of the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 30 consecutive days; (h) the Company or any Significant Subsidiary (A)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors; (i) except as permitted by the
Indenture, any Subsidiary Guarantee shall be 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 its Subsidiary Guarantee; or (j)
the revocation, termination, suspension or other cessation of effectiveness for
a period or more than 90 consecutive days of any Gaming License that results in
the cessation or suspension of gaming operations at the Lawrenceburg Casino or
any Material Casino; provided that any voluntary relinquishment of or failure to
renew after revocation a Gaming License of a Material Casino if such
relinquishment or failure to renew is, in the reasonable, good faith judgment of
the Board of Directors of the Company, evidenced by a resolution of such Board,
both desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous in any material respect
to the holders of the Notes shall not constitute an Event of Default. If an
Event of Default (other than an Event of Default specified in clause (g) or (h)
above that occurs with respect to the Company) occurs and is continuing under
the Indenture, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes, then outstanding, by written notice to the Company (and to
the Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal of, premium, if any, and
accrued interest and Additional or Special Interest, if any, on the Notes to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest and Additional or Special Interest, if
any, shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (e) above has
occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) above shall be remedied or cured by the
Company or the relevant Significant Subsidiary or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto. If an Event of Default specified in clause (g) or (h) above
occurs with respect to the Company, the principal of, premium, if any, and
accrued interest or Additional or Special Interest, if any, on the Notes then
outstanding shall IPSO FACTO become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. The
Holders of at least a majority in principal amount of the outstanding Notes by
written notice to the Company and to the Trustee, may waive all past defaults
and rescind and annul a declaration of acceleration and its consequences if (i)
all existing Events of Default, other than the nonpayment of the principal of,
premium, if any, and accrued interest and Additional or Special Interest, if
any, on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. 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 and
Additional or Special Interest, if any, on the Notes or to enforce the
performance of any provision of this Note or the 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.
A-9
<PAGE>
15. 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.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
18. 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).
19. 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 Registration Rights
Agreement dated as of June 8, 1999, between the Company and the parties named on
the signature pages thereof (the "REGISTRATION RIGHTS AGREEMENT").
20. 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.
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:
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002-6232
Attention: Director of Investor Relations
A-10
<PAGE>
SUBSIDIARY GUARANTEE
For value received, each Subsidiary Guarantor (which term includes any
successor Person under the Indenture) has irrevocably and unconditionally
guaranteed (i) the due and punctual payment of the principal of, premium, if
any, and interest and Additional or Special Interest, if any, on the 10 3/4%
Senior Subordinated Notes due 2009 (the "Notes") of Argosy Gaming Company, a
Delaware corporation (the "Company"), whether at stated maturity, by
acceleration or otherwise, the due and punctual payment of interest on the
overdue principal and premium, if any, and (to the extent permitted by law)
interest on any interest or Additional or Special Interest, if any, on the
Notes, and the due and punctual performance of all other obligations of the
Company, to the Holders or the Trustee all in accordance with the terms set
forth in Article 11 of the Indenture and (ii) in case of any extension of time
of payment or renewal of any Notes or any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
subordinated to Senior Indebtedness of the Subsidiary Guarantors as set forth in
Section 11.2 and Article 10 of the Indenture and reference is hereby made to
such Section and Article for the precise terms of such subordination.
No stockholder, employee, officer, director or incorporator, as such,
past, present or future of each Subsidiary Guarantor shall have any liability
under this Subsidiary Guarantee by reason of his or its status as such
stockholder, employee, officer, director or incorporator.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Subsidiary Guarantor and its
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture or until released or has no further
force or effect in accordance with 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 Subsidiary Guarantee of payment and not of
collectibility.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee shall be limited to the extent necessary to insure that it does not
constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
This Subsidiary Guarantee shall be governed by the laws of the state of
New York.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
A-11
<PAGE>
Dated as of June 8, 1999 ALTON GAMING COMPANY
By:
--------------------------
Dale R. Black
Treasurer
ARGOSY OF LOUISIANA, INC.
By:
--------------------------
Dale R. Black
Treasurer
CATFISH QUEEN PARTNERSHIP IN
COMMENDAM
By: ARGOSY OF LOUISIANA, INC.
its General Partner
By:
--------------------------
Dale R. Black
Treasurer
THE INDIANA GAMING COMPANY
By:
--------------------------
Dale R. Black
Treasurer
IOWA GAMING COMPANY
By:
--------------------------
Dale R. Black
Treasurer
JAZZ ENTERPRISES, INC.
By:
--------------------------
Dale R. Black
Treasurer
THE MISSOURI GAMING COMPANY
By:
--------------------------
Dale R. Black
Treasurer
A-12
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
----------------------------------
(Insert assignee's legal name)
- --------------------------------------------------------------------------------
(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*:
---------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.15 or 4.23 of the Indenture, check the appropriate box
below:
[ ] Section 4.15 [ ] Section 4.23
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.15 or Section 4.23 of the Indenture, state the
amount you elect to have purchased:
$
--------------------
Date:
---------------------------
Your Signature:
------------------------------
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:
----------------------
Signature Guarantee*:
--------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A-14
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
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 Signature of
Amount of decrease in Amount of increase in of this Global Note authorized officer of
Principal Amount Principal Amount following such decrease Trustee or Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
---------------- ------------------- ------------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A-15
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002-6232
Telecopier No.: (618) 474-7420
Attention: Director of Investor Relations
Bank One Trust Company, NA
100 East Broad Street, 8th Floor
Columbus, OH 43215
Attention: Corporate Trust Administration
Re: 10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
Reference is hereby made to the Indenture, dated as of June 8, 1999
(the "Indenture"), between Argosy Gaming Company, as issuer (the "Company"), the
Subsidiary Guarantors named therein and Bank One Trust Company, NA, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the 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 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 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
B-1
<PAGE>
transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements
of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii)
the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not
being made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Upon consummation of the proposed transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on Transfer
enumerated in the Private Placement Legend printed on the Regulation S Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) / / such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) / / such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) / / such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
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 $100,000, 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
the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the IAI Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
B-2
<PAGE>
4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
---------------------------------------------
[Insert Name of Transferor]
By:
-----------------------------------------
Name:
Title:
Dated:
-----------------------
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK (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.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002-6232
Telecopier No.: (618) 474-7420
Attention: Director of Investor Relations
Bank One Trust Company, NA
100 East Broad Street, 8th Floor
Columbus, OH 43215
Attention: Corporate Trust Administration
Re: 10 3/4% SENIOR SUBORDINATED NOTE DUE 2009
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of June 8, 1999
(the "Indenture"), between Argosy Gaming Company, as issuer (the "Company"), the
Subsidiary Guarantors named therein and Bank One Trust Company, NA, 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
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-1
<PAGE>
(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 [CHECK ONE]
/ / 144A Global Note, / / Regulation S Global Note, / / IAI Global Note with an
equal principal amount, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE>
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:
-------------------------
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002-6232
Telecopier No.: (618) 474-7420
Attention: Director of Investor Relations
Bank One Trust Company, NA
100 East Broad Street, 8th Floor
Columbus, OH 43215
Attention: Corporate Trust Administration
Re: 10 3/4% SENIOR SUBORDINATED NOTES DUE 2009
Reference is hereby made to the Indenture, dated as of June [8], 1999
(the "Indenture"), between Argosy Gaming Company, as issuer (the "Company"), the
Subsidiary Guarantors named therein and Bank One Trust Company, NA, 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 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 $100,000, 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.
D-1
<PAGE>
Exhibit D
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
------------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------------
Name:
Title:
Dated:
----------------------------
D-2
<PAGE>
EXHIBIT E
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 Argosy Gaming Company (or its permitted successor), a Delaware
corporation (the "Company"), the Company, the other Subsidiary Guarantors (as
defined in the Indenture referred to herein) and Bank One Trust Company, NA, 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 June 8, 1999 providing for
the issuance of an initial aggregate principal amount of $200,000,000 of 10 3/4%
Senior Subordinated Notes due 2009 (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 "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 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. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all Subsidiary 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, 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
(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 Subsidiary
Guarantors shall be jointly and severally obligated to pay the
same immediately.
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<PAGE>
(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 Subsidiary Guarantee shall not be discharged except
by complete performance of the obligations contained in the Notes and
the Indenture, and the Guaranteeing Subsidiary accepts all obligations
of a Subsidiary Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Subsidiary Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in
relation to either the Company or the Subsidiary Guarantors, any amount
paid by either to the Trustee or such Holder, this Subsidiary
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 Subsidiary 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 Subsidiary 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
Subsidiary Guarantors for the purpose of this Subsidiary Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under
the Guarantee.
(i) Pursuant to Section 11.02 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 Subsidiary Guarantor in respect of the obligations
of such other Subsidiary Guarantor under Article 11 of the Indenture,
this new Subsidiary Guarantee shall be limited to the maximum amount
permissible such that the obligations of such Subsidiary Guarantor
under this Subsidiary Guarantee will not constitute a fraudulent
transfer or conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Subsidiary Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
E-2
<PAGE>
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 Subsidiary Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Subsidiary Guarantor unless:
(i) subject to Sections 11.04 and 11.05 of the Indenture, the
Person formed by or surviving any such consolidation or merger (if
other than a Subsidiary Guarantor or the Company) unconditionally
assumes all the obligations of such Subsidiary Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee, under the Notes, the Indenture and the Subsidiary
Guarantee on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary 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 Subsidiary Guarantor, such successor corporation shall succeed
to and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary 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 Subsidiary
Guarantees so issued shall in all respects have the same legal rank and benefit
under the Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of the Indenture as though all of such
Subsidiary Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 11.05 of
Article 11 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 Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor, or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Subsidiary Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all to the capital stock of any Subsidiary
Guarantor, in each case to a Person that is not (either before or after giving
effect to such transaction) a Restricted Subsidiary of the Company, then such
Subsidiary 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
Subsidiary Guarantor) 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
Subsidiary Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee; PROVIDED that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indenture, including without limitation Section 4.15 of the Indenture. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of the Indenture, including
without limitation Section 4.15 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its obligations under its Subsidiary Guarantee.
E-3
<PAGE>
(b) Any Subsidiary Guarantor not released from its obligations under
its Subsidiary Guarantee shall remain liable for the full amount of principal of
and interest on the Notes and for the other obligations of any Subsidiary
Guarantor under the Indenture as provided in Article 11 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Subsidiary 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 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. 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.
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 BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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.
E-4
<PAGE>
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:
ARGOSY GAMING COMPANY
By:
-----------------------------------
Name:
Title:
ALTON GAMING COMPANY
By:
-----------------------------------
Name:
Title:
ARGOSY OF LOUISIANA, INC.
By:
-----------------------------------
Name:
Title:
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
By: ARGOSY OF LOUISIANA, INC.
its General Partner
By:
------------------------------
Name:
Title:
THE INDIANA GAMING COMPANY
By:
-----------------------------------
Name:
Title:
E-5
<PAGE>
IOWA GAMING COMPANY
By:
-----------------------------------
Name:
Title:
JAZZ ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
THE MISSOURI GAMING COMPANY
By:
-----------------------------------
Name:
Title:
BANK ONE TRUST COMPANY, NA
as Trustee
By:
-----------------------------------
Authorized Signatory
E-6
<PAGE>
SCHEDULE I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under the
Indenture as of the Issue Date:
Alton Gaming Company, an Illinois corporation
Argosy of Louisiana, Inc., a Louisiana corporation
Catfish Queen Partnership in Commendam, a Louisiana partnership
The Indiana Gaming Company, an Indiana corporation
Iowa Gaming Company, an Iowa corporation
Jazz Enterprises, Inc., a Louisiana corporation
The Missouri Gaming Company, a Missouri corporation
<PAGE>
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated June 8, 1999
among
ARGOSY GAMING COMPANY
ALTON GAMING COMPANY
ARGOSY OF LOUISIANA, INC.
CATFISH PARTNERSHIP IN COMMENDAM
THE INDIANA GAMING COMPANY
IOWA GAMING COMPANY
JAZZ ENTERPRISES, INC.
THE MISSOURI GAMING COMPANY
and
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON
SG COWEN SECURITIES CORPORATION
BANC ONE CAPITAL MARKETS, INC.
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into June 8, 1999, between ARGOSY GAMING COMPANY, a Delaware
corporation (the "Company"), ALTON GAMING COMPANY, an Illinois corporation,
ARGOSY OF LOUISIANA, INC., a Louisiana corporation, CATFISH PARTNERSHIP IN
COMMENDAM, a Louisiana partnership, THE INDIANA GAMING COMPANY, an Indiana
corporation, IOWA GAMING COMPANY, an Iowa corporation, JAZZ ENTERPRISES, INC., a
Louisiana corporation and THE MISSOURI GAMING COMPANY, a Missouri corporation,
as guarantors (the "Subsidiary Guarantors"), and MORGAN STANLEY & CO.
INCORPORATED, CREDIT SUISSE FIRST BOSTON, SG COWEN SECURITIES CORPORATION AND
BANC ONE CAPITAL MARKETS, INC., as placement agents (the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement
dated June 3, 1999, between the Company, the Guarantors and the Placement Agents
(the "Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $200,000,000 principal amount of the
Company's 10 3/4% Senior Subordinated Notes Due 2009 (the "Securities"). In
order to induce the Placement Agents to enter into the Placement Agreement, the
Company has agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"CLOSING DATE" shall mean the Closing Date as defined in the
Placement Agreement.
"COMPANY" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"EXCHANGE DATES" shall have the meaning set forth in Section
2(a)(ii) hereof.
"EXCHANGE OFFER" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.
<PAGE>
"EXCHANGE OFFER REGISTRATION" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"EXCHANGE SECURITIES" shall mean securities issued by the
Company under the Indenture containing terms identical to the
Securities (except that (i) interest thereon shall accrue from the last
date on which interest was paid on the Securities or, if no such
interest has been paid, from June 8, 1999 and (ii) the Exchange
Securities will not contain restrictions on transfer) and to be offered
to Holders of Securities in exchange for Securities pursuant to the
Exchange Offer.
"HOLDER" shall mean the Placement Agents, for so long as they
own any Registrable Securities, and each of their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes
of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"INDENTURE" shall mean the Indenture relating to the
Securities dated as of June 8, 1999 among the Company, the Subsidiary
Guarantors and Bank One Trust Company, NA, as trustee, and as the same
may be amended from time to time in accordance with the terms thereof.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or any of its affiliates (as
such term is defined in Rule 405 under the 1933 Act) (other than the
Placement Agents or subsequent Holders of Registrable Securities if
such subsequent holders are deemed to be such affiliates solely by
reason of their holding of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by
the Holders of such required percentage or amount.
"PERSON" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the
preamble.
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
preamble.
"PROSPECTUS" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with
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<PAGE>
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to such prospectus, and in each case
including all material incorporated by reference therein.
"REGISTRABLE SECURITIES" shall mean the Securities; PROVIDED,
HOWEVER, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A)
under the 1933 Act or (iii) when such Securities shall have ceased to
be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and
filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable
fees and disbursements of counsel for any underwriters or Holders in
connection with blue sky qualification of any of the Exchange
Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus,
any amendments or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and, in the case of a
Shelf Registration Statement, the fees and disbursements of one counsel
for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Placement Agents)
and (viii) the fees and disbursements of the independent public
accountants of the Company, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement
of the Company that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected
pursuant to Section 2(b) hereof.
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<PAGE>
"SHELF REGISTRATION STATEMENT" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable
Securities (but no other securities unless approved by the Holders
whose Registrable Securities are covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the 1933 Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference
therein.
"SUBSIDIARY GUARANTORS" shall have the meaning set forth in
the preamble.
"TRUSTEE" shall mean the trustee with respect to the
Securities under the Indenture.
"UNDERWRITER" shall have the meaning set forth in Section 3
hereof.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall
mean a registration in which Registrable Securities are sold to an
Underwriter for reoffering to the public.
2. REGISTRATION UNDER THE 1933 ACT.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company and the
Guarantors shall use their best efforts to cause to be filed an Exchange Offer
Registration Statement covering the offer by the Company and the Guarantors to
the Holders to exchange all of the Registrable Securities for Exchange
Securities and to have such Registration Statement remain effective until the
closing of the Exchange Offer. The Company and the Guarantors shall commence the
Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC and use their best efforts to have the Exchange
Offer consummated not later than 60 days after such effective date. The Company
shall commence the Exchange Offer by mailing the related exchange offer
Prospectus and accompanying documents to each Holder stating, in addition to
such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) and in the manner specified
in the notice prior to the close of business on the last Exchange Date;
and
4
<PAGE>
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the address (located in the Borough
of Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Securities delivered for
exchange and a statement that such Holder is withdrawing its election
to have such Securities exchanged.
As soon as practicable after the last Exchange Date, the
Company shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and issue, and cause the Trustee to
promptly authenticate and mail to each Holder, an Exchange Security
equal in principal amount to the principal amount of the Registrable
Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company determines that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by December , 1999 or (iii) the Exchange Offer has been completed
and in the opinion of counsel for the Placement Agents a Registration Statement
must be filed and a Prospectus must be delivered by the Placement Agents in
connection with any offering or sale of Registrable Securities, the Company
shall use its best efforts to cause to be filed as soon as practicable after
such determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Securities and to have such Shelf
Registration Statement declared effective by the SEC. In the event the Company
is required to file a Shelf Registration Statement solely as a result of the
matters referred to in clause (iii) of the preceding sentence, the Company shall
use its best efforts to file and have declared effective by the SEC both an
Exchange Offer Registration Statement pursuant to Section 2(a) with respect to
all Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Placement
Agents after completion of the Exchange Offer. The Company agrees to use its
best efforts to keep the Shelf Registration Statement continuously effective
until the expiration of the period referred to in Rule 144(k) with respect to
the Registrable Securities
5
<PAGE>
or such shorter period that will terminate when all of the Registrable
Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement. The Company further agrees to
supplement or amend the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the 1933 Act or by
any other rules and regulations thereunder for shelf registration or if
reasonably requested by a Holder of Registrable Securities with respect to
information relating to such Holder, and to use its best efforts to cause any
such amendment to become effective and such Shelf Registration Statement to
become usable as soon as thereafter practicable. The Company agrees to
furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and Section 2(b). Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to
Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b)
hereof will not be deemed to have become effective unless it has been declared
effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. In the event that
either the Exchange Offer is not consummated or the Shelf Registration
Statement, if required hereby, is not declared effective on or prior to December
8, 1999, the interest rate on the Securities will be increased by 0.5% per annum
until the Exchange Offer is consummated or the Shelf Registration Statement, if
required hereby, is declared effective by the SEC.
(e) Without limiting the remedies available to the Placement
Agents and the Holders, the Company acknowledges that any failure by the Company
to comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents 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 Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect
to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof,
the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on
the appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling
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Holders thereof and (z) shall comply as to form in all material respects with
the requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to cause
such Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period and cause
each Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep
each Prospectus current during the period described under Section 4(3) and Rule
174 under the 1933 Act that is applicable to transactions by brokers or dealers
with respect to the Registrable Securities or Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents, to
counsel for such Holders and to each Underwriter of an Underwritten Offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or Underwriter may
reasonably request, in order to facilitate the public sale or other disposition
of the Registrable Securities; and the Company consents to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to cooperate
with such Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. and do any and all other acts
and things which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; PROVIDED, HOWEVER, that the Company shall not
be required to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for such Holders and counsel for the Placement
Agents promptly and, if requested by any such Holder or counsel, confirm such
advice in writing (i) when a Registration Statement has become effective and
when any post-effective amendment thereto has been filed and becomes effective,
(ii) of any request by the SEC or any state securities authority for amendments
and supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the
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effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties of
the Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering cease
to be true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the
period a Shelf Registration Statement is effective which makes any statement
made in such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein
not misleading and (vi) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of the
withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and enable such Registrable Securities to be
in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at least
one business day prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence
of any event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Company agrees to notify the
Holders of Registrable Securities to suspend use of the Prospectus as promptly
as practicable after the occurrence of such an event, and such Holders hereby
agree to suspend use of the Prospectus until the Company has amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus after initial filing of a Registration
Statement, provide copies of such document to the Placement Agents and their
counsel (and, in the
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case of a Shelf Registration Statement, the Holders of Registrable Securities
and their counsel) and make such of the representatives of the Company as
shall be reasonably requested by the Placement Agents or their counsel (and,
in the case of a Shelf Registration Statement, the Holders of Registrable
Securities or their counsel) available for discussion of such document, and
shall not at any time file or make any amendment to the Registration
Statement, any Prospectus or any amendment of or supplement to a Registration
Statement or a Prospectus, of which the Placement Agents and their counsel
(and, in the case of a Shelf Registration Statement, the Holders of
Registrable Securities and their counsel) shall not have previously been
advised and furnished a copy or to which the Placement Agents or their
counsel (and, in the case of a Shelf Registration Statement, the Holders or
their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the effective date of
a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as the case
may be, cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the TIA and execute, and use its best efforts to cause the
Trustee to execute, all documents as may be required to effect such changes and
all other forms and documents required to be filed with the SEC to enable the
Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of such Holders of the Registrable Securities,
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the Holders,
at reasonable times and in a reasonable manner, all financial and other records,
pertinent documents and properties of the Company, and cause the respective
officers, directors and employees of the Company to supply all information
reasonably requested by any such representative, Underwriter, attorney or
accountant in connection with a Shelf Registration Statement, all in a manner as
is necessary and customary to provide the Holders a due diligence defense;
(n) in the case of a Shelf Registration, use its best efforts
to cause all Registrable Securities to be listed on any securities exchange or
any automated quotation system on which similar securities issued by the Company
are then listed if requested by the Majority Holders, to the extent such
Registrable Securities satisfy applicable listing requirements;
(o) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with respect
to such Holder as such Holder reasonably requests to be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as the Company has received notification of the
matters to be incorporated in such filing; and
(p) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities including, but not limited to, an Underwritten
Offering
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and in such connection, (i) to the extent possible, make such representations
and warranties to the Holders and any Underwriters of such Registrable
Securities with respect to the business of the Company and its subsidiaries,
the Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii)
obtain opinions of counsel to the Company (which counsel and opinions, in
form, scope and substance, shall be reasonably satisfactory to the Holders
and such Underwriters and their respective counsel) addressed to each selling
Holder and Underwriter of Registrable Securities, covering the matters
customarily covered in opinions requested in underwritten offerings, (iii)
obtain "cold comfort" letters from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountant of any subsidiary of the Company, or of any business acquired by
the Company for which financial statements and financial data are or are
required to be included in the Registration Statement) addressed to each
selling Holder and Underwriter of Registrable Securities, such letters to be
in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings, and (iv)
deliver such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Registrable Securities being
sold or the Underwriters, and which are customarily delivered in underwritten
offerings, to evidence the continued validity of the representations and
warranties of the Company made pursuant to clause (i) above and to evidence
compliance with any customary conditions contained in an underwriting
agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Securities to furnish to the Company such
information regarding such Holder and the proposed distribution by such Holder
of such Registrable Securities as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
its expense) all copies in its possession, other than permanent file copies then
in such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice to suspend the disposition of Registrable Securities
pursuant to a Registration Statement, the Company shall extend the period during
which the Registration Statement shall be maintained effective pursuant to this
Agreement by the number of days during the period from and including the date of
the giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions. The Company may give any such notice only twice during any
365 day period and any such suspensions may not exceed 30 days for each
suspension and there may not be more than two suspensions in effect during any
365 day period.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any
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such Underwritten Offering, the investment banker or investment bankers and
manager or managers (the "Underwriters") that will administer the offering
will be selected by the Majority Holders of the Registrable Securities
included in such offering and shall be reasonably acceptable to the Company.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company understands that it is the Staff's position that
if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Securities for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company agrees that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; PROVIDED that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration Statement,
as would otherwise be contemplated by Section 3(i), for a period
exceeding 180 days after the last Exchange Date (as such period may be
extended pursuant to the penultimate paragraph of Section 3 of this
Agreement) and Participating Broker-Dealers shall not be authorized by
the Company to deliver and shall not deliver such Prospectus after such
period in connection with the resales contemplated by this Section 4;
and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Placement
Agents or with the reasonable request in writing to the Company by one
or more broker-dealers who certify to the Placement Agents and the
Company in writing that they anticipate that they will be Participating
Broker-Dealers; and PROVIDED FURTHER that, in connection with such
application of the Shelf Registration procedures set forth in Section
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3 to an Exchange Offer Registration, the Company shall be obligated (x)
to deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless
it elects not to act as such representative, (y) to pay the fees and
expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in
the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period
specified in clause (i) above.
(c) The Placement Agents shall have no liability to the
Company or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each Guarantor, jointly and severally,
agree to indemnify and hold harmless the Placement Agents, each Holder and each
Person, if any, who controls any Placement Agent or any Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or
is under common control with, or is controlled by, any Placement Agent or any
Holder, from and against all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred by the
Placement Agents, any Holder or any such controlling or affiliated Person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, 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, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Placement Agents or any Holder
furnished to the Company in writing through Morgan Stanley & Co. Incorporated or
any selling Holder expressly for use therein. In connection with any
Underwritten Offering permitted by Section 3, the Company will also indemnify
the Underwriters, if any, selling brokers, dealers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of the
1933 Act and the 1934 Act) to the same extent as provided above with respect to
the indemnification of the Holders, if requested in connection with any
Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors, the Placement Agents
and the other selling Holders, and each of their respective directors, officers
of the Company or the Guarantors who sign the Registration Statement and each
Person, if any, who controls the Company, the Guarantors, any Placement Agent
and any other selling Holder within the meaning of either Section 15 of the
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1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing
indemnity from the Company to the Placement Agents and the Holders, but only
with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each Person, if any, who controls the Company within the meaning of either such
Section and (c) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all Persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving the Placement Agents and Persons who control the Placement Agents,
such firm shall be designated in writing by Morgan Stanley & Co. Incorporated.
In such case involving the Holders and such Persons who control Holders, such
firm shall be designated in writing by the Majority Holders. In all other cases,
such firm shall be designated by the Company. The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent but, if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is
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or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders 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 by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Securities of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company, the Guarantors and each Holder agree that it
would not be just or equitable if contribution pursuant to this Section 5 were
determined by PRO RATA allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in paragraph (d) above 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 such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that 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 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 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.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any Person controlling any Placement
Agent or any Holder, or by or on behalf of the Company, its officers or
directors or any Person controlling the Company, (iii) acceptance of any of the
Exchange Securities and (iv) any sale of Registrable Securities pursuant to a
Shelf Registration Statement.
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6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered
into, and on or after the date of this Agreement will not enter into, any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. 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 other issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; PROVIDED, HOWEVER, that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Placement Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
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 answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable 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 and such Person shall be entitled to receive the benefits hereof. The
Placement Agents (in their
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capacity as Placement Agents) shall have no liability or obligation to the
Company with respect to any failure by a Holder to comply with, or any breach
by any Holder of, any of the obligations of such Holder under this Agreement.
(e) PURCHASES AND SALES OF SECURITIES. The Company shall not,
and shall use its best efforts to cause its affiliates (as defined in Rule 405
under the 1933 Act) not to, purchase and then resell or otherwise transfer any
Securities.
(f) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Placement Agents, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) 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.
(h) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by the
laws of the State of New York.
(j) 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.
[Signature Pages Follow]
16
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ARGOSY GAMING COMPANY
By: /s/ Dale R. Black
-----------------
Dale R. Black
Vice President and
Chief Financial Officer
ALTON GAMING COMPANY
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
ARGOSY OF LOUISIANA, INC.
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
CATFISH QUEEN PARTNERSHIP IN COMMENDAM
By: ARGOSY OF LOUISIANA, INC.,
its General Partner
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
THE INDIANA GAMING COMPANY
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
S-1
<PAGE>
IOWA GAMING COMPANY
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
JAZZ ENTERPRISES, INC.
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
THE MISSOURI GAMING COMPANY
By: /s/ Dale R. Black
-----------------
Dale R. Black
Treasurer
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO.
INCORPORATED
CREDIT SUISSE FIRST BOSTON
SG COWEN SECURITIES CORPORATION
BANC ONE CAPITAL MARKETS, INC.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Bryan W. Andrzejewski
-------------------------
Bryan W. Andrzejewski
Vice President
S-2
<PAGE>
Exhibit 4.8
EXCHANGE AGENT AGREEMENT
THIS EXCHANGE AGENT AGREEMENT (this "Agreement") is made and entered into
as of __________________ by and between Argosy Gaming Company, a Delaware
corporation, (The "Issuer"), and Bank One Trust Company, N.A., a national
banking association incorporated and existing under the laws of the United
States, as exchange agent ("Exchange Agent").
RECITALS
The Issuer is making an offer to exchange, upon the terms and subject to
the conditions set forth in the Issuer's Prospectus dated _________________ (the
"Prospectus"), and the accompanying letters of transmittal (each a "Letter of
Transmittal"), attached hereto as EXHIBIT A (which together constitute the
"Exchange Offer"), their 10 3/4% Senior Subordinated Notes due 2009 (the
"Outstanding Notes") for an equal principal amount of its 10 3/4% Senior
Subordinated Exchange Notes due 2009 (the "Exchange Notes").
The Exchange Offer will commence as soon as practicable after the Issuer's
Registration Statement on Form S-4 relating to the Exchange Offer is declared
effective under the Securities Act of 1933, as certified in writing to Exchange
Agent by the Issuer (the "Effective Time"); and this Agreement shall be deemed
to take effect at the Effective Time.
AGREEMENT
NOW, THEREFORE, Exchange Agent is hereby appointed by the Issuer, and
Exchange Agent hereby accepts such appointment and shall act as Exchange Agent
in connection with the Exchange Offer. In connection therewith, the undersigned
parties hereby agree as follows:
1. MAILING TO HOLDERS OF THE OUTSTANDING NOTES. Immediately upon receipt
of certification from the Issuer as to the Effective Time and copies of the
Prospectus, Letter of Transmittal and Notice of Guaranteed Delivery, Exchange
Agent will mail to each Holder (as defined in the Indenture) of any Outstanding
Notes (i) a Letter of Transmittal with instructions (including instructions for
completing a substitute Form W-9), substantially in the form attached hereto as
EXHIBIT A (the "Letter of Transmittal"), (ii) a Prospectus, (iii) a return
envelope for use in effecting the surrender of the Outstanding Notes in exchange
for the Exchange Notes and (iv) a Notice of Guaranteed Delivery substantially in
the form attached hereto as EXHIBIT B (the "Notice of Guaranteed Delivery") all
in accordance with the procedures described in the prospectus.
Copies of the Prospectus, Letter of Transmittal and Notice of Guaranteed
Delivery will be furnished to Exchange Agent by the Issuer in quantities agreed
to between Exchange Agent and the Issuer.
Exchange Agent, in its capacity as transfer agent and registrar of the
Outstanding Notes, possesses a list (including mailing addresses) of the Holders
of the Outstanding Notes.
<PAGE>
2. ATOP REGISTRATION. As of the date hereof, the Exchange Agent shall
have established an account with the Depository Trust Company ("DTC") in its
name to facilitate book-entry transfers of Outstanding Notes through DTC's
Automated Tender Offer Program.
3. RECEIPT OF LETTERS OF TRANSMITTAL AND RELATED ITEMS. From and after
the Effective Time, Exchange Agent is hereby authorized and directed to accept
(subject to withdrawal rights described in the Prospectus) (i) Letters of
Transmittal, duly executed in accordance with the instructions thereto (or a
manually signed facsimile thereof), and any requisite collateral documents from
Holders of the Outstanding Notes and (ii) surrendered Outstanding Notes to which
such Letters of Transmittal relate. Exchange Agent is authorized to request
from any person tendering Outstanding Notes such additional documents as
Exchange Agent or the Issuer deem appropriate.
4. DEFECTIVE OR DEFICIENT OUTSTANDING NOTES AND INSTRUMENTS. As soon as
practicable after receipt, Exchange Agent shall examine the Outstanding Notes,
the Letters of Transmittal and the other documents delivered or mailed to
Exchange Agent in connection with tenders of Outstanding Notes to ascertain
whether (i) the Letters of Transmittal are completed and executed in accordance
with the instructions set forth therein, (ii) the Outstanding Notes have
otherwise been properly tendered in accordance with the Prospectus and the
Letters of Transmittal and (iii) if applicable, the other documents (including
the Notice of Guaranteed Delivery) are properly completed and executed. If any
Letter of Transmittal or other document has been improperly completed or
executed or the Outstanding Notes accompanying such Letter of Transmittal are
not in proper form for transfer or have been improperly tendered or if some
other irregularity in connection with any tender of any Outstanding Notes
exists, Exchange Agent shall promptly report such information to the Issuer and,
upon consultation with the Issuer and its counsel, endeavor, subject to the
terms and conditions of the Exchange Offer, to cause such action to be taken as
is necessary to correct such irregularity. All questions as to the validity,
form, eligibility (including timeliness of receipt), acceptance and withdrawal
of any Outstanding Notes tendered or delivered shall be determined by the
Issuer, in its sole discretion. Notwithstanding the above, the Exchange Agent
shall not be under any duty to give notification of defects in such tenders and
shall not incur any liability for failure to give such notification unless such
failure constitutes gross negligence or willful misconduct. The Issuer reserves
the absolute right (i) to reject any or all tenders of any particular
Outstanding Notes determined by the Issuer not to be in proper form or the
acceptance or exchange of which may, in the opinion of Issuer's counsel, be
unlawful and (ii) to waive any of the conditions of the Exchange Offer or any
defect or irregularity in the tender of any particular Outstanding Notes, and
the Issuer's interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and Notice of Guaranteed Delivery and the
instructions set forth therein) will be final and binding.
5. REQUIREMENTS OF TENDERS. Tenders of Outstanding Notes shall be made
only as set forth in the Prospectus and the Letter of Transmittal, and
Outstanding Notes shall be considered properly tendered only when:
<PAGE>
(a) (i) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantee and
any other required documents, are received by the Exchange Agent at the address
set forth in the Letter of Transmittal and Outstanding Notes are received by the
Exchange Agent at its address or by book-entry transfer through DTC's Automated
Tender Offer Program into its account on or prior to the Expiration Date or (ii)
a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form attached hereto as EXHIBIT B (by facsimile
transmission, mail or hand delivery), with an appropriate guarantee of signature
and delivery from any member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or a correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17 Ad-15 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are received
by the Exchange Agent on or prior to the Expiration Date and the Letters of
Transmittal (or a facsimile thereof), together with the certificate(s)
representing the Outstanding Notes in proper form for transfer or a book-entry
confirmation through DTC's Automated Tender Offer Program, as the case may be,
and any other required documents required by the Letters of Transmittal are
received by the Exchange Agent within five (5) New York Stock Exchange trading
days after the Expiration Date. For purposes of this Agreement, an "Eligible
Guarantor Institution" within the meaning of Rule 17 Ad-15 under the Exchange
Act shall mean a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States. The Notice of
Guaranteed Delivery may be delivered to the Exchange Agent by hand or
transmitted by telegram, facsimile transmission or letter, and
(b) the adequacy of the items relating to Outstanding Notes, and the
Letters of Transmittal therefor and any Notice of Guaranteed Delivery and any
other required documents has been favorably passed upon by the Issuer as above
provided.
Notwithstanding the provisions of the preceding paragraph, Outstanding
Notes that the Issuer otherwise shall approve as having been properly tendered
shall be considered to be properly tendered for all purposes of the Exchange
Offer. As used herein, "Expiration Date" shall mean 5:00 p.m., New York City
time, _______________, unless the Exchange Offer is extended by the Issuer at
its sole discretion, in which case, the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended.
6. EXCHANGE OF THE OUTSTANDING NOTES. Promptly after the Expiration Date,
upon surrender of the Outstanding Notes in accordance with the Letter of
Transmittal and Prospectus, Exchange Agent is hereby directed to deliver or
cause to be delivered Exchange Notes as promptly as possible to the Holders of
such surrendered Outstanding Notes, in accordance with this Agreement and the
terms of the Exchange Offer. The principal amount of the Exchange Notes to be
delivered to a Holder shall equal the principal amount of the Outstanding Notes
surrendered.
Promptly after the consummation of the Exchange Offer and after the
Outstanding Notes have been accepted for exchange pursuant to the Exchange
Offer, Exchange Agent shall request
<PAGE>
from the registrar and transfer agent for the Exchange Notes the appropriate
amount of Exchange Notes to be issued in connection with such exchange.
The Exchange Notes issued in exchange for certificated Outstanding Notes
are to be mailed by Exchange Agent, in accordance with the instructions
contained in the Letter of Transmittal, by first class or registered mail, and
under coverage of Exchange Agent's blanket surety bond for first class or
registered mail losses protecting the Issuer from loss or liability arising out
of the non-receipt or non-delivery of such Exchange Notes or the replacement
thereof.
All Outstanding Notes must be tendered in accordance with the terms and
conditions set forth in the Exchange Offer. Issuance of the Exchange Notes for
accepted Outstanding Notes pursuant to the Exchange Offer shall be made only
after deposit with Exchange Agent of the Outstanding Notes, the Letter of
Transmittal and any other required documents.
Exchange Agent shall follow and act upon such instructions in connection
with the Exchange Offer which may be given to Exchange Agent by the Issuer,
counsel for the Issuer or such other persons as the Issuer may authorize.
7. APPLICATION OF THE EXCHANGE NOTES. The Exchange Notes and any other
property (the "Property") to be deposited with, or received by Exchange Agent
from the Issuer as exchange agent constitute a special, segregated account, held
solely for the benefit of the Issuer and Holders tendering Outstanding Notes, as
their interests may appear, and the Property shall not be commingled with the
securities, money, assets or property of Exchange Agent or any other person,
firm or corporation. Exchange Agent hereby waives any and all rights of lien
(including banker's lien), attachment or set-off whatsoever, if any, against the
Property, whether such rights arise by reason of statutory or common law, by
contract or otherwise except to the extent set forth in the Indenture with
respect to the Outstanding Notes and the Exchange Notes.
8. REQUESTS. On each business day after receipt of the first Letter of
Transmittal, and up to and including the Expiration Date, Exchange Agent shall
advise by telephone, not later than 5:00 p.m., Columbus, Ohio time, Issuer's
counsel, and such other persons as they may direct of the principal amount of
the Outstanding Notes which have been duly tendered on such day, stating
separately (i) the principal amount of the Outstanding Notes tendered pursuant
to DTC's Automated Tender Offer Program, as described in the section of the
Prospectus captioned "The Exchange Offer," (ii) the principal amount of the
Outstanding Notes tendered about which Exchange Agent has questions concerning
validity, (iii) the number of Outstanding Notes tendered and not withdrawn that
are represented by certificates, (iv) the number of Outstanding Notes tendered
and not withdrawn that are represented by Notices of Guaranteed Delivery and
(v) the aggregate principal amount of the Outstanding Notes tendered and not
withdrawn through the time of such telephone call. Promptly thereafter (by the
next day), Exchange Agent shall confirm such advice to each of the above persons
in writing, to be transmitted by telecopier, overnight courier or other special
form of delivery. Exchange Agent shall also inform the aforementioned persons,
and such other persons as may be designated by either of them, upon request made
from time to time, of such other information as either of them may request. In
addition, the Exchange Agent shall provide, and cooperate in making available to
the Issuer, such other information as they may reasonably request upon written
request made from time to
<PAGE>
time. The Exchange Agent shall, without limitation, permit the Issuer, and
such other persons as it may reasonably request, access to those persons on
the Exchange Agent's staff who are responsible for receiving tenders of
Outstanding Notes in order to insure that, immediately prior to the
Expiration Date, the Issuer shall have received information in sufficient
detail to enable them to decide whether to extend the Expiration Date of the
Exchange Offer.
9. RECORD KEEPING. Each Letter of Transmittal, Outstanding Note, Notice of
Guaranteed Delivery and any other documents received by the Exchange Agent in
connection with the Exchange Offer shall be stamped by the Exchange Agent to
show the date of the receipt (or if Outstanding Notes are tendered by book-entry
delivery such form of record keeping of receipt as is customary for tenders
through DTC's Automated Tender Offer Program) and, if defective, the date and
time the last defect was waived by the Issuer or was cured. Each Letter of
Transmittal and Outstanding Note that is accepted by the Issuer shall be
retained in the Exchange Agent's possession until the Expiration Date. As
promptly as practicable thereafter, the Exchange Agent will deliver by certified
mail with proper insurance, those items, together with all properly tendered and
canceled Outstanding Notes that are represented by certificates, to counsel for
the Issuer. If after the Expiration Date the Exchange Agent receives any
Letters of Transmittal (or functional equivalent thereof), the Exchange Agent
shall return the same together with all enclosures to the party from whom such
documents were received.
10. DISCREPANCIES IN THE AMOUNT OF THE OUTSTANDING NOTES OWNED. Exchange
Agent shall endeavor to reconcile any discrepancies between the amount of the
Outstanding Notes, claimed to be owned by a surrendering Holder of the
Outstanding Notes and the amount of the Outstanding Notes indicated on the books
of the Transfer Agent as of the applicable record date. If, based upon reliable
documentation, Exchange Agent determines that the Outstanding Notes with respect
to which such discrepancy exists are valid Outstanding Notes, then Exchange
Agent shall deliver the Exchange Notes provided for herein to the holder
surrendering such Outstanding Notes. In case of any questions about whether the
Outstanding Notes are valid Outstanding Notes, Exchange Agent shall be entitled
to receive instructions from the Issuer and proceed based upon such
instructions.
11. OUTSTANDING NOTES AND OTHER NAMES. If an Exchange Note is to be
registered in a name other than that of the record Holder of surrendered
Outstanding Notes, conditions to the issuance thereof shall be (i) that the
Outstanding Note so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall
pay to Exchange Agent any transfer or other taxes required by reason of the
registration of such Exchange Note in any name other than that of the Holder
of the Outstanding Note surrendered, or otherwise required, or shall
establish to Exchange Agent's satisfaction that such tax has been paid or is
not payable and (ii) that the record Holder deliver such other documents and
instruments as Issuer's counsel or Exchange Agent shall require.
If the Letter of Transmittal is signed by a person other than the
registered Holder of the tendered Outstanding Note or the Exchange Note is to be
issued (or any untendered principal amount of the Outstanding Note is to be
reissued) to a person other than the registered Holder of the tendered
Outstanding Note, the registered Holder must either properly endorse the
Outstanding Note tendered or transmit a properly completed separate bond power
guaranteed by
<PAGE>
an Eligible Institution (as defined in the Letter of Transmittal), and such
Outstanding Note must otherwise be in proper form for transfer. In addition,
such registered Holder and/or such other person shall deliver such other
documents and instruments as Issuer's counsel or Exchange Agent shall
require, in which case the Exchange Note shall be mailed to such assignee or
transferee at the address so required.
12. PARTIAL TENDERS. If, pursuant to the Exchange Offer, less than all of
the principal amount of any Outstanding Note submitted to Exchange Agent is to
be tendered, Exchange Agent shall, promptly after the Expiration Date, return,
or cause the registrar with respect to each such Outstanding Note to return, a
new Outstanding Note for principal amount not being tendered to, or in
accordance with the instruction of, the Holder of Outstanding Note who has made
a partial tender of Outstanding Note deposited with Exchange Agent.
13. WITHDRAWALS. A tendering Holder may withdraw tendered Outstanding
Notes as set forth in the Prospectus under the caption "The Exchange Offer -
Withdrawal of Tenders," in which event Exchange Agent shall, as promptly as
practicable after proper notification of such withdrawal, return such
Outstanding Notes to, or in accordance with the instructions of, such Holder and
such Outstanding Notes shall no longer be considered properly tendered. All
questions as to the validity, form and eligibility of notices of withdrawal,
including timeliness of receipt, shall be determined by the Issuer, in its sole
discretion, which determination shall be final and binding on all parties. A
withdrawal of tender of Outstanding Notes may not be rescinded and any
Outstanding Notes withdrawn will thereafter be deemed not validly tendered for
purposes of the Exchange Offer, provided, however, that withdrawn Outstanding
Notes may be retendered by again following one of the procedures therefor
described in the Prospectus at any time on or prior to the Expiration Date.
14. REJECTION OF TENDERS. If, pursuant to the Exchange Offer, the Issuer
does not accept for exchange all of the Outstanding Notes tendered by a Holder
of Outstanding Notes, Exchange Agent shall, promptly after the Expiration Note,
return or cause to be returned the Outstanding Notes not accepted to, or in
accordance with the instructions of, such Holder of Outstanding Notes.
15. CANCELLATION OF EXCHANGED OUTSTANDING NOTES. Exchange Agent is
authorized and directed to cancel all Outstanding Notes received by Exchange
Agent upon delivering the Exchange Notes to tendering holders of the
Outstanding Notes as provided herein. Exchange Agent shall maintain a record
as to which Outstanding Notes have been exchanged pursuant to Section 7
hereof.
16. REQUESTS FOR INFORMATION. Exchange Agent shall accept and comply with
telephone and mail requests for information concerning the proper surrender of
the Outstanding Notes. Upon request by any person, Exchange Agent shall furnish
to such person copies of the Prospectus, any supplements to the Prospectus, the
Letter of Transmittal and the other materials referred to in the Prospectus as
being available to holders of Outstanding Notes. The Issuer will supply
Exchange Agent with copies of such documents upon request by Exchange Agent.
Notwithstanding anything herein to the contrary, the Exchange Agent is not
authorized to offer
<PAGE>
any concessions or to pay any commissions to any brokers, dealers, banks or
other persons or to engage or to utilize any persons to solicit tenders.
17. TAX MATTERS. Exchange Agent shall comply with applicable requirements
of the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder in connection with the Exchange Offer and shall file with
the Internal Revenue Service all reports and other information required to be
filed with the Internal Revenue Service in connection with the Exchange Offer,
provided, however, that if Exchange Agent has questions with respect to any such
information, it shall so notify, and request direction from, the Issuer.
18. REPORTS. Within 5 days after the Expiration Date, Exchange Agent shall
furnish the Issuer a final report showing the disposition of the Exchange Notes.
19. FEES. For Exchange Agent's services as exchange agent hereunder, the
Issuer will pay Exchange Agent $100.00 per Letter of Transmittal mailed by the
Exchange Agent pursuant to Section 1 hereof, plus reasonable out-of-pocket
expenses, including reasonable counsel fees and disbursements.
20. MISCELLANEOUS. As exchange agent hereunder, Exchange Agent:
a. shall have no duties or obligations other than those specifically set
forth in this Agreement;
b. will make no representation and will have no responsibility as to the
validity, value or genuineness of the Exchange Offer and shall not make any
recommendation as to whether a Holder of Outstanding Notes should or should not
tender its Outstanding Notes;
c. shall not be obligated to take any legal action hereunder which might by
Exchange Agent's reasonable judgment involve any expense or liability not
covered by the indemnity provided in Section 21 hereof unless Exchange Agent
shall have been furnished with an indemnity against such expense or liability
which, in the Exchanges Agent's reasonable judgment, is adequate;
d. may rely on and shall be protected in acting in good faith upon any
certificate, instrument, opinion, notice, instruction, letter, telegram or other
document, or any security, delivered to Exchange Agent and believed by Exchange
Agent to be genuine and to have been signed by the proper party or parties;
e. may rely on and shall be protected in acting in good faith upon the
written instructions of the Chief Financial Officer or President of the Issuer
or such other employees and representatives as the Issuer may hereafter
designate in writing;
f. shall not be liable for any claim, loss, liability or expense, incurred
without Exchange Agent's negligence or willful misconduct, arising out of or in
connection with the administration of Exchange Agent's duties hereunder; and
<PAGE>
g. may consult with counsel reasonably satisfactory to the Issuer, and the
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by Exchange Agent hereunder
in good faith and in accordance with the opinion of such counsel.
21. INDEMNIFICATION. THE ISSUER CONVENANTS AND AGREES TO REIMBURSE,
INDEMNIFY AND HOLD EXCHANGE AGENT HARMLESS AGAINST ANY COSTS, EXPENSES
(INCLUDING REASONABLE EXPENSES OF EXCHANGE AGENT'S LEGAL COUNSEL), LOSSES OR
DAMAGE INCLUDING ANY CLAIMS AGAINST EXCHANGE AGENT BY ANY HOLDER TENDERING
OUTSTANDING NOTES FOR EXCHANGE WHICH, WITHOUT NEGLIGENCE, WILLFUL MISCONDUCT OR
BAD FAITH ON EXCHANGE AGENT'S PART OR ARISING OUT OF OR ATTRIBUTABLE THERETO,
MAY BE PAID, INCURRED OR SUFFERED BY EXCHANGE AGENT OR TO WHICH EXCHANGE AGENT
MAY BECOME SUBJECT BY REASON OF OR AS A RESULT OF: (I) THE ADMINISTRATION OF
EXCHANGE AGENT'S DUTIES HEREUNDER, (II) EXCHANGE AGENT'S COMPLIANCE WITH THE
INSTRUCTIONS SET FORTH HEREIN OR WITH ANY WRITTEN OR ORAL INSTRUCTIONS DELIVERED
TO EXCHANGE AGENT PURSUANT HERETO, OR (III) LIABILITY RESULTING FROM EXCHANGE
AGENT'S ACTIONS AS EXCHANGE AGENT PURSUANT HERETO . The Issuer shall be
entitled to participate at its own expense in the defense of any claim
indemnified hereunder, and if the Issuer so elects at any time after receipt of
such notice, the Issuer shall assume the defense of any suit brought to enforce
any such claim. In the event that the Issuer assumes the defense of any such
suit, the Issuer shall not be liable for the fees and expenses thereafter
accruing of any counsel retained by Exchange Agent, unless in the reasonable
judgment of the Issuer's counsel it is advisable for Exchange Agent to be
represented by separate counsel. In no case shall the Issuer be liable under
this indemnity with respect to any claim or action against Exchange Agent,
unless the Issuer shall be promptly notified by Exchange Agent, by letter or by
facsimile confirmed by letter, of the written assertion of a claim or shall have
been served with a summons or other first legal process giving information as to
the nature and basis of an action, but failure so to promptly notify the Issuer
shall not relieve the Issuer from any liability which it may have otherwise than
on account of this indemnity, except to the extent the Issuer is materially
prejudiced or forfeits substantial rights and defenses by reason of such
failure.
22. APPLICABLE LAW. This Agreement and appointment of Exchange Agent as
exchange agent shall be construed and enforced in accordance with the laws of
the State of Texas and shall inure to the benefit of, and the obligations
created hereby shall be binding upon, the successor and assigns of the parties
hereto.
23. NOTICES. Notices or demands authorized by this Agreement to be given
or made by Exchange Agent or by a holder of the Outstanding Notes to or on the
Issuer shall be sufficiently given or made if sent by facsimile transmission or
by first-class mail, postage prepaid, addressed (until another address is filed
in writing with Exchange Agent) as follows:
<PAGE>
Argosy Gaming Company
219 Piasa Street
Alton, IL 62002
Attn: Mr. G. Dan Marshall
Fax: (618) 474-7636
With copy to:
Mr. R. Cabell Morris, Jr.
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601-9703
Fax: (312) 558-5700
Any notice or demand authorized by this Agreement to be given or made by
the Issuer or by a holder of the Outstanding Notes to or in Exchange Agent shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address if filed in writing with the Issuer) as
follows:
Bank One Trust Company, N.A.
235 West Schrock Road
Westerville, Ohio 43271-0184
Attention: Ms. Lora Marsch
Corporate Trust Operations
Fax: (614) 248-9987
With copy to:
Bank One Trust Company, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Attention: Mr. David B. Knox
Corporate Trust Administration
Fax: (614) 248-5195
<PAGE>
Any notice or demand authorized by this Agreement to be given or made by
the Issuer or Exchange Agent to or on a holder of the Outstanding Notes shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the Company's
books.
24. CHANGE OF EXCHANGE AGENT. Exchange Agent may resign and be discharged
from its duties under this Agreement by giving to the Issuer thirty days prior
written notice, by first-class mail, postage prepaid, specifying a date when
such resignation shall take effect. If Exchange Agent resigns or becomes
incapable of acting as exchange agent and the Issuer fails to appoint a new
exchange agent within a period of 30 days after it has been notified in writing
of such resignation or incapacity by Exchange Agent, the Issuer shall become the
exchange agent and any holder of the Outstanding Notes may apply to any court of
competent jurisdiction for the appointment of a successor to Exchange Agent.
Pending the appointment of a successor to Exchange Agent, either by the Issuer
or by such a court, the duties of the exchange agent shall be carried out by the
Issuer. After appointment, the successor exchange agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally name as exchange agent without the further act or deed; but the
Exchange Agent shall deliver and transfer to the successor exchange agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
25. TERMS. This Agreement shall terminate, except for Section 19, 21 and
25 hereof, 30 days after the Expiration Date; provided, however, that the term
of this Agreement may be extended at the request of the Issuer and the agreement
of Exchange Agent. Any portion of the Exchange Notes which remain undistributed
to the holders of the Outstanding Notes after the Expiration Date shall be
marked, canceled and delivered to the Issuer upon demand, and any holders of
unsurrendered Outstanding Notes shall thereafter have no right to exchange their
Outstanding Notes for Exchange Notes.
26. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and such counterparts together shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Issuer and Exchange Agent have caused this
Agreement to be signed by their respective officers thereunto authorized as of
the date first written above.
ARGOSY GAMING COMPANY
By:
Name:
Title:
BANK ONE TRUST COMPANY, N.A.
By:
Name:
Title: Authorized Signer
<PAGE>
Exhibit 5
[Winston & Strawn Letterhead]
July __, 1997
Argosy Gaming Company
219 Piasa Street
Alton, Illinois 62002
Re: Registration Statement on Form S-4
of Argosy Gaming Company and the
Guarantors (as defined below)
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Argosy Gaming Company, a Delaware
corporation (the "Company"), and certain of its subsidiaries (the "Guarantors")
in connection with the preparation of the Registration Statement on Form S-4
(the "Registration Statement") filed on behalf of the Company and the Guarantors
with the Securities and Exchange Commission (the "Commission") relating to the
registration of $200,000,000 aggregate principal amount of the Company's 10-3/4%
Senior Subordinated Notes due 2009 (the "New Notes") and the Guarantees (as
hereinafter defined) thereof by the Guarantors, which are to be offered in
exchange for an equivalent principal amount of the Company's currently
outstanding 10-3/4% Senior Subordinated Notes due 2009 (the "Old Notes"), all as
more fully described in the Registration Statement. The New Notes will be issued
under the Company's Indenture dated as of June 8, 1999 (the "Indenture") between
the Company, the Guarantors and Bank One Trust Company, NA, as trustee.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the prospectus (the "Prospectus") contained in the
Registration Statement.
This opinion letter is delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Securities Act").
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Registration Statement, in the form filed with the Commission and as
amended through the date hereof; (ii) the Certificates of Incorporation of the
Company and each of the Guarantors, as currently in effect; (iii) the By-laws of
the Company and each of the Guarantors, as currently in effect; (iv) the
Indenture; (v) the form of the New Notes; and (vi) resolutions of the Boards of
Directors of the Company and each of the Guarantors relating to, among other
things, the issuance and exchange of the New Notes for the Old Notes, the
issuance of the Guarantees and the filing of the Registration
<PAGE>
Statement. We also have examined such other documents as we have deemed
necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to certain facts
material to this opinion, we have relied without independent verification upon
oral or written statements and representations of officers and other
representatives of the Company, the Guarantors and others.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and exchange of the New Notes for the Old Notes and the
issuance of the Guarantees have been duly authorized by requisite corporate
action on the part of the Company and the Guarantors, respectively.
2. The New Notes and the Guarantees will be valid and binding
obligations of the Company and the Guarantors, respectively, entitled to the
benefits of the Indenture and enforceable against the Company and the
Guarantors, respectively, in accordance with their terms, except to the extent
that the enforceability thereof may be limited by (x) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (y) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) when (i) the Registration Statement, as finally
amended (including all necessary post-effective amendments), shall have become
effective under the Securities Act; (ii) the New Notes are duly executed and
authenticated in accordance with the provisions of the Indenture; and (iii) the
New Notes shall have been issued and delivered in exchange for the Old Notes
pursuant to the terms set forth in the Prospectus.
The foregoing opinions are limited to the laws of the United States,
the State of New York and the General Corporation Law of the State of Delaware.
We express no opinion as to the application of the securities or blue sky laws
of the various states to the issuance or exchange of the New Notes.
We hereby consent to the reference to our firm under the headings
"Legal Matters" in the Prospectus and to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. In giving such consent,
we do not concede that we are experts within the meaning of the Securities Act
or the rules and regulations thereunder or that this consent is required by
Section 7 of the Securities Act.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
April 22, 1999
Mr. James B. Perry
c/o Argosy Gaming Company
219 Piasa Street
Alton, IL 62002
Re: Employment Agreement with Argosy Gaming Company
Dear Mr. Perry:
I am pleased to extend your employment with Argosy Gaming
Company (the "Company") under the following terms:
1. SIGNING BONUS.
Simultaneously with your execution of this agreement the
Company shall pay you a bonus of $263,386.96
2. TITLE AND DUTIES.
Your title shall be President and Chief Executive Officer. As
such, you shall report to the Executive Committee and full Board of Directors.
You shall have all of the authority and duties usual and customary to the Chief
Executive Officer of a publicly-traded corporation, including, but not limited
to the power to direct and control the activities of the senior officers and
employees of the Company or their equivalent including, but not limited to, the
Chief Financial Officer, Vice President Operations, General Counsel, Vice
President Development/Facilities and Vice President Sales and Marketing. As to
the officers and general managers of the Company the Board of Directors will
consider your recommendations as to hirings and terminations. As to all other
employees of the Company you shall have the power and authority to hire and
terminate.
<PAGE>
April 22, 1999
Page 2
3. PLACE OF WORK.
Headquarters of the Company is currently in Alton, Illinois.
You shall maintain an office at headquarters.
4. TERM.
The Term of this Agreement shall be four (4) years until April
30, 2003 (the "Term"), subject to the termination pursuant to Section 12.
5. BASIC COMPENSATION.
Your basic compensation shall be $500,000 annually for the
first two years until April 30, 2001 and $600,000 annually for the remaining
Term of your employment hereunder payable in substantially equal monthly
payments commencing from April 30, 1999, subject to usual and customary
deductions for taxes, governmental charges, and customary contributions to
health, welfare and insurance programs maintained by the Company for the senior
officers of the Company.
6. ADDITIONAL COMPENSATION.
(a) Pursuant to your initial employment agreement dated April
14, 1997 you were issued 100,000 shares of Common Stock of the Company
("Restricted Shares") which were deposited in escrow for you. On October 21,
1998, 40,000 of the Restricted Shares were released to you from the escrow. On
April 21, 2000 the remaining 60,000 of the Restricted Shares shall be released
to you if you are still employed by the Company on such date. You shall be
entitled to any dividends (stock or cash) or the benefits of any stock split
with respect to the shares distributed to you from the escrow. You shall also
have the right to vote the Restricted Shares.
(b) On April 22, 1999, the Compensation Committee granted to
you an option for 200,000 shares of Company Common Stock at an exercise price of
$7 1/16, representing the closing price on the New York Stock Exchange on such
date. The shares subject to the option shall vest 25% per year on each
anniversary date of the date of grant.
7. EXPENSES.
You shall be entitled to reimbursement for all expenses
reasonably associated with the Company's business.
<PAGE>
April 22, 1999
Page 3
8. AUTOMOBILE.
You shall receive an allowance for an automobile in the amount
of $800.00 monthly, which shall include the cost of owning or leasing of the
car, mileage, maintenance, gas, oil and insurance.
9. COUNTRY CLUB.
The Company agrees to pay on your behalf the initiation fees
for the country club of your choice in the St. Louis metropolitan area. In
addition, to the extent the Company's payment of your initiation fee is subject
to income tax the Company will reimburse you for the amount of income taxes
attributable to that payment, provided, however, in no event shall the Company
be liable for more than $75,000 pursuant to this paragraph 9.
10. BENEFITS.
You shall continue to be eligible to participate in all
benefit plans as provided to any officer of the Company. These benefits may
change from time to time. At this time it is believed the benefits include (a)
family medical and dental plans, (b) a qualified profit-sharing plan, (c) a
group life insurance plan, (d) a disability plan. The current specific benefits
are described in the Employee Benefits Handbook. Additionally, you shall be
entitled to coverage or reimbursement for any family medical and dental costs
not covered by the Company's plans, subject to regulatory guidelines. Further,
you shall be entitled to participate in any new or additional stock option or
stock incentive plan that the Company shall adopt subsequent to the date of this
Agreement. Such participation shall be at a level at least equal to that of the
most advantageous plan participation offered to any other employee or officer of
the Company.
11. VACATION/SICK LEAVE.
You shall be entitled to five weeks annual paid vacation. You
shall be entitled to 30 continuous days sick leave for when you are ill, with 60
days on an annual basis. If unable to return to your duties at the end of 30
days with reasonable accommodation, you should be eligible to participate in the
long term disability described in Paragraph 10 and your office shall be
considered vacant and your employment terminated.
12. TERMINATION.
Your employment with the Company during the Term may be
terminated (a) by the Company for cause (as defined below); (b) by the Company
at any time without cause, or (c) by you at any time.
<PAGE>
April 22, 1999
Page 4
"Cause" shall mean the following:
(i) fraud or embezzlement with respect to the Company by you;
(ii) material breach by you of this Agreement; (iii) failure to adhere to any
reasonable and lawful rule or directive of the Board; (iv) gross or willful
neglect of duties; (v) alcohol or drug dependency; (vi) death; (vii) permanent
disability preventing the performance of your duties with reasonable
accommodation for more than 30 continuous days or 60 days in any 12 month
period; or (viii) your failure to qualify (or having so qualified being
thereafter disqualified) under any suitability or licensing requirement to which
you may be subject by reason of your position with the Company under any gaming
laws or regulations as determined by any applicable gaming authority.
If the purported cause of termination is the reasons set forth
in (ii), (iii) or (iv) above the Company must give notice to you of the cause in
writing specifying the purported cause and allow you 60 days to cure the
purported cause.
If your employment with the Company is terminated by the
Company for "cause" or if you voluntarily terminate your employment prior to the
end of the Term you shall only be entitled to (i) your basic compensation and
other benefits to the date of termination; (ii) the portion, if any, of the
Restricted Shares delivered to your prior to termination; however, the portion
then held in escrow shall be forfeited; and (iii) any shares vested under the
option referred to in paragraph 6(b) as of your termination.
If your employment with the Company is terminated by the
Company other than for "cause" then you shall be entitled to receive (i) your
then current basic compensation in monthly installments for the 12 months
following termination; (ii) out-placement services for 6 months following
termination; (iii) relocation expenses up to $40,000; (iv) the portion, if any,
of the Restricted Shares delivered to you prior to termination; however, the
portion then held in escrow shall be forfeited; and (v) unless you go to work
for a competitor you shall have 90 days after the date of termination to
exercise your vested stock options.
13. NO ASSIGNMENT.
This Agreement may not be assigned.
14. CHANGE OF CONTROL.
Should more than 51% of the common stock of the Company be
sold to, purchased by or otherwise subject to the control of a third party not
currently owning more than 5% of the common stock or should substantially all of
the assets of the Company be sold, then you shall be entitled to the following
if you are terminated: (i) Restricted Shares held in escrow; (ii) all your stock
options shall vest, (iii) an amount equal to one and one-half times your then
current base
<PAGE>
April 22, 1999
Page 5
compensation payable in equal monthly installments for the 12 months following
termination, and (iv) you shall be entitled to the items set forth in clauses
(ii) and (iii) of the last paragraph of Section 12 as if you were terminated by
the Company other than for "cause."
15. NON-COMPETE.
Should you voluntarily terminate your employment hereunder or
be terminated with cause, you shall not compete with the Company in any
jurisdictions where it currently maintains gaming facilities (including managed
properties) for a period of 12 months following such resignation or termination
and you agree not to solicit any of the Company's management employees for such
12 month period. Should your employment hereunder be terminated without cause
you shall not compete with the Company in any jurisdictions where it currently
maintains gaming facilities (including managed properties) for as long as the
Company is paying you.
16. CONFIDENTIALITY.
As a condition of this Agreement and your employment with the
Company, you must sign and honor our employee confidentiality and non-disclosure
agreement presently in effect by the Company.
17. ATTORNEYS FEES. The Company shall reimburse you for your
reasonable attorneys fees incurred in connection with this Agreement.
18. ENTIRE AGREEMENT /AUTHORIZATION/BINDING/NO
WAIVER/GOVERNING LAW.
This writing represents the entire Agreement between the
parties and may only be modified in writing signed by the parties. This
Agreement supersedes the prior employment agreement dated April 14, 1997. The
signer of this offer is fully authorized by the Company to make the offer
contained herein. This Agreement is binding on the employer and its successors
and assigns. No waiver of any provision shall constitute a general waiver for
future purposes. This Agreement may be signed in counterparts. This Agreement
shall be governed by the laws of the State of Illinois.
Very truly yours,
ARGOSY GAMING COMPANY
By: /s/ William F. Cellini
-----------------------------------
Title: CHAIRMAN
--------------------------------
<PAGE>
April 22, 1999
Page 6
AGREED AND ACCEPTED
By: /S/ James B. Perry
--------------------------
Dated: 5-31-99
-----------------------
DOCUMENT NUMBER: 489884.2
5-20-99/10:02AM
<PAGE>
------------------------------------------------------------------------
------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF JUNE 8, 1999
AMONG
ARGOSY GAMING COMPANY, A DELAWARE CORPORATION,
THE MISSOURI GAMING COMPANY, A MISSOURI CORPORATION,
ALTON GAMING COMPANY, AN ILLINOIS CORPORATION,
IOWA GAMING COMPANY, AN IOWA CORPORATION,
JAZZ ENTERPRISES, INC., A LOUISIANA CORPORATION,
ARGOSY OF LOUISIANA, INC., A LOUISIANA CORPORATION,
CATFISH QUEEN PARTNERSHIP IN COMMENDAM,
A LOUISIANA PARTNERSHIP IN COMMENDAM, AND
THE INDIANA GAMING COMPANY, AN INDIANA CORPORATION,
AS BORROWERS
THE LENDERS HEREIN NAMED
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS SWINGLINE LENDER, L/C ISSUER AND AGENT BANK
SOCIETE GENERALE,
AS SYNDICATION AGENT
KEYBANK NATIONAL ASSOCIATION,
AS DOCUMENTATION AGENT
THE FIRST NATIONAL BANK OF CHICAGO,
AS MANAGING AGENT
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TABLE OF CONTENTS
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RECITALS...........................................................................................................1
ARTICLE I - DEFINITIONS............................................................................................4
Section 1.01. Definitions............................................................................62
Section 1.02. Interpretation and Construction........................................................63
Section 1.03. Use of Defined Terms...................................................................63
Section 1.04. Cross-References.......................................................................63
Section 1.05. Exhibits and Schedules.................................................................63
ARTICLE II - AMOUNT, TERMS AND SECURITY OF THE FACILITIES.........................................................63
Section 2.01. The Credit Facility....................................................................63
Section 2.02. Use of Proceeds of the Credit Facility.................................................65
Section 2.03. Notice of Borrowings and Exercise of Interest Rate Options.............................66
Section 2.04. Conditions of Borrowings...............................................................67
Section 2.05. The Revolving Credit Note and Interest Rate Options....................................67
Section 2.06. Security for the Credit Facility.......................................................71
Section 2.07. Place and Manner of Payment............................................................71
Section 2.08. The Swingline Facility.................................................................73
Section 2.09. Issuance of Letters of Credit..........................................................75
Section 2.10. Fees...................................................................................77
Section 2.11. Interest on Overdue Amounts and Default Rate...........................................78
Section 2.12. Net Payments...........................................................................79
Section 2.13. Increased Costs........................................................................80
Section 2.14. Mitigation; Exculpation; Replacement Lender............................................81
Section 2.15. Commitment Increases and Term Loans....................................................82
ARTICLE III - CONDITIONS PRECEDENT TO THE CLOSING DATE............................................................85
A. Closing Conditions..............................................................................85
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Section 3.01. Credit Agreement.......................................................................86
Section 3.02. The Notes..............................................................................86
Section 3.03. Security Documentation.................................................................86
Section 3.04. Other Loan Documents...................................................................88
Section 3.05. Articles of Incorporation, Bylaws, Corporate Resolution and Certificate of
Good Standing.................................................................88
Section 3.06. Partnership Documentation..............................................................89
Section 3.07. Closing Certificate and Authorized Representatives Certificate.........................89
Section 3.08. Opinion of Counsel.....................................................................89
Section 3.09. Title Insurance Policies...............................................................89
Section 3.10. Survey.................................................................................90
Section 3.11. Priority of Ship Mortgages.............................................................90
Section 3.12. Indentures.............................................................................90
Section 3.13. Consummation of Tender Offer and Consent Solicitation..................................90
Section 3.14. Outstanding First Mortgage Notes Payment Fund..........................................91
Section 3.15. New Indenture..........................................................................91
Section 3.16. Insurance..............................................................................91
Section 3.17. Payment of Fees........................................................................91
Section 3.18. Reimbursement for Expenses and Fees....................................................91
Section 3.19. Development Agreements and Leases......................................................92
Section 3.20. Estoppel Certificate...................................................................92
Section 3.21. Regulatory Approvals, Permits, Consents, Etc...........................................92
Section 3.22. Pricing Certificate....................................................................92
Section 3.23. Schedule of all Significant Litigation.................................................92
Section 3.24. Financial Statements...................................................................92
Section 3.25. No Injunction or Other Litigation......................................................93
Section 3.26. Additional Documents and Statements....................................................93
B. Conditions Precedent to all Borrowings..........................................................93
Section 3.27. Notice of Borrowing....................................................................93
Section 3.28. Certain Statements.....................................................................93
Section 3.29. Gaming Permits.........................................................................94
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C. Additional Conditions Precedent to Commitment Increases and Term Loans...........................94
Section 3.30. Evidence of Lawrenceburg Buyout.........................................................94
Section 3.31. Additional Security Documents...........................................................94
Section 3.32. Other Loan Documents....................................................................95
Section 3.33. Opinion of Counsel - Commitment Increase................................................95
Section 3.34. Lawrenceburg Title Insurance Policy.....................................................95
Section 3.35. Survey..................................................................................95
Section 3.36. Payment of Taxes........................................................................96
Section 3.37. Lawrenceburg Insurance..................................................................96
Section 3.38. Reimbursement for Expenses and Fees.....................................................96
Section 3.39. Phase I Environmental Site Assessments..................................................96
Section 3.40. No Injunction or Other Litigation.......................................................96
Section 3.41. Pro Forma Financial Compliance..........................................................97
Section 3.42. Designation of Restricted Subsidiary....................................................97
Section 3.43. Additional Documents and Statements.....................................................97
ARTICLE IV - REPRESENTATIONS AND WARRANTIES........................................................................97
Section 4.01. Organization; Power and Authorization...................................................97
Section 4.02. No Conflict With, Violation of or Default Under Laws or Other Agreements................98
Section 4.03. Litigation..............................................................................99
Section 4.04. Agreements Legal, Binding, Valid and Enforceable........................................99
Section 4.05. Information and Financial Data Accurate; Financial Statements;
No Material Adverse Change.....................................................99
Section 4.06. Governmental Approvals.................................................................100
Section 4.07. Payment of Taxes.......................................................................100
Section 4.08. Title to Properties....................................................................100
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Section 4.09. No Untrue Statements...................................................................101
Section 4.10. Brokerage Commissions..................................................................101
Section 4.11. No Defaults............................................................................102
Section 4.12. Employee Retirement Income Security Act of 1974........................................102
Section 4.13. Partnership Agreements, Development Agreements and Baton Rouge Leases..................102
Section 4.14. Senior Indenture.......................................................................103
Section 4.15. Convertible Notes......................................................................104
Section 4.16. Availability of Utility Services and Facilities........................................104
Section 4.17. Policies of Insurance..................................................................104
Section 4.18. Gaming Permits.........................................................................104
Section 4.19. Environmental Certificate..............................................................104
Section 4.20. New Venture Subsidiaries...............................................................105
Section 4.21. Compliance with Statutes, etc..........................................................105
Section 4.22. Investment Company Act.................................................................105
Section 4.23. Public Utility Holding Company Act.....................................................105
Section 4.24. Labor Relations........................................................................105
Section 4.25. Patents, Licenses, Franchises and Formulas.............................................105
Section 4.26. Contingent Liabilities.................................................................106
ARTICLE V - GENERAL COVENANTS OF BORROWERS........................................................................106
Section 5.01. FF&E...................................................................................106
Section 5.02. Permits; Licenses and Legal Requirements...............................................106
Section 5.03. Development Agreements.................................................................107
Section 5.04. Protection Against Lien Claims.........................................................107
Section 5.05. No Change in Character of Business.....................................................108
Section 5.06. Preservation and Maintenance of Properties and Assets; Acquisition
of Additional Property; Release of Baton Rouge Hotel Property.................108
Section 5.07. Repair of Properties and Assets........................................................109
Section 5.08. Financial Statements; Reports; Certificates and Books and Records......................109
Section 5.09. Insurance..............................................................................112
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Section 5.10. Taxes..................................................................................118
Section 5.11. Release of Senior Indenture Security Documents.........................................118
Section 5.12. Lawrenceburg Casino Facilities.........................................................118
Section 5.13. Further Assurances.....................................................................118
Section 5.14. Indemnification........................................................................119
Section 5.15. Inspection of the Collateral and Appraisal.............................................120
Section 5.16. Compliance With Other Loan Documents, Execution of Subsidiary Guaranties
and Pledge of Restricted Subsidiary Stock.....................................120
Section 5.17. Suits or Actions Affecting Borrowers...................................................121
Section 5.18. Occurrence of Senior Subordinated Notes Effective Date and Required
Payments from Proceeds of Senior Subordinated Notes...........................121
Section 5.19. Consents of and Notice to Gaming Authorities...........................................121
Section 5.20. Tradenames, Trademarks and Servicemarks................................................121
Section 5.21. Notice of Hazardous Materials..........................................................122
Section 5.22. Compliance with Statutes, etc..........................................................122
Section 5.23. Compliance with Access Laws............................................................123
Section 5.24. Designation of Bank Facilities as Designated Senior Debt...............................123
Section 5.25. Prohibition on Prepayment or Defeasance of Subordinated Debt...........................123
Section 5.26. Year 2000 Compliance...................................................................123
Section 5.27. Acceleration of Maturity Date..........................................................124
Section 5.28. Restriction on Amendments to Development Agreements, Partnership
Agreements and Baton Rouge Leases.............................................124
ARTICLE VI - FINANCIAL COVENANTS..................................................................................124
Section 6.01. Total Leverage Ratio...................................................................124
Section 6.02. Senior Leverage Ratio..................................................................126
Section 6.03. Fixed Charge Coverage Ratio............................................................127
Section 6.04. Minimum Net Worth......................................................................127
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Section 6.05. Capital Expenditure Requirements.......................................................128
Section 6.06. Contingent Liability(ies)..............................................................129
Section 6.07. Investment Restrictions................................................................129
Section 6.08. Total Liens............................................................................130
Section 6.09. Limitation on Indebtedness.............................................................130
Section 6.10. Minimum Subordinated Debt..............................................................132
Section 6.11. Restriction on Distributions and Argosy Dividends......................................132
Section 6.12. No Change of Control...................................................................132
Section 6.13. Consolidation, Merger, Sale of Assets, etc.............................................132
Section 6.14. Transactions with Affiliates...........................................................133
Section 6.15. No Transfer of Ownership...............................................................134
Section 6.16. ERISA..................................................................................134
Section 6.17. Margin Regulations.....................................................................134
Section 6.18. Limitation on Additional Subsidiaries..................................................135
Section 6.19. Limitation on Consolidated Tax Liability...............................................135
Section 6.20. Change in Accounting Principles........................................................135
ARTICLE VII - EVENTS OF DEFAULT...................................................................................135
Section 7.01. Events of Default......................................................................135
Section 7.02. Default Remedies.......................................................................139
Section 7.03. Application of Proceeds................................................................140
Section 7.04. Notices................................................................................140
Section 7.05. Agreement to Pay Attorney's Fees and Expenses..........................................140
Section 7.06. No Additional Waiver Implied by One Waiver.............................................141
Section 7.07. Licensing of Agent Bank and Lenders....................................................141
Section 7.08. Exercise of Rights Subject to Applicable Law...........................................141
Section 7.09. Discontinuance of Proceedings..........................................................141
ARTICLE VIII - DAMAGE, DESTRUCTION AND CONDEMNATION...............................................................142
Section 8.01. No Abatement of Payments...............................................................142
Section 8.02. Distribution of Capital Proceeds
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Upon Occurrence of Fire, Casualty, Other Perils or Condemnation........................142
ARTICLE IX - AGENCY PROVISIONS....................................................................................144
Section 9.01. Appointment............................................................................144
Section 9.02. Nature of Duties.......................................................................144
Section 9.03. Disbursement of Borrowings.............................................................145
Section 9.04. Distribution and Apportionment of Payments.............................................146
Section 9.05. Rights, Exculpation, Etc...............................................................147
Section 9.06. Reliance...............................................................................148
Section 9.07. Indemnification........................................................................148
Section 9.08. Agent Individually.....................................................................149
Section 9.09. Successor Agent Bank; Resignation of Agent Bank; Removal of Agent Bank.................149
Section 9.10. Consent and Approvals..................................................................150
Section 9.11. Agency Provisions Relating to Collateral...............................................153
Section 9.12. Lender Actions Against Collateral and Restriction on Exercise of Set-Off...............156
Section 9.13. Ratable Sharing........................................................................156
Section 9.14. Delivery of Documents..................................................................156
Section 9.15. Notice of Events of Default............................................................157
Section 9.16. Syndication Agent, Documentation Agent and Managing Agent..............................157
ARTICLE X - GENERAL TERMS AND CONDITIONS..........................................................................157
Section 10.01. Amendments and Waivers.................................................................157
Section 10.02. Failure to Exercise Rights.............................................................159
Section 10.03. Notices and Delivery...................................................................159
Section 10.04. Modification in Writing................................................................159
Section 10.05. Other Agreements.......................................................................160
Section 10.06. Counterparts...........................................................................160
Section 10.07. Rights, Powers and Remedies are Cumulative.............................................160
Section 10.08. Continuing Representations.............................................................160
Section 10.09. Successors and Assigns.................................................................161
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Section 10.10. Assignment of Loan Documents by Borrowers or Syndication Interests by Lenders..........161
Section 10.11. Action by Lenders......................................................................162
Section 10.12. Time of Essence........................................................................163
Section 10.13. Choice of Law and Forum................................................................163
Section 10.14. Advances...............................................................................163
Section 10.15. Waiver of Jury Trial...................................................................163
Section 10.16. Scope of Approval and Review...........................................................164
Section 10.17. Severability of Provisions.............................................................164
Section 10.18. Cumulative Nature of Covenants.........................................................164
Section 10.19. Confidentiality........................................................................164
Section 10.20. Costs to Prevailing Party..............................................................165
Section 10.21. Expenses...............................................................................165
Section 10.22. Security and Loan Documentation........................................................166
Section 10.23. Setoff.................................................................................166
Section 10.24. Borrowers' Waivers and Consents........................................................166
Section 10.25. Schedules Attached.....................................................................171
Schedule 2.01(a) - Schedule of Lenders' Proportions in Credit Facility
Schedule 2.01(c) - Total Commitment Reduction Schedule
Schedule 3.23 - Schedule of Significant Litigation
Schedule 4.08(b) - Schedule of Intercompany Notes
Schedule 4.20 - Schedule of Restricted and Unrestricted Subsidiaries
Schedule 4.25 - Schedule of Trademarks, Patents, Licenses,
Franchises, Formulas and Copyrights
Schedule 4.26 - Schedule of Contingent Liabilities
Schedule 5.11 - Schedule of Senior Indenture Security Documents
Schedule 6.05(b) - Schedule of Excluded Capital Expenditures
Schedule 6.07(h) - Schedule of Existing Unrestricted Subsidiary Investments
Schedule 6.09 - Schedule of Liens
Section 10.26. Exhibits Attached......................................................................171
Exhibit A - Revolving Credit Note - Form
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Exhibit B - Swingline Note - Form
Exhibit C - Notice of Borrowing - Form
Exhibit D - Continuation/Conversion Notice - Form
Exhibit E - Notice of Swingline Advance - Form
Exhibit F - Compliance Certificate - Form
Exhibit G - Pricing Certificate - Form
Exhibit H - Defeasance Account Agreement - Form
Exhibit I - Authorized Representative Certificate - Form
Exhibit J - Closing Certificate - Form
Exhibit K - Assumption and Consent Agreement - Form
Exhibit L - Assignment and Assumption Agreement - Form
Exhibit M - Cash Collateral Pledge Agreement
Exhibit N - Subsidiary Guaranty - Form
Exhibit O - Legal Opinion - Form
Exhibit P - Alton Real Property Description
Exhibit Q - Riverside Real Property Description
Exhibit R - Sioux City Real Property Description
Exhibit S - Baton Rouge Hotel Property Description
Exhibit T - Baton Rouge Real Property Description
</TABLE>
- ix -
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of the
8th day of June, 1999, by and among ARGOSY GAMING COMPANY, a Delaware
corporation ("Argosy"), THE MISSOURI GAMING COMPANY, a Missouri corporation
("MGC"), ALTON GAMING COMPANY, an Illinois corporation ("AGC"), IOWA GAMING
COMPANY, an Iowa corporation ("IGC"), JAZZ ENTERPRISES, INC., a Louisiana
corporation ("Jazz"), ARGOSY OF LOUISIANA, INC., a Louisiana corporation
("AOLI"), CATFISH QUEEN PARTNERSHIP IN COMMENDAM, a Louisiana partnership in
commendam ("CQP") and THE INDIANA GAMING COMPANY, an Indiana corporation
("TIGC" and, together with Argosy, MGC, AGC, IGC, Jazz, AOLI and CQP,
collectively the "Borrowers"), each financial institution whose name is set
forth on the signature pages of this Credit Agreement and each lender which
may hereafter become a party to this Credit Agreement pursuant to Section
2.15(a) and/or 2.15(b) or Section 10.10(b) (each individually a "Lender" and
collectively the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender"), WELLS FARGO BANK, National Association, as
the issuer of letters of credit hereunder (herein in such capacity, together
with its successors and assigns, the "L/C Issuer"), SOCIETE GENERALE, as the
syndication agent ("Syndication Agent"), KEYBANK NATIONAL ASSOCIATION, as the
documentation agent ("Documentation Agent"), THE FIRST NATIONAL BANK OF
CHICAGO, as the managing agent ("Managing Agent") and WELLS FARGO BANK,
National Association, as the arranger and administrative and collateral agent
for the Lenders, Swingline Lender and L/C Issuer (herein, in such capacity,
called the "Agent Bank" and, together with the Lenders, Swingline Lender and
L/C Issuer, collectively referred to as the "Banks").
R E C I T A L S:
WHEREAS:
A. In this Credit Agreement all capitalized words and terms
shall have the respective meanings and be construed herein as hereinafter
provided in Section 1.01 of this Credit Agreement and shall be deemed to
incorporate such words and terms as a part hereof in the same manner and with
the same effect as if the same were fully set forth.
B. AGC, MGC, AOLI, Jazz, IGC and TIGC are each wholly owned
subsidiaries of Argosy. AOLI is the general partner of and the owner of a
ninety percent (90%) partnership interest in CQP. Jazz is the partner in
commendam of and the owner of a ten percent (10%) partnership interest in CQP.
- 1 -
<PAGE>
C. On or about June 5, 1996, Argosy issued Two Hundred
Thirty-Five Million Dollars ($235,000,000.00) in aggregate principal amount
of thirteen and one-quarter percent (13.25%) First Mortgage Notes due 2004
(the "First Mortgage Notes") pursuant to the terms of the Indenture of even
date therewith (the "Senior Indenture") executed by and among Argosy, as
issuer, MGC, AGC, The St. Louis Gaming Company, IGC, Jazz, AOLI, CQP and
TIGC, as guarantors and Bank One Trust Company, NA as successor trustee of
First National Bank of Commerce, as trustee (the "Senior Indenture Trustee").
D. On or about June 6, 1994, Argosy issued One Hundred
Fifteen Million Dollars ($115,000,000.00) aggregate principal amount of
twelve percent (12.0%) convertible subordinated notes due 2001 (the
"Convertible Notes") pursuant to the terms of the Indenture of even date
therewith (the "Convertible Notes Indenture") executed by and among Argosy,
as issuer, and Bank One, Springfield, as trustee.
E. Argosy desires to issue no less than One Hundred Fifty
Million Dollars ($150,000,000.00) in new 10.75% Senior Subordinated Notes due
2009 (the "Initial Senior Subordinated Notes") in a limited offering to
Qualified Institutional Buyers (as defined in Rule 144A of the Securities and
Exchange Commission (the "SEC")) and outside the United States to certain
persons in reliance on Regulation S of the SEC, which Initial Senior
Subordinated Notes are intended to be issued under and pursuant to an
indenture (together with any amendments or supplements in connection with the
Exchange Senior Subordinated Notes, the "New Indenture") to be dated on or
before the Closing Date, executed by and among Argosy, as issuer, MGC, AGC,
IGC, Jazz, AOLI, CQP and TIGC, as guarantors and Bank One Trust Company, NA,
as trustee, prepared and executed consistent with the Confidential Offering
Memorandum dated June 3, 1999.
F. Following the issuance of the Initial Senior
Subordinated Notes and in order to facilitate trading in such debt
securities, Argosy intends to file a registration statement with the SEC
seeking to register an exchange offer for the exchange of the Initial Senior
Subordinated Notes for an issue of no less than One Hundred Fifty Million
Dollars ($150,000,000.00) in Senior Subordinated Notes due 2009 (the
"Exchange Senior Subordinated Notes") under and pursuant to the New
Indenture. The Exchange Senior Subordinated Notes will be identical in all
material respects to the Initial Senior Subordinated Notes.
G. Argosy has made an "Offer to Purchase For Cash All
Outstanding 13-1/4% First Mortgage Notes Due 2004 and Solicitation of
Consents to the Proposed Amendments to Related Indenture and Security
Documents" (together with the related letter of transmittal and related
offering materials, collectively the "Purchase/Solicitation Statement")
pursuant to which Argosy has offered to purchase the First Mortgage Notes
(the "Tender Offer") and has solicited from the holders of the First Mortgage
Notes consents to
- 2 -
<PAGE>
proposed, amendments to the Senior Indenture and the Senior Indenture
Security Documents and to Argosy's grant of additional liens on the Senior
Indenture Collateral (the "Consent Solicitation").
H. On the Closing Date: (i) Argosy shall purchase pursuant
to the Tender Offer, no less than 85.0% in aggregate principal amount of the
First Mortgage Notes, (ii) the Senior Indenture shall have been amended
pursuant to and consistent with the Consent Solicitation, and (iii) Argosy
shall have obtained the required consent of the holders of the First Mortgage
Notes to the grant of a second lien on the Senior Indenture Collateral.
I. The Borrower Consolidation desires to finance a portion
of the costs of the Tender Offer, Consent Solicitation and First Mortgage
Notes Defeasance and for the payment of the Convertible Notes and to provide
working capital for the Borrower Consolidation by establishing a bank
financed revolving line of credit in the principal amount of no less than Two
Hundred Million Dollars ($200,000,000.00), including a swingline subfacility
for fundings in smaller minimum amounts and on shorter notice in the maximum
amount of no less than Ten Million Dollars ($10,000,000.00) at any time
outstanding, and also including a subfacility for the issuance of Letters of
Credit in the maximum amount of no less than Ten Million Dollars
($10,000,000.00) at any time outstanding.
J. Banks are willing, subject to the terms, covenants and
conditions hereinafter set forth, to establish in favor of Borrowers a
secured revolving line of credit in the initial principal amount of Two
Hundred Million Dollars ($200,000,000.00), subject to potential increase of
the Aggregate Commitment by an additional amount of up to Two Hundred Million
Dollars ($200,000,000.00) as provided in Section 2.15(a) and (b) hereinbelow.
Additionally, the Credit Facility will include the L/C Facility, as a
subfacility for the issuance of standby and documentary letters of credit by
the L/C Issuer in the maximum aggregate amount as set forth in this Credit
Agreement in Letters of Credit at any time outstanding and shall further
include the Swingline Facility to be funded by the Swingline Lender, as a
subfacility in the maximum aggregate amount as set forth in this Credit
Agreement at any time outstanding, all on the terms and subject to the
conditions, covenants and understandings hereinafter set forth and contained
in each of the Loan Documents.
NOW, THEREFORE, in consideration of the foregoing, and
other valuable considerations as hereinafter described, the parties hereto do
promise, covenant and agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. For the purposes of this Credit
Agreement, each of the following terms shall have the meaning specified with
respect thereto, unless a different meaning clearly appears from the context:
"AGC" shall mean Alton Gaming Company, an Illinois
corporation.
"AOLI" shall mean Argosy of Louisiana, Inc., a Louisiana
corporation.
"Access Laws" shall have the meaning set forth in Section
5.23(a).
"Adjusted Assets" of the Argosy Consolidation as of any
Fiscal Quarter end shall mean Assets less the Minority Asset Adjustment.
"Adjusted Cash Flow" as of the end of any Fiscal Quarter
shall mean with reference to the Argosy Consolidation:
For the Fiscal Quarter under review, together with the most
recently ended three (3) preceding Fiscal Quarters, the sum
of: (i) Economic EBITDA, less (ii) the aggregate amount of
actually paid federal and state taxes on or measured by
income, less (iii) Distributions (exclusive of advisory
fees paid to Conseco) actually paid (to the extent not
included in Adjusted Fixed Charges), less (iv) the sum of:
(a) the aggregate amount actually paid for Non-Financed
Capital Expenditures at the Argosy Owned Facilities during
such period (exclusive of Sioux City Casino Facilities),
plus (b) 57.5% of the aggregate amount actually paid for
Non-Financed Capital Expenses at the Lawrenceburg Casino
Facilities during such period, plus (c) 70% of the
aggregate amount actually paid for Non-Financed Capital
Expenditures at the Sioux City Casino Facilities during
such period.
"Adjusted Fixed Charges" of the Argosy Consolidation as of
any Fiscal Quarter end shall mean Fixed Charges less the Minority Fixed
Charges Adjustment.
"Adjusted Funded Debt" of the Argosy Consolidation as of
any Fiscal Quarter end shall mean Funded Debt less the Minority Funded Debt
Adjustment.
- 4 -
<PAGE>
"Adjusted Senior Funded Debt" of the Argosy Consolidation
as of any Fiscal Quarter end shall mean Senior Funded Debt less the Minority
Senior Funded Debt Adjustment.
"Adjusted Total Liabilities" of the Argosy Consolidation as
of any Fiscal Quarter end shall mean Total Liabilities less the Minority
Total Liabilities Adjustment.
"Affiliate(s)" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such Person. A Person shall be deemed to be "controlled by" any other
Person if such other Person possesses, directly or indirectly, power to:
(a) vote ten percent (10%) or more of the equity
securities (on a fully diluted basis) having ordinary voting
power for the election of directors or managing general
partners; or
(b) direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Agent Bank" has the meaning set forth in the Preamble of
this Credit Agreement.
"Aggregate Commitment" shall mean reference to the
aggregate amount committed by Lenders for advance to or on behalf of
Borrowers as Borrowings under the Credit Facility in the initial principal
amount of Two Hundred Million Dollars ($200,000,000.00) as may be increased
by up to the additional principal amount of Two Hundred Million Dollars
($200,000,000.00) as provided in Section 2.15(a) and (b), in each case
subject to: (i) the Scheduled Reductions as set forth on the Total Commitment
Reduction Schedule, (ii) the limitations for advance as set forth in the
definition of Maximum Permitted Balance, and (iii) Voluntary Permanent
Reduction as provided in Section 2.01(c).
"Aggregate Expenditure Availability" shall mean, as of any
date of determination, the lesser of (a) One Hundred Seventy-Five Million
Dollars ($175,000,000.00) less the aggregate of Capital Expenditures,
Investments and Indebtedness in the following categories for the period of
the life of the Bank Facilities, and (b) the Aggregate Expenditure Basket
less the aggregate of Capital Expenditures, Investments and Indebtedness in
the following categories, for the period of the Fiscal Year in which the date
of determination occurs:
- 5 -
<PAGE>
(i) Investments made under Section 6.07(d), except
Investments made in BOSCLP for the purpose of funding
Capital Expenditures to the Sioux City Casino Facilities to
the extent permitted under Section 6.05;
(ii) Capital Expenditures made to the Argosy Owned
Facilities during any Fiscal Year in excess of the Maximum
Cap Ex Limit, except to the extent permitted under Section
6.05(a);
(iii) Capital Expenditures described on the Schedule
of Excluded Capital Expenditures;
(iv) The amount of Investments made in each
Restricted Subsidiary that is redesignated by Borrowers as
an Unrestricted Subsidiary;
(v) Until the occurrence of the Lawrenceburg
Buyout, Non-financed Capital Expenditures at the
Lawrenceburg Casino Facilities in excess of (a) Ten Million
Dollars ($10,000,000.00) in the aggregate during the first
(1st) through fourth (4th) full Fiscal Quarters following
the Closing Date; (b) Eleven Million Dollars
($11,000,000.00) in the aggregate during the fifth (5th)
through eighth (8th) full Fiscal Quarters following the
Closing Date; (c) Twelve Million Dollars ($12,000,000.00)
in the aggregate during the ninth (9th) through twelfth
(12th) full Fiscal Quarters following the Closing Date; (d)
Thirteen Million Dollars ($13,000,000.00) in the aggregate
during the thirteenth (13th) through sixteenth (16th) full
Fiscal Quarters following the Closing Date; and (e)
Fourteen Million Dollars ($14,000,000.00) in the aggregate
during the period commencing with the seventeenth Fiscal
Quarter following the Closing Date through Bank Facilities
Termination; and
(vi) Until the occurrence of the Lawrenceburg
Buyout, all Indebtedness of IGCLP in excess of Twenty-One
Million Dollars ($21,000,000.00), exclusive of Secured
Indebtedness and Capital Lease Liabilities to the extent
permitted under Section 6.09(b).
"Aggregate Expenditure Basket" shall mean Sixty Million
Dollars ($60,000,000.00) during any Fiscal Year; provided, however, that
commencing with the third (3rd) Fiscal Year following the Closing Date and
continuing for each Fiscal Year until Bank Facility Termination (the Fiscal
Year in which the Closing Date occurs being deemed the first Fiscal Year) to
the extent the Borrower Consolidation uses less than Sixty Million Dollars
($60,000,000.00) in Aggregate Expenditure Availability during any Fiscal
Year, the unused amount of Aggregate Expenditure Availability, up to the
maximum carryover amount
- 6 -
<PAGE>
of Thirty Million Dollars ($30,000,000.00), shall be added to the Aggregate
Expenditure Basket for the next, but only the next, ensuing Fiscal Year. The
amount of any such carryover shall be deemed the first expenditures made
during the next ensuing Fiscal Year.
"Aggregate Outstandings" shall mean collective reference to
the sum of the Funded Outstandings, Swingline Outstandings, Potential L/C
Exposure and L/C Exposure as of any given date of determination.
"Alton Assignment of Permits, Contracts, Rents and
Revenues" shall mean the Assignment of Permits, Contracts, Rents and Revenues
to be executed by AGC on or before the Closing Date, whereby AGC assigns to
Agent Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer
in consideration of the Bank Facilities: (a) all of its right, title and
interest under all spaceleases and equipment leases and contracts relating to
the Alton Casino Facilities, (b) all of its right, title and interest in and
to all permits, licenses and contracts relating to the Alton Casino
Facilities, except those gaming permits and licenses which are unassignable,
and (c) all rents, issues, profits, revenues and income from the operation of
the Alton Casino Facilities, together with any and all future expansions
thereof, related thereto or used in connection therewith, as such assignment
may be amended, modified, supplemented, extended, renewed or restated from
time to time.
"Alton Belle II" shall mean that vessel known as Alton
Belle Casino II, Official No. 992563.
"Alton Belle II Ship Mortgage" shall mean the First
Preferred Ship Mortgage to be executed by AGC on or before the Closing Date
wherein AGC, as owner and mortgagor, grants a mortgage lien in favor of Agent
Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer, in
and to Alton Belle II, as such ship mortgage may be amended, modified,
supplemented, extended, renewed or restated from time to time.
"Alton Casino Facilities" shall mean the riverboat casino
business and related activities conducted by AGC on the Alton Vessel and on
the Alton Real Property and all improvements now or hereafter situate thereon.
"Alton Development Agreement" shall mean that certain
Agreement under date of April 18, 1991 by and between the City of Alton,
Illinois and the Alton Riverboat Gambling Partnership (the predecessor in
interest to AGC), pursuant to which, among other things, AGC constructed
various improvements to the Alton Real Property and was granted the Alton
Easement, as such agreement has been extended and is it may hereafter be
amended, modified, supplemented, extended, renewed or restated from time to
time.
- 7 -
<PAGE>
"Alton Development Agreement Estoppel Certificate" shall
mean that certain Estoppel Certificate to be executed by the City of Alton,
Illinois as of the Closing Date pursuant to which the City of Alton, Illinois
represents to Agent Bank on behalf of the Lenders, the Swingline Lender and
the L/C Issuer, among other things, that: (i) the Alton Development Agreement
is in full force and effect; (ii) there are no defaults existing under the
Alton Development Agreement; and (iii) the City of Alton, Illinois
acknowledges that AGC is entitled to assign its interest under the Alton
Easement pursuant to the Assignment of Alton Development Agreement.
"Alton Easement" shall mean the easement for use of the
Alton Real Property which is granted to AGC under the Alton Development
Agreement.
"Alton Landing" shall mean that vessel known as Alton
Landing, Official No. 559023.
"Alton Landing Ship Mortgage" shall mean the First
Preferred Ship Mortgage to be executed by AGC on or before the Closing Date
wherein AGC, as owner and mortgagor, grants a mortgage lien in favor of Agent
Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer, in
and to Alton Landing, as such ship mortgage may be amended, supplemented or
otherwise modified from time to time.
"Alton Real Property" shall mean that real property which
is particularly described by "Exhibit P" attached hereto, which real property
is subject to, and used by AGC, as the Alton Easement in accordance with the
terms and conditions of the Alton Development Agreement.
"Alton Vessel" shall mean collective reference to Alton
Belle II and to any other documented or undocumented vessels, barges
watercraft or floating structures which may be utilized by AGC, as of the
Closing Date or thereafter, in the operation of its riverboat casino business
at, or in connection with, the Alton Real Property.
"Annualized EBITDA" shall mean with reference to EBITDA
realized by each Restricted Subsidiary in each applicable Restricted
Subsidiary Venture, as of the last day of each Fiscal Quarter (a) EBITDA for
the fiscal period consisting of that Fiscal Quarter and the three (3)
immediately preceding Fiscal Quarters, or (b) with respect to any such fiscal
period in which the applicable Restricted Subsidiary Venture has been open
for business to the public for at least one (1) full Fiscal Quarter but less
than four (4) full Fiscal Quarters, such amount as is necessary to reflect
the annualization of EBITDA attributable to the applicable Restricted
Subsidiary using the following calculations:
- 8 -
<PAGE>
(i) if the applicable Restricted Subsidiary
Venture has been open for business to the public for one
(1) full Fiscal Quarter, the applicable Restricted
Subsidiary EBITDA for that Fiscal Quarter shall be
multiplied by four (4);
(ii) if the applicable Restricted Subsidiary
Venture has been open for business to the public for two
(2) full Fiscal Quarters, the applicable Restricted
Subsidiary EBITDA for those Fiscal Quarters shall be
multiplied by two (2); and
(iii) if the applicable Restricted Subsidiary
Venture has been open for business to the public for three
(3) full Fiscal Quarters, the applicable Restricted
Subsidiary EBITDA for those Fiscal Quarters shall be
multiplied by four-thirds (4/3).
"Applicable Margin" means for any Base Rate Loan or LIBOR
Loan during the period commencing on the Closing Date and continuing until
the Maturity Date, the applicable percentage amount to be added to the Base
Rate or LIBO Rate, as the case may be, as set forth in Table One below in
each instance based on the Total Leverage Ratio calculated with regard to the
Argosy Consolidation as of each Fiscal Quarter end, any change in the
applicable percentage amount by reason thereof to be effective as of the 1st
day of the third (3rd) month immediately following each such Fiscal Quarter
end:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
TABLE ONE TABLE TWO
- ----------------------------------------------------------------------------------------------------------
LIBO
BASE RATE RATE COMMITMENT
TOTAL LEVERAGE RATIO MARGIN MARGIN PERCENTAGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater than 4.25 to 1.00 but less than or equal 1.500% 2.750% 0.50%
to 4.75 to 1.00
- ----------------------------------------------------------------------------------------------------------
Greater than 3.75 to 1.00 but less than or equal 1.250% 2.500% 0.375
to 4.25 to 1.00
- ----------------------------------------------------------------------------------------------------------
Greater than 3.25 to 1.0 but less than or equal 1.000% 2.250% 0.375%
to 3.75 to 1.00
- ----------------------------------------------------------------------------------------------------------
Greater than 2.75 to 1.0 but less than or equal 0.750% 2.000% 0.250%
to 3.25 to 1.00
- ----------------------------------------------------------------------------------------------------------
Greater than 2.00 to 1.0 but less than or equal 0.500% 1.750% 0.250%
to 2.75 to 1.00
- ----------------------------------------------------------------------------------------------------------
Less than or equal to 2.00 to 1.00 0.250% 1.500% 0.250%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- 9 -
<PAGE>
"Argosy" shall mean Argosy Gaming Company, a Delaware
corporation.
"Argosy I" shall mean that vessel known as Argosy I,
Official No. 693321.
"Argosy I Ship Mortgage" shall mean the First Preferred
Ship Mortgage to be executed by AGC on or before the Closing Date wherein
AGC, as owner and mortgagor, grants a mortgage lien in favor of Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, in and to
Argosy I, as such ship mortgage may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Argosy III" shall mean that vessel known as Argosy III,
Official No. 1023758.
"Argosy III Ship Mortgage" shall mean the First Preferred
Ship Mortgage to be executed by CQP on or before the Closing Date wherein
CQP, as owner and mortgagor, grants a mortgage lien in favor of Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, in and to
Argosy III, as such ship mortgage may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Argosy IV" shall mean that vessel known as Argosy IV,
Official No. 1024067.
"Argosy IV Ship Mortgage" shall mean the First Preferred
Ship Mortgage to be executed by MGC on or before the Closing Date wherein
MGC, as owner and mortgagor, grants a mortgage lien in favor of Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, in and to
Argosy IV, as such ship mortgage may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Argosy V" shall mean that vessel known as Argosy V,
Official No. 972895.
"Argosy V Ship Mortgage" shall mean the First Preferred
Ship Mortgage to be executed by IGC on or before the Closing Date wherein
IGC, as owner and mortgagor, grants a mortgage lien in favor of Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, in and to
Argosy V, as such ship mortgage may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Argosy VI" shall mean that vessel known as Argosy VI,
Official No. 1054147.
"Argosy VI Ship Mortgage" shall mean the First Preferred
Ship Mortgage to be executed by IGCLP as of the Level Two Commitment Increase
Effective Date, or upon
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<PAGE>
the closing of the Level Two Term Loan, as the case may be, wherein IGCLP, as
owner and mortgagor, grants a mortgage lien in favor of Agent Bank on behalf
of the Lenders, the Swingline Lender and the L/C Issuer, in and to Argosy VI,
as such ship mortgage may be amended, supplemented or otherwise modified from
time to time.
"Argosy Consolidation" shall mean collective reference to
the Borrower Consolidation, IGCLP and BOSCLP on a consolidated basis, without
regard to any Unrestricted Subsidiary or other Affiliate of any of them.
"Argosy Dividends" shall mean collective reference to any
and all Cash dividends or Distributions to any stockholder of Argosy by
reason of its capital stock (common or preferred) in Argosy, including,
without limitation, Share Repurchases.
"Argosy Owned Facilities" shall mean collective reference
to the Hotel/Casino Facilities, exclusive of the Lawrenceburg Casino
Facilities until the occurrence of the Lawrenceburg Buyout, together with
each Restricted Subsidiary Venture.
"Assets" shall mean the total assets of the Argosy
Consolidation determined in accordance with GAAP.
"Assignment and Assumption Agreement" shall mean the
document evidencing an assignment of a Syndication Interest by any Lender to
an Eligible Assignee in the form of the Assignment, Assumption and Consent
Agreement marked "Exhibit L", affixed hereto and by this reference
incorporated herein and made a part hereof.
"Assignment of Alton Development Agreement" shall mean that
Assignment of Development Agreement to be executed by AGC on or before the
Closing Date pursuant to which, among other things, AGC assigns a present
interest in the Alton Development Agreement to Agent Bank on behalf of the
Lenders, the Swingline Lender and the L/C Issuer in consideration of the Bank
Facilities.
"Assignments" shall mean a collective reference to the
Alton Assignment of Permits, Contracts, Rents and Revenues, the Baton Rouge
Assignment of Permits, Contracts, Rents and Revenues, the Riverside
Assignment of Permits, Contracts, Rents and Revenues, the Sioux City
Assignment of Permits, Contracts, Rents and Revenues, and the Assignment of
Alton Development Agreement.
"Assumption and Consent Agreement" shall mean the document
evidencing an increase of the Aggregate Commitment and assumption of such
increase by a Lender or Eligible Assignee in the form of the Assumption and
Consent Agreement marked "Exhibit K", affixed hereto and by this reference
incorporated herein and made a part hereof.
- 11 -
<PAGE>
"Authorized Representative(s)" shall mean, relative to the
Borrowers, those of the respective officers whose signatures and incumbency
shall have been certified to Agent Bank and the Banks as required by and
defined in Section 3.07 of the Credit Agreement with the authority and
responsibility to deliver Notices of Borrowing, Continuation/Conversion
Notices, Pricing Certificates, Notices of Swingline Advances, requests for
the issuance of Letters of Credit and all other requests, notices, reports,
consents, certifications, actions and authorizations on behalf of Borrowers,
or any of them.
"Available Borrowings" shall mean, at any time, and from
time to time, the aggregate amount available to Borrowers for a Borrowing, a
Swingline Advance or issuance of a Letter of Credit not exceeding the amount
of the Maximum Availability, as of each date of determination.
"BOSCLP" shall mean Belle of Sioux City, L.P., an Iowa
limited partnership.
"BOSCLP Partnership Agreement" shall mean the Agreement of
Limited Partnership of Belle of Sioux City, L.P. dated as of December 1,
1994, by and between IGC, as the general partner and Sioux City Riverboat
Corp. as the limited partner.
"Bank Facilities" shall mean collective reference to the
Credit Facility, Swingline Facility and L/C Facility.
"Bank Facility Termination" or "Bank Facilities
Termination" shall mean indefeasible payment in full of all sums owing under
the Notes and each of the other Loan Documents, the occurrence of the Stated
Expiry Date or other termination of all outstanding Letters of Credit, and
the irrevocable termination of the obligation to advance Borrowings, to
advance Swingline Advances and to issue Letters of Credit.
"Banking Business Day" means (a) with respect to any
Borrowing, payment or rate determination of LIBOR Loans, a day, other than a
Saturday or Sunday, on which Agent Bank is open for business in San Francisco
and on which dealings in Dollars are carried on in the London interbank
market, and (b) for all other purposes any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the States of Illinois,
California, Nevada and/or New York, or is a day on which banking institutions
located in California, Nevada and/or New York are required or authorized by
law or other governmental action to close.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, as amended, 11 U.S.C. Section 101, ET SEQ.
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"Banks" shall have the meaning set forth in the Preamble to
this Credit Agreement.
"Base Rate" shall mean, as of any date of determination,
the rate per annum equal to the higher of (a) the Prime Rate in effect on
such date and (b) the Federal Funds Rate in effect on such date plus one-half
of one percent (1/2 of 1%) (fifty basis points).
"Base Rate Loan" shall mean reference to that portion of
the unpaid principal balance of the Credit Facility bearing interest with
reference to the Base Rate plus the Applicable Margin.
"Baton Rouge Assignment of Permits, Contracts, Rents and
Revenues" shall mean the Assignment of Permits, Contracts, Rents and Revenues
to be executed by AOLI, Jazz and CQP on or before the Closing Date, whereby
AOLI, Jazz and CQP assign to Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer in consideration of the Bank Facilities:
(a) all of their right, title and interest under all spaceleases and
equipment leases and contracts relating to the Baton Rouge Casino Facilities,
(b) all of their right, title and interest in and to all permits, licenses
and contracts relating to the Baton Rouge Casino Facilities, except those
gaming permits and licenses which are unassignable, and (c) all rents,
issues, profits, revenues and income from the operation of the Baton Rouge
Casino Facilities, together with any and all future expansions thereof,
related thereto or used in connection therewith, as such assignment may be
amended, modified, supplemented, extended, renewed or restated from time to
time.
"Baton Rouge Casino Facilities" shall mean the riverboat
casino business and related activities conducted by CQP on the Baton Rouge
Vessel and on the Baton Rouge Real Property and all improvements now or
hereafter situate thereon.
"Baton Rouge Collateral Assignment" shall mean that certain
Collateral Assignment of Loan Documents to be executed by Argosy and Agent
Bank pursuant to which the instruments securing performance under the
Intercompany Notes from Jazz to Argosy are collaterally assigned to Agent
Bank as security for the Bank Facilities and all other sums which may be
owing by Borrowers to the Banks from time to time under the Credit Agreement
as such assignment may be amended, modified, supplemented, extended, renewed
or restated from time to time.
"Baton Rouge Development Agreement" shall mean that certain
Contract under date of September 21, 1994 by and among the City of Baton
Rouge, Louisiana, the Parish of East Baton Rouge (collectively, the
"City-Parish") and Jazz pursuant to which, among other things, Jazz agreed to
construct certain improvements on the Baton Rouge Real Property and also
agreed that certain payments would be made to the City-Parish in
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connection with operation of a riverboat gaming business in connection with
the Baton Rouge Real Property.
"Baton Rouge Fee Property" shall mean that portion of the
Baton Rouge Real Property which is designated as Parcel I, Parcels II A
through II F, Parcel III Tract A, Parcel III Tract B-2 and Parcels IV through
XV on Exhibit T attached hereto and incorporated by reference herein.
"Baton Rouge Hotel Property" shall mean the unimproved real
property more particularly described on that certain exhibit marked "Exhibit
S", affixed hereto, to be contributed by the Borrower Consolidation to an
Unrestricted Subsidiary or other Person which is not a member of the Borrower
Consolidation for the development and operation of a hotel on such land.
"Baton Rouge Lease Property" shall mean those portions of
the Baton Rouge Real Property which are designated as Parcels II G and II H,
Parcel III Tract B-1, and Parcels XVI and XVII, on Exhibit T attached hereto
and incorporated by reference herein.
"Baton Rouge Mortgage" shall mean that certain Mortgage of
Jazz Enterprises, Inc., Argosy of Louisiana, Inc. and Catfish Queen
Partnership in Commendam to Secure Present and Future Indebtedness,
Assignment of Leases and Rents, Security Agreement and Fixture Filing to be
executed by AOLI, Jazz and CQP as of the Closing Date in favor of Agent Bank,
on behalf of the Lenders, the Swingline Lender and the L/C Issuer,
encumbering the Baton Rouge Real Property and other Collateral therein
described for the purpose of securing the Bank Facilities and all other sums
which may be owing by Borrowers to the Banks from time to time under the
terms of the Credit Agreement, as it may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Baton Rouge Parking Lot Lease" shall mean that certain
Contract of Lease with Option to Renew and Right of First Refusal, under date
of October 19, 1995, by and between Phillips Connel Witter, as lessor, and
CQP, as lessee, pursuant to which CQP is granted a leasehold interest in the
Baton Rouge Parking Lot Parcel.
"Baton Rouge Parking Lot Parcel" shall mean that portion of
the Baton Rouge Real Property which is designated as Parcel XVII on Exhibit T
attached hereto and incorporated by reference herein.
"Baton Rouge Real Property" shall mean that real property
which is particularly described by "Exhibit T" attached hereto and
incorporated by reference herein (except that, after the Baton Rouge Hotel
Property has been released as Collateral under the
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<PAGE>
Security Documentation in accordance with Section 5.06, it shall no longer be
part of the Baton Rouge Real Property).
"Baton Rouge Vessel" shall mean collective reference to
Argosy III and to any other documented or undocumented vessels, barges,
watercraft or floating structures which may be utilized by CQP, as of the
Closing Date or thereafter, in the operation of its riverboat casino business
at, or in connection with, the Baton Rouge Real Property.
"Borrower Consolidation" shall mean collective reference to
Borrowers and each Restricted Subsidiary on a consolidated basis, without
regard to any Unrestricted Subsidiary or other Affiliate.
"Borrowers" shall have the meaning ascribed to such term in
the Preamble of this Credit Agreement.
"Borrowing(s)" shall mean the Closing Disbursement and such
amounts as Borrowers may request by Notice of Borrowing to Agent Bank from
time to time to be advanced under the Credit Facility in accordance with the
provisions of Section 2.03 or at the request of Agent Bank pursuant to
Section 2.08 or Section 2.09.
"Breakage Charges" shall have the meaning ascribed to such
term in Section 2.07(c) of the Credit Agreement.
"CQP Partnership Agreement" shall mean that certain Amended
and Restated Articles of Partnership in Commendam of Catfish Queen
Partnership in Commendam, executed under date of September 21, 1994, by AOLI,
as general partner, and by Jazz as partner in commendam.
"Capital Expenditures" shall mean, for any period, without
duplication, the aggregate of all expenditures (whether paid in cash or
accrued as liabilities during that period and including Capitalized Lease
Liabilities) by the Borrower Consolidation during such period that, in
conformity with GAAP, are required to be included in or reflected by the
property, plant or equipment or similar fixed or capital asset accounts
reflected in the consolidated balance sheet of the Borrower Consolidation
(including equipment which is purchased simultaneously with the trade-in of
existing equipment owned by Borrowers to the extent of (a) the gross amount
of such purchase price LESS (b) the cash proceeds of trade-in credit of the
equipment being traded in at such time), but excluding capital expenditures
made in connection with the replacement or restoration of assets, to the
extent reimbursed or refinanced from insurance proceeds paid on account of
the loss of or damage to the assets being replaced or restored, or from
awards of compensation arising from the taking by
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condemnation of or the exercise of the power of eminent domain with respect
to such assets being replaced or restored.
"Capital Proceeds" shall mean the Net Proceeds (after
deducting all reasonable expenses incurred in connection therewith) available
to Borrowers in excess of Five Million Dollars ($5,000,000.00) in the
aggregate during any Fiscal Year from (i) partial or total condemnation or
destruction of any part of the Collateral, (ii) insurance proceeds (other
than rent insurance and business interruption insurance) received in
connection with damage to or destruction of the Collateral, and (iii) the
sale or other disposition of any portion of the Collateral in accordance with
the provisions of this Credit Agreement (not including, however, any proceeds
received by Borrowers, or any of them, from a sale, condemnation, damage or
destruction of FF&E or other personal property if such FF&E or other personal
property is replaced by items of equivalent value and utility, in each case
such exclusion to apply only during any period in which no Default in the
payment of any principal or interest owing under the terms of the Bank
Facilities or an Event of Default has occurred and is continuing).
"Capitalized Lease Liabilities" means all monetary
obligations of the Borrowers, or any of them, under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Credit Agreement, the amount of
such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to
the first date upon which such lease may be terminated by the lessee without
payment of a penalty.
"Cash" shall mean, when used in connection with any Person,
all monetary and non-monetary items owned by that Person that are treated as
cash or the equivalent of cash in accordance with GAAP, consistently applied.
"Cash Collateral Account" shall mean the restricted
depository savings account to be established by Borrowers or Agent Bank on
behalf of Borrowers with L/C Issuer at its offices located at One East First
Street, Reno, Nevada, or at such other office located in the United States as
may be designated from time to time by L/C Issuer, for the purpose of
depositing cash collateral for the aggregate L/C Exposure upon the occurrence
of any Event of Default.
"Cash Collateral Pledge Agreement" shall mean the Pledge
and Assignment of Savings Account Agreement to be executed by Borrowers in
favor of L/C Issuer as of the Closing Date as the same may be amended or
modified from time to time under the terms of which all sums held from time
to time in the Cash Collateral Account are pledged in favor of L/C Issuer to
secure repayment of any funding required under any outstanding Letters of
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<PAGE>
Credit, a copy of which Cash Collateral Pledge Agreement is marked "Exhibit
M", affixed hereto and by this reference incorporated herein and made a part
hereof.
"Cash Equivalents" shall mean, when used in connection with
any Person, that Person's Investments in:
(a) Government Securities maturing within one (1)
year after the date of the making of the Investment;
(b) readily marketable direct obligations of any
State of the United States of America given on the date of
such Investment a credit rating of at least Aa by Moody's
Investors Service, Inc. or AA by Standard & Poor's
Corporation, in each case maturing within one (1) year from
the making of the Investment;
(c) certificates of deposit issued by, bank
deposits in, eurodollar deposits through, bankers'
acceptances of, and repurchase agreements covering
Government Securities executed by, any Lender or, if not a
Lender, any bank incorporated under the laws of the United
States of America or any State thereof and having on the
date of such Investment combined capital, surplus and
undivided profits of at least Two Hundred Fifty Million
Dollars ($250,000,000.00), or total assets of at least Five
Billion Dollars ($5,000,000,000.00), in each case maturing
within one (1) year after the date of the making of the
Investment;
(d) certificates of deposit issued by, bank
deposits in, eurodollar deposits through, bankers'
acceptances of, and repurchase agreements covering
Government Securities executed by, any branch or office
located in the United States of America of a bank
incorporated under the laws of any jurisdiction outside the
United States of America having on the date of such
Investment combined capital, surplus and undivided profits
of at least Five Hundred Million Dollars ($500,000,000.00),
or total assets of at least Fifteen Billion Dollars
($15,000,000,000.00) in each case maturing within one year
after the date of the making of the Investment;
(e) repurchase agreements covering Government
Securities executed by a broker or dealer registered under
Section 15(b) of the Securities Exchange Act of 1934 having
on the date of the Investment capital of at least One
Hundred Million Dollars ($100,000,000.00), maturing within
thirty (30) days after the date of the making of the
Investment; PROVIDED that the maker of the Investment
receives written confirmation of the transfer to
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it of record ownership of the Government Securities on the
books of a "primary dealer" in such Government Securities on
the books of such registered broker or dealer, as soon as
practicable after the making of the Investment;
(f) readily marketable commercial paper of
corporations doing business in and incorporated under the
laws of the United States of America or any State thereof
or of any corporation that is the holding company for a
bank described in clauses (c) or (d) above given on the
date of such Investment a credit rating of at least P-1 by
Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Corporation, in each case maturing within three hundred
sixty-five (365) days after the date of the making of the
Investment;
(g) "money market preferred stock" issued by a
corporation incorporated under the laws of the United
States of America or any State thereof given on the date
of such Investment a credit rating of at least Aa by
Moody's Investors Service, Inc. or AA by Standard & Poor's
Corporation, in each case having an investment period not
to exceed fifty (50) days; PROVIDED that (i) the amount of
all such Investments issued by the same issuer does not
exceed Five Million Dollars ($5,000,000.00) and (ii) the
aggregate amount of all such Investments does not exceed
Fifteen Million Dollars ($15,000,000.00); and
(h) a readily redeemable "money market mutual
fund" advised by a bank described in clauses (c) or (d)
hereof, or an investment advisor registered under Section
203 of the Investment Advisors Act of 1940, that has and
maintains an investment policy limiting its investments
primarily to instruments of the types described in clauses
(a) through (g) hereof and having on the date of such
Investment total assets of at least One Billion Dollars
($1,000,000,000.00).
"Centaur" shall mean Centaur, Inc., an Indiana corporation.
"Change in Control" shall mean the date on which:
(a) Any "person" or "group" (as such terms are
defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) other than William F.
Cellini, F. Lance Callis, Jimmy F. Gallagher, William J.
Enery, John B. Pratt, Sr., James S. Connors and Stephanie
Pratt, each of such Person's immediate family or a trust or
similar entity existing solely for the benefit of such
Person or such Person's immediate family, own
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or control, more than forty percent (40%) of the common
voting stock of Argosy; or
(b) During any period of twenty-four (24)
consecutive months commencing after the Closing Date,
individuals who at the beginning of such period constituted
Argosy's Board of Directors (together with any new or
replacement directors whose election by Argosy's Board of
Directors or whose nomination for election by Argosy's
shareholders, was approved by a vote of at least a majority
of the directors then still in office who were either
directors at the beginning of such period or whose election
or nomination for election was previously so approved)
cease for any reason to constitute a majority of the
directors then in office; or
(c) Argosy fails to own, directly or indirectly,
one hundred percent (100%) of the capital stock interests
of MGC, AGC, IGC, Jazz, AOLI and TIGC or members of the
Borrower Consolidation fail to own one hundred percent
(100%) of the partnership interests in CQP.
"Closing Certificate" shall have the meaning ascribed to
such term in Section 3.07.
"Closing Date" shall mean the date upon which: (i) each
condition precedent required under Article IIIA of this Credit Agreement has
been satisfied or waived and (ii) the Security Documentation has been filed
and/or recorded in accordance with and in the manner required herein and by
the Agent Bank, or such other date as to which Agent Bank and Borrowers agree
in writing.
"Closing Disbursement" shall have the meaning set forth in
Section 2.02(a).
"Closing Instructions" shall mean the Closing Instructions
to be given by Agent Bank to Title Company at or prior to the Closing Date
setting forth the requirements of Lenders for the issuance of the Title
Insurance Policies and other conditions for the closing of the Credit
Facilities, as may be amended or modified prior to the Closing Date to the
reasonable satisfaction of Agent Bank.
"Collateral" shall mean collective reference to all of
Borrowers' right, title and interest in and to: (i) all of the Alton Casino
Facilities, the Riverside Casino Facility, Baton Rouge Casino Facility, the
Vessels and the personal property, FF&E, contract rights, leases, intangibles
and other interests of the Borrowers in the Hotel/Casino Facilities, and each
of them, which are subject to the liens, pledges and security interests
created by the Security Documentation; (ii) all rights of the Borrowers, or
any of them, assigned and/or pledged as
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additional security pursuant to the terms of the Loan Documents and Security
Documentation; and (iii) any and all other property and/or intangible rights,
interest or benefits inuring to or in favor of the Borrowers, or any of them,
which are in any manner assigned, pledged, encumbered or otherwise
hypothecated in favor of Banks or Agent Bank on behalf of Lenders to secure
payment of the Credit Facility.
"Collateral Real Properties" shall mean collective
reference to the real properties, improvements and associated FF&E which are
pledged and encumbered as Collateral securing repayment of the Bank
Facilities, which shall consist of the Alton Casino Facilities, the Riverside
Casino Facilities, and the Baton Rouge Casino Facilities, together with any
other real property or interests therein which may be held by Agent Bank from
time to time to secure repayment of the Bank Facilities.
"Commercial L/C Fee" shall have the meaning set forth in
Section 2.10(c) of this Credit Agreement.
"Commercial Letter(s) of Credit" shall mean a letter or
letters of credit issued by L/C Issuer pursuant to Section 2.09 of this
Credit Agreement for the purpose of assuring payment for goods or equipment
supplied to Borrowers, or any of them.
"Commitment Fee" shall have the meaning ascribed to such
term in Section 2.10(b) of this Credit Agreement.
"Commitment Increases" shall mean collective reference to
the Level One Commitment Increase and the Level Two Commitment Increase.
"Commitment Percentage" shall mean the per annum percentage
to be used in the calculation of the Commitment Fee based on the Leverage
Ratio of the Borrower Consolidation, determined as set forth in Table Two of
the definition of Applicable Margin.
"Compliance Certificate" shall mean a compliance
certificate as described in Section 5.08(a)(v) substantially in the form of
"Exhibit F", affixed hereto and by this reference incorporated herein and
made a part hereof to be completed and signed by an Authorized Representative.
"Conseco" shall mean Conseco Entertainment, L.L.C., an
Indiana limited liability company.
"Conseco IGCLP Loans" as of any date of determination,
shall mean collective reference to the unpaid balance of principal owing by
IGCLP to Conseco on each
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"Capital Loan" (as defined in the IGCLP Partnership Agreement) made by
Conseco to the IGCLP.
"Consent Solicitation" shall have the meaning set forth in
Recital Paragraph G.
"Consent Solicitation Consideration" shall mean the
aggregate amount to be paid to the holders of the First Mortgage Notes in
consideration of the amendments to the Senior Indenture and Senior Indenture
Security Documents pursuant to the Consent Solicitation and in accordance
with the terms of the Purchase/Solicitation Statement.
"Contingent Liability(ies)" shall mean, as to any Person,
any obligation of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness, leases or dividends ("primary obligations") of
any other Person (the "primary obligor") (other than Indebtedness of the
Borrower Consolidation, or any of them) in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (by means of loans, capital contributions or otherwise) (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or support the solvency or level of any balance sheet
item of the primary obligor or any "keep well," "make well" or other
arrangement of whatever nature given for the purpose of assuring or holding
harmless an obligee against loss with respect to any obligation of such
primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation,
(d) to make payment in respect of any net liability arising in connection
with any Interest Rate Hedges, foreign currency exchange agreement, commodity
hedging agreement or any similar agreement or arrangement in any such case if
the purpose or intent of such agreement is to provide assurance that such
primary obligation will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such primary
obligation will be protected (in whole or in part) against loss in respect
thereof or (e) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided, however, that
the term Contingent Liability shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount of
any Contingent Liability shall be deemed to be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Contingent Liability is made (unless the Contingent Liability is limited by
its terms to a lesser amount, in which case to the extent of such amount) or,
if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof as determined by Borrowers in good faith, PROVIDED that
(y) the amount of any Contingent Liability consisting of a completion
guaranty shall be
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deemed to be zero unless and until Borrowers' independent auditors have
quantified the amount of the exposure thereunder (and thereafter shall be
deemed to be the amount so quantified from time to time), and (z) the amount
of any Contingent Liability consisting of Interest Rate Hedges or of a
"keep-well", "make well" or other similar arrangement shall be deemed to be
zero unless and until either Borrower or any Restricted Subsidiary is
required to make payment with respect thereto (and shall thereafter be deemed
during the relevant period to be the amount required to be paid and after
paid in full, zero).
"Continuation/Conversion Notice" shall mean a notice of
continuation or conversion of or to a LIBOR Loan and certificate duly
executed by an Authorized Representative, substantially in the form of that
certain exhibit marked "Exhibit D", affixed hereto and by this reference
incorporated herein and made a part hereof.
"Convert, Conversion and Converted" shall refer to a
Borrowing at or continuation of a particular interest rate basis or
conversion of one interest rate basis to another pursuant to Section 2.05(c).
"Convertible Notes" shall have the meaning set forth in
Recital Paragraph D.
"Convertible Notes Indenture" shall have the meaning set
forth in Recital Paragraph D.
"Corporate Borrowers" shall have the meaning set forth in
Section 3.05.
"Credit Agreement" shall mean this Credit Agreement
executed by and among Borrowers and Banks setting forth the terms and
conditions of the Credit Facility, Swingline Facility and L/C Facility,
together with all Schedules, Exhibits and other attachments thereto, as the
same may be amended, modified, supplemented, extended, renewed or restated
from time to time.
"Credit Facility" shall mean the agreement of Lenders to
fund a revolving line of credit, subject to the terms and conditions set
forth in this Credit Agreement and the Revolving Credit Note, up to the
Maximum Permitted Balance.
"Default" shall mean the occurrence or non-occurrence, as
the case may be, of any event that with the giving of notice or passage of
time, or both, would become an Event of Default.
"Default Rate" shall have the meaning set forth in Section
2.11(b) with respect to defaults occurring under the Notes and shall mean the
Base Rate plus the then Applicable Margin plus two percent (2%) per annum for
all other purposes.
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"Defaulting Lender" means any Lender which fails or refuses to
perform its obligations under the Credit Facility within the time period
specified for performance of such obligation or, if no time frame is specified,
if such failure or refusal continues for a period of five (5) Banking Business
Days after notice from Agent Bank.
"Defeasance Account" shall mean the irrevocable special
purpose restricted account to be established by Borrowers with the Defeasance
Custodian pursuant to the Defeasance Account Agreement into which the Defeasance
Consideration shall be deposited on or before the Closing Date.
"Defeasance Account Agreement" shall mean the Irrevocable
Special Purpose Restricted Account, Control and Security Agreement to be
executed by and among Borrowers, as trustors, the Defeasance Custodian and Agent
Bank as of the Closing Date, as the same may be amended, modified, supplemented,
extended, renewed or restated from time to time, a copy of which is marked
"Exhibit H", affixed hereto, under the terms of which: (a) the Defeasance
Consideration is irrevocably deposited into the Defeasance Account for the sole
and exclusive purposes of: (i) paying when due all accrued interest under the
Outstanding First Mortgage Notes, and (ii) paying all principal and premium
necessary to redeem and pay in full the Outstanding First Mortgage Notes on or
before July 1, 2000, and (b) all sums held from time to time in the Defeasance
Account are pledged in favor of Agent Bank to secure repayment of the Bank
Facilities.
"Defeasance Consideration" shall mean the Cash to be deposited
with the Defeasance Custodian in the Defeasance Account in an aggregate amount,
calculated to the satisfaction of Agent Bank, sufficient to fully pay all
principal, premium and interest owing under the Outstanding First Mortgage Notes
and the Senior Indenture as the same become due from time to time subsequent to
the Closing Date and in connection with the full payment and redemption of the
Outstanding First Mortgage Notes on or before July 1, 2000.
"Defeasance Custodian" shall mean Wells Fargo Bank, National
Association, in its capacity as custodian and intermediary under the Defeasance
Account Agreement.
"Defeased Debt" shall mean the Indebtedness evidenced by the
Outstanding First Mortgage Notes and Senior Indenture following the occurrence
of the First Mortgage Notes Redemption and the First Mortgage Notes Defeasance.
"Designated Deposit Account" shall mean a deposit account to
be maintained by Borrowers with Agent Bank, as from time to time designated in
writing by an Authorized Representative.
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"Development Agreements" shall mean collective reference to
the Alton Development Agreement, the Riverside Development Agreement, the Baton
Rouge Development Agreement, the Sioux City Development Agreement and the
Lawrenceburg Development Agreement.
"Distributions" shall mean and collectively refer to any and
all management fees (including, without limitation, all management, consulting
and financial advisory fees paid to the holders of Minority Interest
Percentages), payments, advances or other distributions, fees or compensation of
any kind or character whatsoever, other than within the Borrower Consolidation,
but shall not include consideration paid for financial consulting services
incurred in connection with the Bank Facilities and Subordinated Debt and for
tangible and intangible assets in an arms length exchange for fair market value,
trade payments made and other payments for liabilities incurred in the ordinary
course of business or compensation to officers, directors and employees of
Borrowers in the ordinary course of business or compensation to consultants paid
in an arms length transaction for fair market value for the purpose of pursuing
or investigating prospective business opportunities.
"EBITDA" shall mean with reference to any Person, for any
fiscal period under review, the sum of (i) Net Income for that period, plus
(ii) any extraordinary loss reflected in such Net Income, minus (iii) any
extraordinary gain reflected in such Net Income, plus (iv) Interest Expense
for that period, plus (v) the aggregate of amortization of fees and expenses
incurred and paid in connection with the closing of the Bank Facilities, the
New Indenture and issuance of the Senior Subordinated Notes, the Commitment
Increases and/or Term Loans described in Section 2.15 and Subordinated Debt
to the extent not included in (iv) above as Interest Expense, plus (vi) the
aggregate amount of federal and state taxes on or measured by income for that
period (whether or not payable during that period), plus (vii) depreciation,
amortization, pre-opening and all other non-cash expenses for that period
(including, without limitation, any adjustments to the book value of AOLI,
Jazz or CQP relating to the Baton Rouge Casino Facility), in each case
determined in accordance with GAAP and, in the case of items (ii), (iv), (v),
(vi) and (vii), only to the extent deducted in the determination of Net
Income for that period.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Economic EBITDA" with reference to the Argosy Consolidation
as of any Fiscal Quarter end shall mean EBITDA (including Annualized EBITDA of
each applicable Restricted Subsidiary) less the Minority EBITDA Adjustment, in
each case determined for the Fiscal Quarter under review and the three (3)
immediately preceding Fiscal Quarters.
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<PAGE>
"Eligible Assignee" means (a) another Lender, (b) with respect
to any Lender, any Affiliate of that Lender, (c) any commercial bank having a
combined capital and surplus of Fifty Million Dollars ($50,000,000.00) or more
that is (i) organized under the Laws of the United States of America, any State
thereof or the District of Columbia or (ii) organized under the Laws of any
other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, PROVIDED that (A)
such bank is acting through a branch or agency located in the United States of
America and (B) such Bank is otherwise exempt from withholding of tax on
interest and delivers Form 1001 or Form 4224 at the time of any assignment, (d)
a financial institution which is an accredited investor as defined by the
Securities Act of 1934 and is otherwise exempt from withholding tax on interest
at the time of any assignment, and (e) with respect to such commercial bank or
financial institution as described in (a) through (d) above, no finding of
unsuitability has been made or determined by any Gaming Authority.
"Eligible Subparticipant" shall mean: (i) any Eligible
Assignee, and (ii) any other Person which is a bank, savings and loan
association or other financial or lending institution which has not been found
unsuitable as a lender by any Gaming Authority.
"Eligible Term Lender" shall mean: (i) any Eligible
Subparticipant, and (ii) any other Person that is not a Related Entity which has
not been found unsuitable as a lender by any Gaming Authority.
"Environmental Certificate" shall mean the Certificate and
Indemnification Regarding Hazardous Materials to be executed by Borrowers on or
before the Closing Date and delivered to Agent Bank as a further inducement to
the Banks to establish the Bank Facilities, as it may be amended, modified,
extended, renewed or restated from time to time.
"Equity Offering" shall mean the issuance and sale of
additional shares of common voting stock by Argosy to the public after the
Closing Date in exchange for Cash or Cash Equivalents.
"Event of Default" shall mean any event of default as
defined in Section 7.01 hereof.
"Excess Capital Proceeds" shall have the meaning ascribed to
such term in Section 5.01 of this Credit Agreement.
"Exchange Senior Subordinated Notes" shall have the meaning
set forth in Recital Paragraph F.
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<PAGE>
"FF&E" shall mean collective reference to any and all
furnishings, fixtures and equipment, including, without limitation, all gaming
devices, slots and associated equipment, which have been installed or are to be
installed and used in connection with the operation of the Hotel/Casino
Facilities and those items of furniture, fixtures and equipment which have been
purchased or leased or are hereafter purchased or leased by Borrowers, or any of
them, in connection with the Hotel/Casino Facilities.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989.
"Federal Funds Rate" means, as of any date of determination,
the rate set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such date opposite the caption "Federal Funds
(Effective)". If for any relevant date such rate is not yet published in
H.15(519), the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective Rate". If
on any relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent Bank. For purposes of the Credit Agreement, any change in
the Base Rate due to a change in the Federal Funds Rate shall be effective as of
the opening of business on the effective date of such change.
"Fee Side Letter" shall mean the Confidential Fee Letter dated
April 16, 1999 executed by and between Agent Bank and Argosy concerning payment
of the fees in connection with the Credit Facility, as more particularly therein
described.
"Financial Covenants" shall mean collective reference to the
financial covenants set forth in Article VI of this Credit Agreement.
"Financing Statements" shall mean collective reference to the
Financing Statements (Argosy), the Financing Statements (AGC), the Financing
Statements (MGC), the Financing Statements (TIGC), the Financing Statements
(AOLI), the Financing Statements (Jazz), the Financing Statements (CQP), the
Financing Statements (IGC) and, after the Level Two Commitment Increase
Effective Date or the closing of the Level Two Term Loan, as applicable, the
Financing Statements (IGCLP).
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<PAGE>
"Financing Statements (AGC)" shall mean the Uniform Commercial
Code financing statements to be executed by AGC, as Debtor, and by Agent Bank,
as Secured Party, and filed in the Office of the Secretary of State of the State
of Illinois and in the Office of the County Recorder of Madison County,
Illinois, in order to perfect the security interest granted to Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer under the
Security Agreement (AGC) and other Security Documentation in accordance with
requirements of the Illinois Uniform Commercial Code, as they may be amended,
modified, supplemented, extended, renewed or restated from time to time.
"Financing Statements (AOLI)" shall mean the Uniform
Commercial Code financing statements to be executed by AOLI, as Debtor, and by
Agent Bank, as Secured Party, and filed in the Office of the Secretary of State
of the State of Illinois and in the Office of the Recorder of East Baton Rouge
Parish, Louisiana, in order to perfect the security interest granted to Agent
Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer under the
Security Agreement (AOLI) and other Security Documentation in accordance with
requirements of the Louisiana Uniform Commercial Code, as they may be amended,
modified, supplemented, extended, renewed or restated from time to time.
"Financing Statements (Argosy)" shall mean the Uniform
Commercial Code financing statements to be executed by Argosy, as Debtor, and by
Agent Bank, as Secured Party, and filed in the Office of the Secretary of State
of the State of Illinois, in the Office of the Secretary of State of Missouri,
in the Office of the County Recorder of Madison County, Illinois and in the
office of the County Recorder of Platte County, Missouri, in order to perfect
the security interest granted to Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer under the Security Agreement (Argosy) and
other Security Documentation in accordance with requirements of the Illinois
Uniform Commercial Code, as they may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Financing Statements (CQP)" shall mean the Uniform Commercial
Code financing statements to be executed by CQP, as Debtor, and by Agent Bank,
as Secured Party, and filed in the Office of the Secretary of State of the State
of Illinois and in the Office of the Recorder of East Baton Rouge Parish,
Louisiana, in order to perfect the security interest granted to Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer under the
Security Agreement (CQP) and other Security Documentation in accordance with
requirements of the Louisiana Uniform Commercial Code, as they may be amended,
modified, supplemented, extended, renewed or restated from time to time.
"Financing Statements (IGC)" shall mean the Uniform Commercial
Code financing statements to be executed by IGC, as Debtor, and by Agent Bank,
as Secured Party, and filed in the Office of the Secretary of State of the State
of Illinois, in the Office
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of the Secretary of State of the State of Iowa and in the Office of the
County Recorder of Woodbury County, Iowa, in order to perfect the security
interest granted to Agent Bank on behalf of the Lenders, the Swingline Lender
and the L/C Issuer under the Security Agreement (IGC) and other Security
Documentation in accordance with requirements of the Iowa Uniform Commercial
Code, as they may be amended, modified, supplemented, extended, renewed or
restated from time to time.
"Financing Statements (IGCLP)" shall mean the Uniform
Commercial Code Financing Statements to be executed, as of the Level Two
Commitment Increase Effective Date or the closing of the Level Two Term Loan, by
IGCLP, as Debtor, and by Agent Bank, as Secured Party, and filed in the Office
of the Secretary of State of the State of Illinois, in the Office of the
Secretary of State of the State of Indiana and in the Office of the County
Recorder of Dearborn County, Indiana, in order to perfect the security interest
granted to Agent Bank on behalf of the Lenders, the Swingline Lender and the L/C
Issuer under the Security Agreement (IGCLP) and other Security Documentation in
accordance with requirements of the Indiana Uniform Commercial Code, as they may
be amended, modified, supplemented, extended, renewed or restated from time to
time.
"Financing Statements (Jazz)" shall mean the Uniform
Commercial Code financing statements to be executed by Jazz, as Debtor, and by
Agent Bank, as Secured Party, and filed in the Office of the Recorder of East
Baton Rouge Parish, Louisiana, in order to perfect the security interest granted
to Agent Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer
under the Security Agreement (Jazz) and other Security Documentation in
accordance with requirements of the Louisiana Uniform Commercial Code, as they
may be amended, modified, supplemented, extended, renewed or restated from time
to time.
"Financing Statements (MGC)" shall mean the Uniform
Commercial Code financing statements to be executed by MGC, as Debtor, and by
Agent Bank, as Secured Party, and filed in the Office of the Secretary of
State of the State of Illinois, in the Office of the Secretary of State of
the State of Missouri and in the Office of the County Recorder of Platte
County, Missouri, in order to perfect the security interest granted to Agent
Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer under
the Security Agreement (MGC) and other Security Documentation in accordance
with requirements of the Missouri Uniform Commercial Code, as they may be
amended, modified, supplemented, extended, renewed or restated from time to
time.
"Financing Statements (TIGC)" shall mean the Uniform
Commercial Code financing statements to be executed by TIGC, as Debtor, and by
Agent Bank, as Secured Party, and filed in the Office of the Secretary of State
of the State of Illinois, in the Office
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of the Secretary of State of the State of Indiana and in the Office of the
County Recorder of Dearborn County, Indiana, in order to perfect the security
interest granted to Agent Bank on behalf of the Lenders, the Swingline Lender
and the L/C Issuer under the Security Agreement (TIGC) and other Security
Documentation in accordance with requirements of the Indiana Uniform
Commercial Code, as they may be amended, modified, supplemented, extended,
renewed or restated from time to time.
"First Mortgage Notes" shall have the meaning set forth in
Recital Paragraph C.
"First Mortgage Notes Defeasance" shall mean the contract
defeasance of the Outstanding First Mortgage Notes on the Closing Date by the
funding of the Defeasance Account with the Defeasance Consideration pursuant to
the terms of the Defeasance Account Agreement.
"First Mortgage Notes Redemption" shall mean the purchase and
acquisition by Borrowers of no less than eighty-five percent (85%) of the
outstanding principal amount of the First Mortgage Notes pursuant to the Tender
Offer and in accordance with the terms of the Purchase/Solicitation Statement.
"Fiscal Quarter" shall mean the consecutive three (3) month
periods during each Fiscal Year beginning on January 1, April 1, July 1 and
October 1 and ending on March 31, June 30, September 30 and December 31,
respectively.
"Fiscal Year" shall mean the fiscal year period beginning
January 1 of each calendar year and ending on the following December 31.
"Fiscal Year End" shall mean December 31 of each calendar year.
"Fixed Charge Coverage Ratio" as of the end of any Fiscal
Quarter shall mean with reference to the Argosy Consolidation, the ratio of
Adjusted Cash Flow to Adjusted Fixed Charges.
"Fixed Charges" shall mean (without regard to the Defeased
Debt) the sum of (i) Interest Expense (expensed and capitalized) for the Fiscal
Quarter under review, together with the three (3) immediately preceding Fiscal
Quarters, plus (ii) any other Contingent Liability of the type described in
clause (b)(ii) of the definition thereof actually paid during the Fiscal Quarter
under review, together with the three (3) immediately preceding Fiscal Quarters,
plus (iii) the current portion of long-term Indebtedness (exclusive of the
amount due under the Credit Facility on the Maturity Date) as of the end of the
Fiscal Quarter under review, plus (iv) the current portion of Capitalized Lease
Liabilities as of the
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<PAGE>
end of the Fiscal Quarter under review, plus (v) Argosy Dividends paid in
Cash during the Fiscal Quarter under review, together with the three (3)
immediately preceding Fiscal Quarters.
"Funded Debt" of the Argosy Consolidation shall mean for any
Fiscal Quarter the sum of: (i) the average of the Aggregate Outstandings as of
the last day of each calendar month during such Fiscal Quarter, plus (ii) the
total as of the last day of such period of the unpaid principal balance of both
the long-term and current portions (without duplication) of all other
Indebtedness (exclusive of the Defeased Debt) and Capitalized Lease Liabilities
shown on the financial statements of the Argosy Consolidation prepared in
accordance with GAAP.
"Funded Outstandings" shall mean the unpaid principal amount
outstanding on the Credit Facility as of any given date of determination, not
including Swingline Outstandings or the amount of any Potential L/C Exposure or
L/C Exposure.
"Funding Date" shall mean the date on which the Closing
Disbursement is advanced by Lenders and each date upon which Lenders fund
Borrowings requested by Borrowers in accordance with the provisions of Section
2.03 or at the request of Agent Bank pursuant to Section 2.08 or Section 2.09.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination, in each instance consistently applied.
"Gaming Authorities" shall mean, without limitation,
collective reference to the Illinois Gaming Board, the Indiana Gaming
Commission, the Iowa Racing and Gaming Commission, the Louisiana Gaming
Control Board, the Missouri Gaming Commission, and any other applicable
Governmental Authority or administrative state or local agency involved in
the regulation of gaming and gaming activities conducted at the Hotel/Casino
Facilities.
"Gaming Devices" shall mean slot machines and other devices
which constitute gaming devices and related equipment.
"Gaming Laws" shall mean all statutes, rules, regulations,
ordinances, codes and administrative or judicial precedents pursuant to which
any Gaming Authority possesses
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regulatory licensing or permit authority over gambling, gaming or casino
activities conducted by any member of the Borrower Consolidation at the
Hotel/Casino Facilities.
"Gaming Permits" shall mean collective reference to every
license, permit or other authorization required to own, operate and otherwise
conduct gambling, gaming and casino activities at the Hotel/Casino Facilities,
including, without limitation, all licenses granted by the Gaming Authorities.
"Government Securities" means readily marketable (a) direct
full faith and credit obligations of the United States of America or obligations
guaranteed by the full faith and credit of the United States of America and (b)
obligations of an agency or instrumentality of, or corporation owned, controlled
or sponsored by, the United States of America that are generally considered in
the securities industry to be implicit obligations of the United States of
America.
"Governmental Authority" or "Governmental Authorities" shall
mean any federal, state, regional, county or municipal governmental agency,
board, commission, officer or official whose consent or approval is required or
whose regulations must be followed as a prerequisite to (i) the continued
operation and occupancy of the Hotel/Casino Facilities or (ii) the performance
of any act or obligation or the observance of any agreement, provision or
condition of whatever nature herein contained.
"Hazardous Materials Claims" shall have the meaning set
forth in Section 5.21.
"Hazardous Materials Laws" shall have the meaning set forth
in Section 5.21.
"Hotel/Casino Facilities" shall mean collective reference to
Alton Casino Facilities, Baton Rouge Casino Facilities, Lawrenceburg Casino
Facilities, Riverside Casino Facilities and Sioux City Casino Facilities,
together with any future expansions thereof, related thereto or used in
connection therewith, and all appurtenances thereto.
"IGCLP" shall mean Indiana Gaming Company, L.P., an Indiana
limited partnership.
"IGCLP Partnership Agreement" shall mean the Second Amended
and Restated Agreement of Limited Partnership of Indiana Gaming Company, L.P.
dated as of February 21, 1996, executed by and among IGC, as the general
partner, and Conseco, Centaur and Ratcliff, as the limited partners.
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"Indebtedness" shall mean, as to any Person, with-out
duplication, (a) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money, (b) the deferred purchase price of
property or services (other than accrued expenses, tax liability, deferred
taxes, and trade accounts payable less than ninety (90) days past due and other
accrued or deferred liabilities incurred in the ordinary course of business)
which in accordance with GAAP would be shown on the liability side of the
balance sheet of such Person, (c) the face amount of all letters of credit to
the extent not secured with Cash, issued for the account of such Person and all
drafts drawn thereunder, (d) all obligations under conditional sale or other
title retention agreements relating to property purchased by such Person, (e)
all liabilities of the type described in clauses (a) through (d) or (f) of this
definition secured by (or for which the holder of any such liability has an
existing right, contingent or otherwise, to be secured by) any lien or
encumbrance on any property owned by such Person, whether or not such
liabilities have been assumed by such Person, (f) all Capitalized Lease
Liabilities of such Person, and (g) all Contingent Liabilities of such Person in
respect of any indebtedness, obligations or liabilities of any other Person of
the type referred to in clauses (a)-(f) of this definition.
"Initial Senior Subordinated Notes" shall have the meaning set
forth in Recital Paragraph E.
"Intercompany Notes" shall mean a collective reference to
those intercompany promissory notes which are particularly described on the
Schedule of Intercompany Notes marked Schedule 4.08(b), affixed hereto and by
this reference incorporated herein and made a part hereof.
"Intercreditor Agreement" shall mean each agreement to be
executed by and among Agent Bank, on behalf of itself and each of the Banks
(upon the prior approval of Requisite Lenders) and the holders of all Pari
Passu Notes, or the authorized agent, trustee or other representative thereof
under any loan agreement, indenture, document or other agreement evidencing
such authority to act on behalf of such holders, setting forth the terms and
understandings upon which: (i) any Liens securing such Pari Passu Obligations
shall be equal, ratable and pari passu with the Liens securing the
Obligations, (ii) the parties thereto agree as to the disposition and
priority of payment between the Obligations and the Pari Passu Obligations
both before and after any insolvency case involving any member of the
Borrower Consolidation, (iii) the parties thereto agree as to the disposition
of proceeds in the event of any realization upon any Collateral securing both
the Obligations and the Pari Passu Obligations, and (iv) the parties thereto
agree as to any other matters deemed reasonably necessary by them, or any of
them, with respect to the Obligations and the Pari Passu Obligations,
including, without limitation, voting rights, title insurance, declaration of
default, enforcement of remedies and any other matters customarily provided
in pari passu intercreditor arrangements in comparable financing transactions.
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"Interest Expense" shall mean with respect to any Person, as
of the last day of any fiscal period under review, the sum of (i) all interest
(without duplication but including capitalized interest), fees and other charges
for that fiscal period incurred by such Person to a lender in connection with
borrowed money (including any obligations for fees payable to the issuer of any
letter of credit) or the deferred purchase price of assets that are considered
"interest expense" under GAAP; provided, however, that the amortization of fees
and expenses incurred and paid in connection with the closing of the Bank
Facilities, the New Indenture and issuance of the Senior Subordinated Notes, the
Commitment Increases and/or Term Loans described in Section 2.15 and
Subordinated Debt shall be excluded from the determination of Interest Expense,
plus (ii) the portion of the up front costs and expenses for Interest Rate
Hedges (to the extent not included in (i)) fairly allocated to such interest
rate hedges as expenses for such period, plus (iii) the portion of Capital Lease
Liabilities that should be treated as interest in accordance with GAAP.
"Interest Period(s)" shall have the meaning set forth in
Section 2.05(d).
"Interest Rate Hedges" shall mean, with respect to any Person,
all liabilities of such Person under interest rate swap agreements, interest
rate cap agreements, basis swap, forward rate agreements and interest collar or
floor agreements and all other agreements or arrangements designed to protect
such Person against fluctuations in interest rates or currency exchange rates.
"Interest Rate Option" shall have the meaning ascribed to such
term in Section 2.05(b) of the Credit Agreement.
"Investment" shall mean, when used in connection with any
Person, any investment by or of that Person, whether by means of purchase or
other acquisition of stock or other securities of any other Person or by means
of a loan, advance creating a debt, capital contribution, payment under a
guaranty or other debt or equity participation or interest in any other Person,
INCLUDING any partnership and joint venture interests of such Person. The amount
of any Investment shall be the amount actually invested without adjustment for
subsequent increases or decreases in the value of such Investment.
"L/C Agreement(s)" shall mean collective reference to the
Application and Agreement for Standby Letter of Credit and Application for
Commercial Letter of Credit and addendum(s) thereto executed by an Authorized
Officer of Borrowers in favor of L/C Issuer in L/C Issuer's standard form
setting forth the terms and conditions upon which L/C Issuer shall issue a
Letter(s) of Credit, as the same may be amended, modified, supplemented,
extended, renewed or restated from time to time.
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"L/C Exposure" shall mean the aggregate amount which L/C
Issuer may be required to fund or is contingently liable for disbursement under
all issued and outstanding Letter(s) of Credit, which amount shall be determined
by subtracting from the aggregate of the Stated Amount of each such Letter(s) of
Credit (to the extent such Letter of Credit is not secured by Cash deposited
into the Cash Collateral Account and subject to the Cash Collateral Pledge
Agreement), the principal amount of all L/C Reimbursement Obligations which have
accrued and have been fully satisfied as of each date of determination and which
reduce the amount that can be drawn thereunder.
"L/C Facility" shall mean the agreement of L/C Issuer to issue
Letters of Credit subject to the terms and conditions and up to the maximum
amounts and duration as set forth in Section 2.09 of this Credit Agreement.
"L/C Fees" shall mean collective reference to Standby L/C Fees
and Commercial L/C Fees.
"L/C Issuer" shall have the meaning set forth in the Preamble
of this Credit Agreement.
"L/C Reimbursement Obligation(s)" shall mean the obligation of
Borrowers to reimburse L/C Issuer for amounts funded or disbursed under a
Letter(s) of Credit, together with accrued interest thereon.
"LIBO Rate" means, relative to any Interest Period for any
LIBOR Loan, the per annum rate (reserve adjusted as hereinbelow provided) as
published on the applicable Banking Business Day in "Telerate System Reports" by
the British Bankers Association for interest settlement rates relating to London
Interbank Offerings as of 11:00 a.m., London, England time, two (2) Banking
Business Days prior to the beginning of the applicable Interest Period for
delivery on the first day of such Interest Period, for the number of months
comprised therein and in a minimum amount and multiples as set forth in this
Credit Agreement. The foregoing rate of interest shall be reserve adjusted by
dividing the applicable LIBO Rate by a one (1.00) minus the LIBOR Reserve
Percentage, with such quotient to be rounded upward, if necessary, to the
nearest whole multiple of one-hundredth of one percent (0.01%). All references
in this Credit Agreement or other Loan Documents to a LIBO Rate include the
aforesaid reserve adjustment.
"LIBOR Loan" shall mean each portion of the total unpaid
principal under the Credit Facility which bears interest at a rate determined by
reference to the LIBO Rate plus the Applicable Margin.
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"LIBOR Reserve Percentage" means, relative to any Interest
Period for LIBOR Loans made by any Lender, the reserve percentage (expressed as
a decimal) equal to the actual aggregate reserve requirements (including all
basic, emergency, supplemental, marginal and other reserves and taking into
account any transactional adjustments or other scheduled changes in reserve
requirements) applicable to Agent Bank as specified under regulations issued
from time to time by the Federal Reserve Board. The LIBOR Reserve Percentage
shall be based on Regulation D of the Federal Reserve Board or other regulations
from time to time in effect concerning reserves for "Eurocurrency Liabilities"
from related institutions as though Agent Bank were in a net borrowing position.
"Lawrenceburg Assignment of Permits, Contracts, Rents and
Revenues" shall mean the Assignment of Permits, Contracts, Rents and Revenues to
be executed by IGCLP as of the Level Two Commitment Increase Effective Date, or
upon closing of the Level Two Term Loan, as the case may be, whereby IGCLP
assigns to Agent Bank on behalf of the Lenders, the Swingline Lender and the L/C
Issuer in consideration of the Bank Facilities: (a) all of its right, title and
interest under all spaceleases and equipment leases and contracts relating to
the Lawrenceburg Casino Facilities, (b) all of its right, title and interest in
and to all permits, licenses and contracts relating to the Lawrenceburg Casino
Facilities, except those gaming permits and licenses which are unassignable, and
(c) all rents, issues, profits, revenues and income from the operation of the
Lawrenceburg Casino Facilities, together with any and all future expansions
thereof, related thereto or used in connection therewith, as such assignment may
be amended, modified, supplemented, extended, renewed or restated from time to
time.
"Lawrenceburg Buyout" shall mean the purchase and/or
acquisition by Argosy, TIGC or any member of the Borrower Consolidation, such
that the Borrower Consolidation owns one hundred percent (100%) ownership of the
Lawrenceburg Casino Facilities or one hundred percent (100%) of the ownership
and partner interests in IGCLP.
"Lawrenceburg Buyout Effective Date" shall mean the date upon
which the Lawrenceburg Buyout occurs.
"Lawrenceburg Casino Facilities" shall mean the riverboat
casino business and related activities conducted by IGCLP on the Lawrenceburg
Vessel and on the Lawrenceburg Real Property and all improvements now or
hereafter situate thereon.
"Lawrenceburg Closing Instructions" shall mean instructions to
the Title Company from counsel for Agent Bank setting forth the terms and
conditions under which the Lawrenceburg Title Policy is to be issued.
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"Lawrenceburg Development Agreement" shall mean that certain
Riverboat Gaming Development Agreement between the City of Lawrenceburg,
Indiana, and the Indiana Gaming Company, L.P., executed by IGCLP, and by the
City of Lawrenceburg, Indiana under date of April 13, 1994, as amended by that
certain Amendment Number One to Riverboat Gaming Development Agreement under
date of December 28, 1995 and by that certain Amendment Number Two to Riverboat
Gaming Development Agreement under date of August 20, 1996.
"Lawrenceburg Mortgage" shall mean that certain Mortgage,
Fixture Filing and Security Agreement with Assignment of Rents to be executed by
IGCLP as of the Level Two Commitment Increase Effective Date or the closing of
the Level Two Term Loan, as applicable, in favor of Agent Bank, on behalf of the
Lenders, the Swingline Lender and the L/C Issuer, encumbering all real property
which is owned or leased by IGCLP, or which is used in operation of the
Lawrenceburg Casino Facilities, as of the Level Two Commitment Increase
Effective Date or the closing of the Level Two Term Loan, as applicable, and
other Collateral therein described for the purpose of securing the Bank
Facilities and all other sums which may be owing by Borrowers to the Banks from
time to time under the terms of the Credit Agreement, as it may be amended,
modified, supplemented, extended, renewed or restated from time to time.
"Lawrenceburg Permitted Encumbrances" shall mean, at any
particular time with respect to the Lawrenceburg Casino Facilities, (i) Liens
for taxes, assessments or governmental charges not then due, payable and
delinquent, (ii) Liens for taxes, assessments or governmental charges not
then required to be paid pursuant to Section 5.10, (iii) Liens consented to
in writing by Agent Bank upon the approval of Requisite Lenders, (iv) Liens
of legally valid capital leases and purchase money security interests for
acquired FF&E up to the maximum amount permitted under Section 6.09(b), and
only to the extent of the lesser of the purchase money loan or the fair
market value of the acquired FF&E, (v) Liens of legally valid leases for FF&E
at the time of the acquisition thereof, (vi) easements, licenses or
rights-of-way, hereafter granted to any Governmental Authority or public
utility providing services to the Hotel/Casino Facilities and/or Restricted
Subsidiary Venture which do not in any material way affect the marketability
of the same or interfere with the use thereof in the business of the
Borrowers, (vii) judgment and attachment Liens which do not constitute an
Event of Default, (viii) statutory Liens of landlords and liens of carriers,
warehousemen, mechanics, customs and revenue authorities and materialmen and
other similar Liens imposed by law incurred in the ordinary course of
business which could not reasonably be expected to cause a Material Adverse
Change and which are discharged in accordance with Section 5.04, (ix) Liens
incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money
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bonds and other similar obligations; (x) leases or subleases granted to
others not interfering in any material respect with the ordinary conduct of
the business of the Borrower Consolidation, or any of them; (xi) the
replacement or renewal of any Lien otherwise permitted hereunder; (xii) minor
defects, encroachments or irregularities in title not interfering in any
material respect with the ordinary conduct of the business of the Borrower
Consolidation, or any of them; and (xiii) Liens in existence as of the Level
Two Commitment Increase Effective Date or as of the closing of the Level Two
Term Loan, so long as such Liens are not created or perfected in
contemplation of such acquisition or designation.
"Lawrenceburg Real Property" shall mean any real property
owned or leased by IGCLP, or used in operation of the Lawrenceburg Casino
Facilities, as of the Closing Date, together with any real property which is
acquired or leased by IGCLP, or used in operation of the Lawrenceburg Casino
Facilities, subsequent to the Closing Date.
"Lawrenceburg Sale" shall mean the sale or divestment by
Argosy of its ownership interest in TIGC or sale by Argosy and/or TIGC of all of
their respective right, title and interest in and to the IGCLP and/or the
Lawrenceburg Casino Facilities.
"Lawrenceburg Title Insurance Policy" shall mean an ALTA
Extended Coverage Lender's Policy of Title Insurance to be issued by Title
Company acceptable to Agent Bank, insuring the Lawrenceburg Mortgage as a first
mortgage lien on the Lawrenceburg Real Property subject only to the Lawrenceburg
Permitted Encumbrances, all in accordance with the Lawrenceburg Closing
Instructions.
"Lawrenceburg Vessel" shall mean collective reference to
Argosy VI and to any other documented or undocumented vessels, barges,
watercraft or floating structures which may be utilized by IGCLP, as of the
Closing Date or thereafter, in the operation of its riverboat casino business
at, or in connection with, the Lawrenceburg Casino Facilities.
"Laws" means, collectively, all international, foreign,
federal, state and local statutes, maritime laws, treaties, rules, regulations,
ordinances, codes and administrative or judicial precedents.
"Lender Reply Period" shall have the meaning set forth in
Section 9.10(d).
"Lenders" shall have the meaning set forth in the Preamble
to this Credit Agreement. With respect to matters requiring the consent to or
approval of all Lenders at any given time, all then existing Defaulting
Lenders will be disregarded and excluded, and, for voting purposes only, "all
Lenders" shall be deemed to mean "all Lenders other than Defaulting Lenders".
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"Letter(s) of Credit" shall mean collective reference to the
Standby Letter(s) of Credit and/or Commercial Letter(s) of Credit, as the case
may be, issued by L/C Issuer on behalf of Borrowers, or any of them, as the same
may be amended, modified, supplemented, extended, renewed or restated from time
to time.
"Level One Availability" shall mean Seventy-Five Million
Dollars ($75,000,000.00) less (i) in the case of a Level One Commitment
Increase, the amount previously or to be concurrently incurred as a Level One
Term Loan, or (ii) in the case of a Level One Term Loan, the amount of the Level
One Commitment Increase previously or to be concurrently effectuated.
"Level One Commitment Increase" shall have the meaning set
forth in Section 2.15(a).
"Level One Increase Conditions" shall have the meaning set
forth in Section 2.15(a).
"Level One Term Loan" shall mean a term loan which may be
incurred by the Borrower Consolidation for general corporate purposes as
evidenced by Pari Passu Notes subject to the conditions and up to the maximum
aggregate principal amount set forth in Section 2.15(c).
"Level Two Availability" shall mean One Hundred Fifty Million
Dollars ($150,000,000.00) less (i) in the case of a Level Two Commitment
Increase, the amount previously or to be concurrently incurred as a Level Two
Term Loan, or (ii) in the case of a Level Two Term Loan, the amount of the Level
Two Commitment Increase previously or to be concurrently effectuated.
"Level Two Commitment Increase" shall have the meaning set
forth in Section 2.15(b).
"Level Two Increase Conditions" shall have the meaning set
forth in Section 2.15(b).
"Level Two Term Loan" shall mean a term loan which may be
incurred by the Borrower Consolidation for the purpose of effectuating the
Lawrenceburg Buyout as evidenced by Pari Passu Notes subject to the conditions
and up to the maximum aggregate principal amount set forth in Section 2.15(d).
"Liabilities and Costs" means all claims, judgments,
liabilities, obligations, responsibilities, losses, damages (including lost
profits), punitive or treble damages, costs,
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disbursements and expenses (including, without limitation, reasonable
attorneys', experts' and consulting fees and costs of investigation and
feasibility studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present
or future.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan Documents" shall mean the collective reference to this
Credit Agreement, the Revolving Credit Note, the Swingline Note, the Security
Documentation, Environmental Certificate, Alton Development Agreement Estoppel
Certificate and all other instruments and agreements required to be executed by
or on behalf of Borrowers, or any of them, or any other Person in connection
with the Bank Facilities for the benefit of Banks or Agent Bank on behalf of the
Lenders, the Swingline Lender and the L/C Issuer.
"Margin Stock" shall have the meaning provided in Regulation U
of the Board of Governors of the Federal Reserve System.
"Material Adverse Change" shall mean: (i) any set of
circumstances or events which, other than with respect to the Representations
and Warranties set forth in Article IV of the Credit Agreement which shall be
construed to be applicable to circumstances and events existing both as of the
Closing Date (or such earlier date as may be referenced in each particular
provision) and subsequent to the Closing Date, are not in existence as of the
Closing Date, which are material and adverse to (a) the Collateral or (b) the
condition (financial or otherwise) or business operations of the Argosy
Consolidation taken as a whole, or (c) the ability of Borrowers to perform their
respective Obligations under the Loan Documents, or (d) the ability of any of
the Lenders to enforce any of their material rights or remedies under any of the
Loan Documents, or (ii) any events or changes, which, other than with respect to
the Representations and Warranties set forth in Article IV of the Credit
Agreement which shall be construed to be applicable to events and changes
existing both as of the Closing Date (or such earlier date as may be referenced
in each particular provision) and subsequent to the Closing Date, are not in
existence as of the Closing Date and which have or result in a material adverse
effect upon (a) the value of the Hotel/Casino Facilities taken as a whole or the
priority of the security interests granted to Agent Bank, (b) the validity of
any of the Loan Documents, or (c) the use, occupancy or operation of the
Hotel/Casino Facilities taken as a whole.
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"Maturity Date" shall mean June 8, 2004, subject to
acceleration to July 1, 2000, as provided in Section 5.27.
"Maximum Availability" shall mean the Maximum Permitted
Balance less the Aggregate Outstandings.
"Maximum Cap Ex Requirement" shall have the meaning ascribed
to such term in Section 6.05(a) of the Credit Agreement.
"Maximum Permitted Balance" shall mean the maximum amount of
principal which may be outstanding on the Bank Facilities from time to time,
which shall be the lesser of: (a) the Maximum Scheduled Balance, or (b) the
amount to which the Maximum Scheduled Balance is permanently voluntarily reduced
by Borrower pursuant to Section 2.01(c) or is otherwise further reduced or
limited pursuant to Sections 5.01 and 8.02.
"Maximum Scheduled Balance" shall mean the amount of the Total
Commitment, as reduced on each Reduction Date by the Scheduled Reductions.
"Minimum Cap Ex Requirement" shall have the meaning ascribed
to such term in Section 6.05(a) of the Credit Agreement.
"Minority Asset Adjustment" shall mean the amount to be
deducted from the aggregate amount of Assets of the Argosy Consolidation as of
any Fiscal Quarter end in an aggregate amount determined in the following
manner:
(a) that portion of the aggregate amount of Assets of
the Argosy Consolidation attributable to each Minority Venture Project shall be
determined;
(b) each respective amount determined in (a) above
shall be multiplied by the Minority Interest Percentage applicable to each
respective Minority Venture Project; and
(c) the products of each of the calculations made in
(b) above shall be added to determine the aggregate amount of the Minority Asset
Adjustment.
"Minority EBITDA Adjustment" shall mean the amount to be
deducted from EBITDA of the Argosy Consolidation during any specified period in
an aggregate amount determined in the following manner:
(a) that portion of the EBITDA of the Argosy
Consolidation attributable to each Minority Venture Project shall be
determined, which shall be annualized
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in the same manner as described in the definition of Annualized EBITDA with
respect to each Restricted Subsidiary Venture which has been open to the
public for less than four (4) full Fiscal Quarters; Management and advisory
fees paid to Argosy and Conseco shall be deducted from the EBITDA
attributable to the Lawrenceburg Casino Facilities;
(b) each respective amount determined in (a) above
shall be multiplied by the Minority Interest Percentage applicable to each
respective Minority Venture Project; and
(c) the products of each of the calculations made in
(b) above shall be added to determine the aggregate amount of the Minority
EBITDA Adjustment.
"Minority Fixed Charges Adjustment" shall mean the amount to
be deducted from Fixed Charges of the Argosy Consolidation during any specified
period in an aggregate amount determined in the following manner:
(a) that portion of Fixed Charges of the Argosy
Consolidation attributable to each Minority Venture Project shall be determined;
(b) each respective amount determined in (a) above
shall be multiplied by the Minority Interest Percentage applicable to each
respective Minority Venture Project; and
(c) the products of each of the calculations made in
(b) above shall be added to determine the aggregate amount of the Minority Fixed
Charges Adjustment.
"Minority Funded Debt Adjustment" as of the end of any Fiscal
Quarter shall mean the amount to be deducted from Funded Debt of the Argosy
Consolidation as of the end of such Fiscal Quarter in an aggregate amount
determined as of the end of such Fiscal Quarter in the following manner:
(a) that portion of the Funded Debt of the Argosy
Consolidation attributable to each Minority Venture Project shall be determined;
(b) with respect to each portion of Funded Debt, as
determined in (a) above, but exclusive of all amounts identified in (c) below,
for which any member of the Borrower Consolidation is directly or contingently
liable, the amount of each such portion of Funded Debt shall be multiplied by
the Minority Interest Percentage applicable to each respective Minority Venture
Project;
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(c) each portion of Funded Debt as determined in (a)
above, attributable to the Conseco IGCLP Loans shall be identified; and
(d) the products of each of the calculations made in
(b) above, together with the total of the portions of Funded Debt identified in
(c) above, shall be added to determine the aggregate amount of the Minority
Funded Debt Adjustment.
"Minority Interest Expense Adjustment" shall mean the amount
to be deducted from Interest Expense of the Argosy Consolidation during any
specified period in an aggregate amount determined in the following manner:
(a) that portion of Interest Expense of the Argosy
Consolidation attributable to each Minority Venture Project shall be determined;
(b) each respective amount determined in (a) above
shall be multiplied by the Minority Interest Percentage applicable to each
respective Minority Venture Project; and
(c) the products of each of the calculations made in
(b) above shall be added to determine the aggregate amount of the Minority
Interest Expense Adjustment.
"Minority Interest Percentage" shall mean the percentage of
ownership of a Minority Venture Project held by all Persons which are not
members of the Borrower Consolidation.
"Minority Senior Funded Debt Adjustment" as of the end of any
Fiscal Quarter shall mean the amount to be deducted from Senior Funded Debt of
the Argosy Consolidation as of the end of such Fiscal Quarter in an aggregate
amount determined as of the end of such Fiscal Quarter in the following manner:
(a) that portion of the Senior Funded Debt of the
Argosy Consolidation attributable to each Minority Venture Project shall be
determined;
(b) with respect to each portion of Senior Funded
Debt, as determined in (a) above, for which any member of the Borrower
Consolidation is directly or contingently liable, the amount of each such
portion of Senior Funded Debt shall be multiplied by the Minority Interest
Percentage applicable to each respective Minority Venture Project;
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(c) each Obligation of Senior Funded Debt as
determined in (a) above, for which no member of the Borrower Consolidation is
directly or contingently liable, shall be identified; and
(d) the products of each of the calculations made in
(b) above, together with the total of the Senior Funded Debt identified in (c)
above, shall be added to determine the aggregate amount of the Minority Senior
Funded Debt Adjustment.
"Minority Total Liabilities Adjustment" shall mean the amount
to be deducted from Total Liabilities of the Argosy Consolidation as of the end
of any Fiscal Quarter in an aggregate amount determined in the following manner:
(a) that portion of Total Liabilities of the Argosy
Consolidation attributable to each Minority Venture Project shall be determined;
(b) each respective amount determined in (a) above
shall be multiplied by the Minority Interest Percentage applicable to each
respective Minority Venture Project; and
(c) the products of each of the calculations made in
(b) above shall be added to determine the aggregate amount of the Minority Total
Liabilities Adjustment.
"Minority Venture Project" shall mean individual reference and
"Minority Venture Projects" shall mean collective reference to the Lawrenceburg
Casino Facilities (until the occurrence of the Lawrence Buyout Effective Date),
the Sioux City Casino Facilities and each Restricted Subsidiary Venture in which
Requisite Lenders have consented in writing to a minority interest being owned
by a Person or Persons which are not members of the Borrower Consolidation.
"Mortgages" mean collective reference to the Shore Mortgages
and the Ship Mortgages.
"Net Gaming Revenues" shall mean all gaming revenues realized
by the Borrower Consolidation at the Argosy Owned Facilities which are subject
to taxation by a Gaming Authority.
"Net Income" shall mean with respect to any Person for any
fiscal period, the net income of such Person during such fiscal period
determined in accordance with GAAP, consistently applied.
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"Net Proceeds" shall mean the aggregate cash proceeds
received by the Borrower Consolidation in respect of any sale, transfer,
conveyance or disposition of FF&E, net of the direct costs relating to such
sale, transfer, conveyance or disposition of FF&E, amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such sale, transfer, conveyance or
disposition of FF&E, any reserve for adjustment in respect of the sale price
of such FF&E or liabilities associated with such sale, transfer, conveyance
or disposition of FF&E and retained by the Borrower Consolidation and all
Indebtedness assumed by the purchaser in connection with such sale, transfer,
conveyance or disposition of FF&E and all taxes paid or payable as a result
of such sale, transfer, conveyance or disposition.
"Net Worth" of the Argosy Consolidation shall mean Adjusted
Assets, less Adjusted Total Liabilities, as of any given date of determination.
"New Indenture" shall have the meaning set forth in Recital
Paragraph E.
"New Venture" means a casino, hotel, casino/hotel, resort,
casino/resort, riverboat casino, dock casino, entertainment center or similar
facility (or any site or proposed site for any of the foregoing or entity that
provides management or other services or goods to any of the foregoing) owned in
whole (or in part upon the prior written consent of Requisite Lenders) by any
New Venture Subsidiary or owned by a Person in which Argosy or a New Venture
Subsidiary is an owner or equity investor.
"New Venture Investment" shall mean any Investment made by the
Borrower Consolidation in or to any New Venture or New Venture Subsidiary after
the Closing Date.
"New Venture Investments" shall mean collective reference to
each and every New Venture Investment.
"New Venture Subsidiary" shall mean a Subsidiary of Argosy
that is the owner in whole (or in part upon the prior written consent of
Requisite Lenders) of a New Venture.
"Non-Financed Capital Expenditures" shall mean collective
reference to: (i) Capital Expenditures to the Argosy Owned Facilities which are
paid from advances under the Bank Facilities, and (ii) Capital Expenditures to
the Hotel/Casino Facilities which are paid from sources other than from the Bank
Facilities or from any loan, credit arrangement, lease or other financing from
any source or third party, but shall not include Non-Financed Capital
Expenditures made for the Capital Expenditures set forth on the Schedule of
Excluded Capital Expenditures, Schedule 6.05(b) to the extent permitted in
Section 6.05(b).
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"Non Pro Rata Borrowing" means a Borrowing with respect to
which fewer than all Lenders have funded their respective Pro Rata Shares of
such Borrowing and the failure of the non-funding Lender or Lenders to fund its
or their respective Pro Rata Shares of such Borrowing constitutes a breach of
this Credit Agreement.
"Notes" shall mean collective reference to the Revolving
Credit Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning set forth in
Section 2.03.
"Notice of Swingline Advance" shall have the meaning set
forth in Section 2.08(b).
"Obligations" means, from time to time, all Indebtedness of
Borrowers owing to Agent Bank, any Lender or any Person entitled to
indemnification pursuant to Section 5.14, or any of their respective successors,
transferees or assigns, of every type and description, whether or not evidenced
by any note, guaranty or other instrument, arising under or in connection with
this Credit Agreement or any other Loan Document, whether or not for the payment
of money, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, reasonable attorneys' fees and disbursements,
including, without limitation, Protective Advances, reasonable fees and
disbursements of expert witnesses and other consultants, and any other sum now
or hereinafter chargeable to Borrowers under or in connection with Credit
Agreement or any other Loan Document. Notwithstanding the foregoing definition
of "Obligations", Borrowers' obligations under any environmental indemnity
agreement constituting a Loan Document, or any environmental representation,
warranty, covenant, indemnity or similar provision in this Credit Agreement or
any other Loan Document, shall be secured by the Collateral only to the extent,
if any, specifically provided in the Security Documentation.
"Outstanding First Mortgage Notes" shall mean the collective
reference to the First Mortgage Notes which are not tendered by the respective
holders thereof and accepted by Argosy pursuant to the Tender Offer and remain
outstanding obligations of the Borrower Consolidation following the First
Mortgage Notes Redemption and the Closing Date.
"Pari Passu Note" shall mean individual reference and "Pari
Passu Notes" shall mean collective reference to the promissory notes evidencing
Indebtedness incurred by any member of the Borrower Consolidation as the Level
One Term Loan and/or Level Two Term Loan, as applicable, which is PARI PASSU to
the Obligations (and guaranties thereof issued by any member of the Borrower
Consolidation) in priority of payment and in any
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Collateral securing repayment thereof in accordance with the terms, covenants
and provisions contained in an Intercreditor Agreement.
"Pari Passu Obligations" shall mean collective reference to
all obligations and Indebtedness of the Borrower Consolidation under the Pari
Passu Notes, together with any loan agreement, indenture and all other
documents and agreements and related collateral and security documents and
instruments, as may be amended, modified, supplemented, extended, renewed or
restated from time to time in accordance with the requirements of the
applicable Intercreditor Agreement, executed by any member of the Borrower
Consolidation in connection with or relating to the Pari Passu Notes in favor
of the holders thereof or any agent, trustee or other representative thereof.
"Partnership Agreements" shall mean a collective reference to
the CQP Partnership Agreement, the BOSCLP Partnership Agreement and the IGCLP
Partnership Agreement.
"Pension Plan" means any "employee pension benefit plan" that
is subject to Title IV of ERISA and which is maintained for employees of
Borrowers, or any of them, or any of their respective ERISA Affiliates.
"Permitted Encumbrances" shall mean, at any particular time
with respect to the Borrower Consolidation, (i) Liens for taxes, assessments or
governmental charges not then due, payable and delinquent, (ii) Liens for taxes,
assessments or governmental charges not then required to be paid pursuant to
Section 5.10, (iii) Liens in favor of the Senior Indenture Trustee securing the
Outstanding First Mortgage Notes evidenced by the Senior Indenture Security
Documents until October 1, 2000 and Liens in favor of Agent Bank or any Lender
created or contemplated by the Security Documentation, (iv) the Liens on the
Baton Rouge Real Property and/or the Riverside Real Property and existing
improvements which are allowed by Banks to appear in Schedule B, Part I and II
of the Title Insurance Policies at the Closing Date, (v) Liens consented to in
writing by Agent Bank upon the approval of Requisite Lenders, (vi) Liens of
legally valid capital leases and purchase money security interests for acquired
FF&E up to the maximum amount permitted under Section 6.09(b), and only to the
extent of the lesser of the purchase money loan or the fair market value of the
acquired FF&E, (vii) Liens of legally valid leases for FF&E at the time of the
acquisition thereof, (viii) easements, licenses or rights-of-way, hereafter
granted to any Governmental Authority or public utility providing services to
the Hotel/Casino Facilities and/or Restricted Subsidiary Venture which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Borrowers, (ix) judgment and attachment Liens
which do not constitute an Event of Default, (x) statutory Liens of landlords
and liens of carriers, warehousemen, mechanics, customs and revenue authorities
and materialmen and other similar Liens imposed by law incurred in the
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ordinary course of business which could not reasonably be expected to cause a
Material Adverse Change and which are discharged in accordance with Section
5.04, (xi) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and other similar
obligations; (xii) leases or subleases granted to others not interfering in
any material respect with the ordinary conduct of the business of the
Borrower Consolidation, or any of them; (xiii) the replacement or renewal of
any Lien otherwise permitted hereunder; (xiv) minor defects, encroachments or
irregularities in title not interfering in any material respect with the
ordinary conduct of the business of the Borrower Consolidation, or any of
them; and (xv) Liens in existence on the Closing Date referenced on the
Schedule of Liens.
"Person" means an individual, firm, corporation, limited
liability company, trust, association, partnership, joint venture, tribunal or
other entity.
"Policies of Insurance" shall mean the insurance to be
obtained and maintained by Borrower throughout the term of this Credit Agreement
as provided in Section 5.09 herein.
"Post Foreclosure Plan" shall have the meaning set forth in
Section 9.11(e).
"Potential L/C Exposure" shall mean the amount of L/C Exposure
that would result from the issuance of each Letter of Credit that is requested
by Borrowers, or any of them, pursuant to Section 2.09 herein, which amount
shall be measured during the period commencing on the date of such request for
issuance and continuing until the requested Letter of Credit is either issued by
the L/C Issuer or the request for issuance is rejected, withdrawn, rescinded or
otherwise terminated.
"Pricing Certificate" shall have the meaning set forth in
Section 5.08(a)(ii).
"Prime Rate" means at any time, and from time to time, the
rate of interest most recently announced within WFB at its principal office in
San Francisco, California, as its "Prime Rate", with the understanding that
WFB's "Prime Rate" is one of its base rates and serves as the basis upon which
effective rates of interest are calculated for those loans and extensions of
credit making reference thereto, and is evidenced by the recording thereof after
its announcement in such internal publication or publications as WFB may
designate. Each change in the Prime Rate shall be effective on the day the
change is announced within WFB.
"Principal Prepayments" shall have the meaning set forth in
Section 2.07(a) of this Credit Agreement.
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"Pro Rata Share" shall mean with respect to any Lender, a
percentage equal to such Lender's Syndication Interest in the Credit Facility as
set forth on the Schedule of Lenders' Proportions in Credit Facility.
"Protective Advance" means all sums expended as determined
by Agent Bank to be necessary to: (a) protect the priority, validity and
enforceability of the Security Documentation on, and security interests in,
any Collateral and the instruments evidencing or securing the Obligations, or
(b) prevent the value of any Collateral from being materially diminished
(assuming the lack of such a payment within the necessary time frame could
potentially cause such Collateral to lose value), or (c) protect any of the
Collateral from being materially damaged, impaired, mismanaged or taken,
including, without limitation, any amounts expended in accordance with
Section 10.21.
"Purchase/Solicitation Statement" shall have the meaning
ascribed to such term in Recital Paragraph G.
"Qualified Appraisal" shall mean reference to an appraisal or
appraisals of the Hotel/Casino Facilities and Collateral, or any portion
thereof, acceptable to Agent Bank, prepared at Borrowers' expense in compliance
with FIRREA by an appraiser acceptable to Agent Bank, with sufficient copies
delivered to Agent Bank for distribution to each of the Lenders.
"Ratcliff" shall mean RJ Investments, Inc., an Indiana
corporation.
"Redemption Consideration" shall mean the aggregate amount to
be paid for the purchase of First Mortgage Notes pursuant to the Tender Offer
and in accordance with the terms of the Purchase/Solicitation Statement.
"Reduction Date(s)" shall mean reference to each date or the
dates, as the context may require, upon which the Total Commitment is reduced by
a Scheduled Reduction as set forth on the Total Commitment Reduction Schedule.
"Related Entities" shall mean collective reference to all
stockholders, Affiliates and Subsidiaries of the Borrowers, or any of them,
other than another Borrower.
"Replacement Note(s)" shall have the meaning set forth in
Section 2.05(i) of this Credit Agreement.
"Reportable Event" shall mean a reportable event as defined in
Title IV of ERISA, except actions of general applicability by the Secretary of
Labor under Section 110 of ERISA.
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"Requisite Lenders" means, as of any date of determination
prior to the occurrence of an Event of Default, Lenders holding Syndication
Interests in excess of fifty percent (50.1%) of the Credit Facility; and at
all times during which an Event of Default has occurred and remains
continuing, Lenders holding a percentage in excess of fifty percent (50.1%)
of the Funded Outstandings; PROVIDED THAT, (i) in determining such percentage
at any given time, all then existing Defaulting Lenders will be disregarded
and excluded and the Pro Rata Shares of Lenders shall be redetermined, for
voting purposes only, to exclude the Pro Rata Shares of such Defaulting
Lenders, and (ii) notwithstanding the foregoing, at all times when three (3)
or more Lenders are party to this Credit Agreement, the term Requisite
Lenders shall in no event mean less than three (3) Lenders.
"Restricted Subsidiary" shall mean a wholly owned Subsidiary
of Argosy (other than MGC, AGC, IGC, Jazz, AOLI, CQP and TIGC) which: (a) has
not incurred any Indebtedness other than in connection with a Subsidiary
Guaranty, guaranties issued in connection with Subordinated Debt and Pari Passu
Obligations, if any, and accrued expenses, tax liability, deferred taxes and
trade accounts payable less than ninety (90) days past due and other accrued or
deferred liabilities incurred in the ordinary course of business, (b) is not
subject to any Liens except Restricted Subsidiary Permitted Encumbrances and in
connection with a Restricted Subsidiary Security Agreement, (c) has executed and
delivered to Agent Bank a Subsidiary Guaranty and has executed and delivered to
Agent Bank such security instruments, mortgages, ship mortgages and other
documents as Agent Bank may reasonably require for the purpose of adding its
assets, real and personal, as additional Collateral securing repayment of the
Bank Facilities and the Subsidiary Guaranty, (d) all of the stock or other
evidence of ownership thereof has been pledged in favor of Agent Bank by a
Restricted Subsidiary Security Agreement, and (e) has been designated by Argosy
to be a Restricted Subsidiary by written notice thereof to Agent Bank, subject
to Argosy's right to redesignate such New Venture Subsidiary as an Unrestricted
Subsidiary by written notice thereof to Agent Bank so long as: (i) no Default or
Event of Default has occurred and remains continuing, and (ii) giving effect to
such redesignation as of the end of the most recently ended Fiscal Quarter on a
pro forma basis, no Default or Event of Default would exist under the Financial
Covenants.
"Restricted Subsidiary Permitted Encumbrances" shall mean, at
any particular time with respect to a Restricted Subsidiary, (i) Liens for
taxes, assessments or governmental charges not then due, payable and delinquent,
(ii) statutory Liens for labor or materials or liens for taxes, assessments or
governmental charges not then required to be paid pursuant to Section 5.10,
(iii) Liens in favor of Agent Bank or any Lender created or contemplated by the
Security Documentation, (iv) Liens consented to in writing by Agent Bank upon
the approval of Requisite Lenders, (v) Liens of legally valid capital leases and
purchase money security interests for acquired FF&E up to the maximum amount
permitted under Section 6.09(b), and only to the extent of the lesser of the
purchase money loan or the fair
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market value of the acquired FF&E at the time of the acquisition thereof,
(vi) Liens of legally valid leases for FF&E, (vii) easements, licenses or
rights-of-way, now existing or hereafter granted to any Governmental
Authority or public utility providing services to the Restricted Subsidiary
or Restricted Subsidiary Venture, (viii) judgment and attachment Liens which
do not constitute an Event of Default, (ix) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, customs and revenue authorities
and materialmen and other similar Liens imposed by law incurred in the
ordinary course of business which could not reasonably be expected to cause a
Material Adverse Change and which are discharged in accordance with Section
5.04, (x) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and other similar
obligations; (xi) leases or subleases granted to others not interfering in
any material respect with the ordinary conduct of the business of such
Restricted Subsidiary; (xii) the replacement or renewal of any Lien otherwise
permitted hereunder; (xiii) minor defects, encroachments or irregularities in
title not interfering in any material respect with the ordinary conduct of
the business of such Restricted Subsidiary; and (xiv) Liens in existence at
the time of acquisition or designation of any Restricted Subsidiary, so long
as such Lien is not created or perfected in contemplation of such acquisition
or designation.
"Restricted Subsidiary Security Agreements" shall mean the
Security Agreement and Pledge Agreement in substantially the form of the
Security Agreements, and in any case to the reasonable satisfaction of Agent
Bank, to be executed by Argosy in favor of Agent Bank on behalf of the Banks for
the purpose of pledging and granting a security interest in the capital stock
and other interests which it may have in any Restricted Subsidiary, as it may be
amended, modified, supplemented, extended, renewed or restated from time to
time.
"Restricted Subsidiary Venture" shall mean a New Venture
wholly owned by a Restricted Subsidiary.
"Revolving Credit Note" shall mean the Revolving Credit Note,
a copy of which is marked "Exhibit A", affixed hereto and by this reference
incorporated herein and made a part hereof, to be executed by Borrowers on the
Closing Date, payable to the order of Agent Bank on behalf of the Lenders,
evidencing the Credit Facility, as it may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Riverside Assignment of Permits, Contracts, Rents and
Revenues" shall mean the Assignment of Permits, Contracts, Rents and Revenues to
be executed by MGC and by Argosy on or before the Closing Date, whereby MGC and
Argosy assign to Agent
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Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer in
consideration of the Bank Facilities: (a) all of their right, title and
interest under all spaceleases and equipment leases and contracts relating to
the Riverside Casino Facilities, (b) all of their right, title and interest
in and to all permits, licenses and contracts relating to the Riverside
Casino Facilities, except those gaming permits and licenses which are
unassignable, and (c) all rents, issues, profits, revenues and income from
the operation of the Riverside Casino Facilities, together with any and all
future expansions thereof, related thereto or used in connection therewith,
as such assignment may be amended, modified, supplemented, extended, renewed
or restated from time to time.
"Riverside Casino Facilities" shall mean the riverboat casino
business and related activities conducted by MGC on the Riverside Vessel and on
the Riverside Real Property and all improvements now or hereafter situate
thereon.
"Riverside Deed of Trust" shall mean that certain Deed of
Trust, Fixture Filing and Security Agreement with Assignment of Rents to be
executed by AGC and by MGC as of the Closing Date in favor of Agent Bank, on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, encumbering the
Riverside Property and other Collateral therein described for the purpose of
securing the Bank Facilities and all other sums which may be owing by Borrowers
to the Banks from time to time under the terms of the Credit Agreement, as it
may be amended, modified, supplemented, extended, renewed or restated from time
to time.
"Riverside Development Agreement" shall mean that certain
Lease and Development Agreement executed by the City of Riverside, Missouri and
by AGC under date of June 7, 1993, pursuant to which, among other things MGC
agreed to: (i) construct certain improvements on the Riverside Real Property;
and (ii) make certain payments to the City of Riverside; all in connection with
its operation of a riverboat gaming business in connection with the Riverside
Real Property.
"Riverside Real Property" shall mean that real property which
is particularly described by "Exhibit Q" attached hereto and incorporated by
reference herein.
"Riverside Vessel" shall mean collective reference to Argosy
IV and to any other documented or undocumented vessels, barges, watercraft or
floating structures which may be utilized by MGC, as of the Closing Date or
thereafter, in the operation of its riverboat casino business at, or in
connection with, the Riverside Real Property.
"SEC" shall have the meaning set forth in Recital Paragraph E.
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"Schedule of Excluded Capital Expenditures" shall mean the
Schedule of Excluded Capital Expenditures, a copy of which is set forth as
Schedule 6.05(b), affixed hereto, setting forth the list of Capital Expenditures
which may be paid from Borrowers' assets and advances under the Bank Facilities
as exclusions from Non-Financed Capital Expenditures.
"Schedule of Existing Unrestricted Subsidiary Investments"
shall mean the Schedule of Existing Unrestricted Subsidiary Investments, a copy
of which is set forth as Schedule 6.07(h), affixed hereto, setting forth the
Investments in Unrestricted Subsidiaries existing as of the Closing Date.
"Schedule of Lenders' Proportions in Credit Facility" shall
mean the Schedule of Lenders' Proportions in Credit Facility, a copy of which is
marked "Schedule 2.01(a), affixed hereto, setting forth the respective
Syndication Interest and maximum amount to be funded under the Credit Facility
by each Lender as such schedule may be amended, modified or restated from time
to time in connection with an Assumption and Consent Agreement or Assignment and
Assumption Agreement.
"Schedule of Liens" shall mean the Schedule of Liens, a copy
of which is set forth as Schedule 6.09, affixed hereto, setting forth certain
Liens encumbering the Collateral as of the Closing Date.
"Schedule of Significant Litigation" shall mean the Schedule
of Significant Litigation, a copy of which is set forth as Schedule 3.23,
affixed hereto and by this reference incorporated herein and made a part hereof,
setting forth the information described in Section 3.23 with respect to each
Significant Litigation.
"Schedule of Subsidiaries" shall mean the Schedule of
Subsidiaries, a copy of which is marked "Schedule 4.20", affixed hereto and by
this reference incorporated herein and made a part hereof, setting forth the
name of each Subsidiary of Argosy as of the Closing Date, stating whether each
such Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary and if
the Subsidiary is a New Venture Subsidiary setting forth a description of the
applicable New Venture.
"Scheduled Reduction(s)" shall mean the amount by which the
Aggregate Commitment is reduced on each Reduction Date (calculated as a
percentage of the Total Commitment) as set forth on the Total Commitment
Reduction Schedule.
"Second Anniversary Date" shall mean the second annual
anniversary of the Closing Date.
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"Secured Indebtedness" shall mean that portion of the
Indebtedness of the Argosy Consolidation, determined in accordance with GAAP,
(i) which is owing by IGCLP (both secured and unsecured), prior to the
Lawrenceburg Buyout Date, exclusive of Indebtedness owing by IGCLP to its
partners, and (ii) in each other instance the repayment of which is secured by
any of the Collateral or by all or any portion of the Assets owned by any member
of the Argosy Consolidation.
"Secured Interest Rate Hedge(s)" shall mean any Interest Rate
Hedge entered into between any Borrower and any Lender, or Affiliate of any
Lender, which is secured by the Security Documentation.
"Security Agreement (AGC)" shall mean the Security and Pledge
Agreement (AGC) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by AGC for the purpose of pledging,
and granting a security interest in, all right, title and interest of AGC in and
to any FF&E and other tangible and intangible personal property in which it may
have an interest, and the other Collateral set forth therein; including, without
limitation: (i) any Intercompany Notes in which it may have an interest; and
(ii) all capital stock, partnership interests and other interests which it may
have in any Subsidiary, as it may be amended, modified, supplemented, extended,
renewed or restated from time to time.
"Security Agreement (AOLI)" shall mean the Security and Pledge
Agreement (AOLI) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by AOLI for the purpose of pledging,
and granting a security interest in, all right, title and interest of AOLI in
and to any FF&E and other tangible and intangible personal property in which it
may have an interest, and the other Collateral set forth therein; including,
without limitation: (i) any Intercompany Notes in which it may have an interest;
and (ii) all capital stock, partnership interests and other interests which it
may have in any Subsidiary, as it may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Security Agreement (Argosy)" shall mean the Security and
Pledge Agreement (Argosy) in favor of Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer, to be executed by Argosy for the purpose of
pledging, and granting a security interest in, all right, title and interest of
Argosy in and to any FF&E and other tangible and intangible personal property in
which it may have an interest, and the other Collateral set forth therein;
including, without limitation: (i) any Intercompany Notes in which it may have
an interest; and (ii) all capital stock, partnership interests and other
interests which it may have in any Subsidiary, as it may be amended, modified,
supplemented, extended, renewed or restated from time to time.
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"Security Agreement (CQP)" shall mean the Security and Pledge
Agreement (CQP) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by CQP for the purpose of pledging,
and granting a security interest in, all right, title and interest of CQP in and
to any FF&E and other tangible and intangible personal property in which it may
have an interest, and the other Collateral set forth therein; including, without
limitation: (i) any Intercompany Notes in which it may have an interest; and
(ii) all capital stock, partnership interests and other interests which it may
have in any Subsidiary, as it may be amended, modified, supplemented, extended,
renewed or restated from time to time.
"Security Agreement (IGC)" shall mean the Security and
Pledge Agreement (IGC) in favor of Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer, to be executed by IGC for the purpose of
pledging, and granting a security interest in, all right, title and interest
of IGC in and to any FF&E and other tangible and intangible personal property
in which it may have an interest (excluding its partnership interest in
BOSCLP), and the other Collateral set forth therein; including, without
limitation: (i) any Intercompany Notes in which it may have an interest; (ii)
all capital stock, partnership interests and other interests which it may
have in any Subsidiary (other than BOSCLP); and (iii) all right, title and
interest of IGC to receive payments under the Sioux City Vessel Lease; as
such Security and Pledge Agreement may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Security Agreement (IGCLP)" shall mean the Security and
Pledge Agreement (IGCLP) in favor of Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer, to be executed by IGCLP on or before the
Level Two Commitment Increase Effective Date or the closing of the Level Two
Term Loan, as applicable, for the purpose of pledging, and granting a security
interest in, all right, title and interest of IGCLP in and to any FF&E and other
tangible and intangible personal property in which it may have an interest, and
the other Collateral set forth therein; including, without limitation: (i) any
Intercompany Notes in which it may have an interest; and (ii) all capital stock,
partnership interests and other interests which it may have in CQP or in any
Subsidiary, as it may be amended, modified, supplemented, extended, renewed or
restated from time to time.
"Security Agreement (Jazz)" shall mean the Security and Pledge
Agreement (Jazz) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by Jazz for the purpose of pledging,
and granting a security interest in, all right, title and interest of Jazz in
and to any FF&E and other tangible and intangible personal property in which it
may have an interest, and the other Collateral set forth therein; including,
without limitation: (i) any Intercompany Notes in which it may have an interest;
and (ii) all capital stock, partnership interests and other interests which it
may have in any
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Subsidiary, as it may be amended, modified, supplemented, extended, renewed
or restated from time to time.
"Security Agreement (MGC)" shall mean the Security and Pledge
Agreement (MGC) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by MGC for the purpose of pledging,
and granting a security interest in, all right, title and interest of MGC in and
to any FF&E and other tangible and intangible personal property in which it may
have an interest, and the other Collateral set forth therein; including, without
limitation: (i) any Intercompany Notes in which it may have an interest; and
(ii) all capital stock, partnership interests and other interests which it may
have in any Subsidiary, as it may be amended, modified, supplemented, extended,
renewed or restated from time to time.
"Security Agreement (TIGC)" shall mean the Security and Pledge
Agreement (TIGC) in favor of Agent Bank on behalf of the Lenders, the Swingline
Lender and the L/C Issuer, to be executed by TIGC for the purpose of pledging,
and granting a security interest in, all right, title and interest of TIGC in
and to any FF&E and other tangible and intangible personal property in which it
may have an interest, and the other Collateral set forth therein; including,
without limitation: (i) any Intercompany Notes in which it may have an interest;
and (ii) all capital stock, partnership interests and other interests which it
may have in any Subsidiary (including, without limitation, its partnership
interest in IGCLP), as it may be amended, modified, supplemented, extended,
renewed or restated from time to time.
"Security Agreements" shall mean collective reference to the
Security Agreement (AGC), the Security Agreement (AOLI), the Security Agreement
(Argosy), the Security Agreement (CQP), the Security Agreement (IGC), the
Security Agreement (Jazz), the Security Agreement (MGC), the Security Agreement
(TIGC), and, as of the Level Two Commitment Increase Effective Date or closing
of the Level Two Term Loan, as the case may be, the Security Agreement (IGCLP).
"Security Documentation" shall mean collective reference to
the Mortgages, Financing Statements, Assignments, Security Agreements, Revolving
Credit Note, Subsidiary Guaranties, Trademark Security Agreement and all other
instruments and agreements to be executed by or on behalf of any member of the
Borrower Consolidation, including, without limitation, each Restricted
Subsidiary, or any of them, or other applicable Persons, in favor of Agent Bank
on behalf of the Banks securing repayment of the Bank Facilities.
"Senior Funded Debt" of the Argosy Consolidation shall mean
for any Fiscal Quarter the sum of: (i) the average of the Aggregate Outstandings
as of the last day of each calendar month during such Fiscal Quarter, plus (ii)
the total as of the last day of such period
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of the unpaid principal balance of both the long-term and current portions
(without duplication) of all other Secured Indebtedness (exclusive of the
Defeased Debt) and Capitalized Lease Liabilities shown on the financial
statements of the Argosy Consolidation prepared in accordance with GAAP.
"Senior Indenture" shall have the meaning set forth in
Recital Paragraph C.
"Senior Indenture Amendment" shall mean the amendment or
supplement to the Senior Indenture to be executed by the Senior Indenture
Trustee, Argosy and the other parties to the Senior Indenture effectuating
the amendments and modifications to the Senior Indenture and Senior Indenture
Security Documents pursuant to the Consent Solicitation and as set forth in
the Purchase/Solicitation Statement.
"Senior Indenture Collateral" shall have the meaning ascribed
to the term "Collateral" in the Senior Indenture.
"Senior Indenture Security Documents" shall mean those
documents securing repayment of the Borrowers' obligations under the Senior
Indenture, and the First Mortgage Notes issued in accordance therewith, as
described on Schedule 5.11 attached hereto.
"Senior Indenture Trustee" shall have the meaning ascribed to
such term in Recital Paragraph C.
"Senior Leverage Ratio" as of the end of any Fiscal Quarter
shall mean with reference to the Argosy Consolidation, the ratio of Adjusted
Senior Funded Debt to Economic EBITDA.
"Senior Subordinated Notes" shall mean reference to the
Initial Senior Subordinated Notes or the Exchange Senior Subordinated Notes, or
both, as the case may be, whichever are issued and outstanding as of any date of
determination.
"Senior Subordinated Notes Effective Date" shall have the
meaning set forth in Section 3.15.
"Share Repurchases" shall mean the purchase of shares of any
class of stock, option, right or other equity interest, whether voting or
non-voting of Argosy by any member of the Borrower Consolidation, or any of
them.
"Ship Mortgages" shall mean collective reference to the Argosy
I Ship Mortgage, the Alton Belle II Ship Mortgage, the Alton Landing Ship
Mortgage, the Argosy III Ship Mortgage, the Argosy IV Ship Mortgage, the Argosy
V Ship Mortgage and
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the Spirit of America Ship Mortgage and, as of the Level Two Commitment
Increase Effective Date or closing of the Level Two Term Loan, as the case
may be, the Argosy VI Ship Mortgage.
"Shore Mortgages" shall mean a collective reference to the
Baton Rouge Mortgage, the Riverside Deed of Trust and, as of the Level Two
Commitment Increase Effective Date, or the closing of the Level Two Term Loan,
as the case may be, the Lawrenceburg Mortgage.
"Significant Litigation" shall mean each action, suit,
proceeding, litigation and controversy against, or to the actual knowledge of
Borrowers threatened, or affecting any member of the Argosy Consolidation, or
any of them, not fully covered by insurance or that is subject to a
reservation of rights and involving claims in excess of Three Million Dollars
($3,000,000.00) or which if determined adverse to the interests of any member
of the Argosy Consolidation, or any of them, would reasonably be expected to
result in a Material Adverse Change.
"Sioux City Assignment of Permits, Contracts, Rents and
Revenues" shall mean the Assignment of Permits, Contracts, Rents and Revenues to
be executed by IGC on or before the Closing Date, whereby IGC assigns to Agent
Bank on behalf of the Lenders, the Swingline Lender and the L/C Issuer in
consideration of the Bank Facilities: (a) all of its right, title and interest
under all spaceleases and equipment leases and contracts relating to the Sioux
City Casino Facilities, (b) all of its right, title and interest in and to all
permits, licenses and contracts relating to the Sioux City Casino Facilities,
except those gaming permits and licenses which are unassignable, (c) all of its
right, title and interest in and to all rents, issues, profits, revenues and
income from the operation of the Sioux City Casino Facilities, together with any
and all future expansions thereof, related thereto or used in connection
therewith, and (d) all of its right, title and interest to receive payments
under the Sioux City Vessel Lease, as such assignment may be amended, modified,
supplemented, extended, renewed or restated from time to time.
"Sioux City Casino Facilities" shall mean the riverboat casino
business and related activities conducted by BOSCLP on the Sioux City Vessels
and on the Sioux City Real Property and all improvements now or hereafter
situate thereon.
"Sioux City Development Agreement" shall mean that certain
Development Agreement under date of June 22, 1992, by and between the City of
Sioux City, Iowa and Sioux City Riverboat Corp., pursuant to which, among other
things, Sioux City Riverboat Corp. constructed various improvements to the Sioux
City Real Property and was granted the right to utilize the Sioux City Real
Property as well as certain adjoining parking facilities owned by the City of
Sioux City, all in operation of the Sioux City Casino Facilities, with
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the interest of Sioux City Riverboat Corp. under the Sioux City Development
Agreement having been assigned to BOSCLP pursuant to that certain Assignment
and Assumption Agreement executed by Sioux City Riverboat Corp. and by BOSCLP
under date of December 1, 1994.
"Sioux City Real Property" shall mean that real property which
is particularly described by "Exhibit R" attached hereto and incorporated by
reference herein.
"Sioux City Riverboat Corp." shall mean Sioux City Riverboat
Corp., Inc., an Iowa corporation.
"Sioux City Vessel Lease" shall mean that certain Management
and Boat Lease Agreement executed by BOSCLP and by IGC under date of December 1,
1994 pursuant to which, among other things, IGC leased the Sioux City Vessels to
BOSCLP and IGC agreed to manage the Sioux City Casino Facilities on behalf of
BOSCLP.
"Sioux City Vessels" shall mean collective reference to Argosy
V, Alton Landing and to any other documented or undocumented vessels, barges,
watercraft or floating structures which may be utilized by BOSCLP, as of the
Closing Date or thereafter, in the operation of its riverboat casino business
at, or in connection with, the Sioux City Real Property.
"Spirit of America" shall mean that vessel known as Spirit of
America, Official No. 259139.
"Spirit of America Ship Mortgage" shall mean the First
Preferred Ship Mortgage to be executed by Argosy on or before the Closing Date
wherein Argosy, as owner and mortgagor, grants a Lien in favor of Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, in and to Spirit
of America, as such ship mortgage may be amended, modified, supplemented,
extended, renewed or restated from time to time.
"Standby L/C Fee" shall have the meaning set forth in Section
2.10(c) of this Credit Agreement.
"Standby Letter(s) of Credit" shall mean a letter or letters
of credit issued by L/C Issuer pursuant to Section 2.09 of the Credit Agreement
for the purpose of securing payment or performance of a financial obligation of
Borrowers, or any of them, other than in connection with the payment for goods
or equipment.
"Stated Amount" shall mean the maximum amount which L/C Issuer
may be required to disburse to the beneficiary(ies) of a Letter(s) of Credit
under the terms thereof.
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"Stated Expiry Date(s)" shall mean the date set forth on the
face of a Letter(s) of Credit as the date when all obligations of L/C Issuer to
advance funds thereunder will terminate, as the same may be extended from time
to time.
"Subordinated Debt" shall mean: (i) the Indebtedness evidenced
by the New Indenture and Senior Subordinated Notes, and (ii) all other unsecured
Indebtedness of the Borrower Consolidation (not including, however: (x) the
First Mortgage Notes purchased by Borrowers as of the Closing Date pursuant to
the First Mortgage Notes Redemption, and (y) the Senior Indenture and the
Outstanding First Mortgage Notes subsequent to July 1, 2000) which is
contractually subordinated to the Obligations and for which (a) there is no
principal or sinking fund payment requirement maturing or otherwise coming due
prior to one (1) year after the Maturity Date; (b) the maturity date of the
Subordinated Debt shall not be earlier than one year subsequent to the Maturity
Date; (c) all material covenants, terms and conditions of the Subordinated Debt
shall be no more restrictive on Argosy and the Borrower Consolidation than those
applicable under this Credit Agreement; and (d) the covenants, terms,
conditions, representations, subordination and blockage provisions, events
of default and other provisions of the Subordinated Debt are either (i)
substantially similar in all material respects to the covenants, terms,
conditions, representations, subordination and blockage provisions, events of
default and other provisions contained in the New Indenture, or (ii) such
covenants, terms, conditions, representations, subordination and blockage
provisions, events of default and other provisions shall be acceptable to the
Requisite Lenders in their reasonable credit judgment.
"Subsidiary" shall mean, on the date in question, any Person
of which an aggregate of 50% or more of the stock of any class or classes (or
equivalent partnership or limited liability company interests) is owned of
record or beneficially, directly or indirectly, by another Person and/or any of
its Subsidiaries, if the holders of the stock of such class or classes (or
equivalent partnership or limited liability company interests) (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or individuals performing similar functions) of
such Person, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are entitled, as such holders, to vote
for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Subsidiary Guarantor" shall mean each Restricted Subsidiary
which has executed the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean the General Continuing
Subsidiary Guaranty to be executed by each Restricted Subsidiary in favor of the
Agent Bank on behalf of Banks in the form of the General Continuing Subsidiary
Guaranty marked "Exhibit N",
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affixed hereto and by this reference incorporated herein and made a part
hereof, under the terms of which each Restricted Subsidiary irrevocably and
unconditionally guaranties to Agent Bank on behalf of the Banks the full and
prompt payment and performance of all Obligations.
"Swingline Advance" shall mean each advance made by Swingline
Lender to Borrowers under the Swingline Facility.
"Swingline Facility" shall mean the agreement of Swingline
Lender to make Swingline Advances to Borrowers subject to the terms and
conditions and up to the maximum amounts and for the duration as set forth in
Section 2.08 of this Credit Agreement.
"Swingline Lender" shall have the meaning set forth in the
Preamble of this Credit Agreement.
"Swingline Note" shall mean the Swingline Note, a copy of
which is marked "Exhibit B", affixed hereto, to be executed by Borrowers on the
Closing Date, payable to the order of Swingline Lender evidencing the Swingline
Facility.
"Swingline Outstandings" shall mean the aggregate amount of
all outstanding and unpaid Swingline Advances as of each date of determination.
"Syndication Interest" shall mean the proportionate interest
of each Lender in the Credit Facility as set forth on the Schedule of Lenders'
Proportions in Credit Facility, a copy of which is marked Schedule 2.01(a)
affixed hereto and by this reference incorporated herein and made a part hereof,
as the same may be amended or restated from time to time.
"Taxes" shall have the meaning set forth in Section 2.12.
"Tender Offer" shall have the meaning ascribed to such term in
Recital Paragraph G.
"Term Loans" shall mean collective reference to the Level
One Term Loan and the Level Two Term Loan.
"Title Company" shall mean First American Title Insurance
Company, together with such reinsurers with direct access as are requested by
Agent Bank or other title insurance company or companies as may be reasonably
acceptable to Agent Bank.
"Title Insurance Policies" shall mean the ALTA Extended
Coverage Lenders Policy(ies) of Title Insurance and endorsements to be attached
thereto, to be issued by Title
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Company as of the Closing Date, in the aggregate amount of Fifty-Five Million
Dollars ($55,000,000.00) in connection with the Riverside Casino Facilities
and Fifty-Seven Million Dollars ($57,000,000.00) in connection with the Baton
Rouge Casino Facility, in each case in favor of WFB, as Agent Bank, insuring:
(i) the Baton Rouge Mortgage as a first mortgage lien on the Baton Rouge Real
Property; and (ii) the Riverside Deed of Trust as a first mortgage lien on
the Riverside Real Property; all subject only to the exceptions permitted to
be shown thereon in accordance with the requirements set forth in the Closing
Instructions.
"Total Commitment" shall mean the amount of Two Hundred
Million Dollars ($200,000,000.00) (the amount of the Aggregate Commitment on the
Closing Date), plus, on and after the Level One Commitment Increase Effective
Date, the aggregate amount of the Level One Commitment Increase, plus, on and
after the Level Two Commitment Increase Effective Date, the aggregate amount of
the Level Two Commitment Increase.
"Total Commitment Reduction Schedule" shall mean the Total
Commitment Reduction Schedule marked "Schedule 2.01(c)", affixed hereto, setting
forth as of each Reduction Date the amount of each Scheduled Reduction as a
percentage of the Total Commitment.
"Total Leverage Ratio" as of the end of any Fiscal Quarter
shall mean with reference to the Argosy Consolidation, the ratio of Adjusted
Funded Debt to Economic EBITDA.
"Total Liabilities" shall mean the total liabilities of the
Argosy Consolidation determined in accordance with GAAP.
"Trademark Security Agreement" shall mean the security
agreement to be executed by Borrowers as of the Closing Date for the purpose of
granting a security interest in favor of Agent Bank on behalf of Lenders in all
trademarks, tradenames and servicemarks used in connection with the Argosy Owned
Facilities, including, without limitation, each registration and application set
forth on Schedule 4.27 or otherwise described on Schedule A to the Trademark
Security Agreement.
"USCG" shall mean the United States Coast Guard.
"Unrestricted Subsidiary" shall mean each New Venture
Subsidiary which is not a Restricted Subsidiary or a Borrower.
"Unsuitable Lender" shall have the meaning set forth in
Section 10.10(d).
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"Vessels" shall mean collective reference to the Alton Vessel,
the Baton Rouge Vessel, the Lawrenceburg Vessel, the Riverside Vessel, and the
Sioux City Vessels.
"Voluntary Permanent Reduction" shall have the meaning set
forth in Section 2.01(c).
"WFB" shall mean Wells Fargo Bank, National Association.
Section 1.02. INTERPRETATION AND CONSTRUCTION. In this
Credit Agreement, unless the context otherwise requires:
(a) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Credit Agreement as so numbered;
(b) Words importing a particular gender mean and include
every other gender, and words importing the singular number mean and include the
plural number and VICE VERSA;
(c) All times specified herein, unless otherwise
specifically referred, shall be the time in San Francisco, California;
(d) Any headings preceding the texts of the several
Articles and Sections of this Credit Agreement, and any table of contents or
marginal notes appended to copies hereof, shall be solely for convenience of
reference and shall not constitute a part of this Credit Agreement, nor shall
they affect its meaning, construction or effect;
(e) If any clause, provision or Section of this Credit
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any of
the remaining provisions hereof;
(f) The terms "herein", "hereunder", "hereby", "hereto",
"hereof" and any similar terms as used in the Credit Agreement refer to this
Credit Agreement; the term "heretofore" means before the date of the execution
of this Credit Agreement; and the term "hereafter" means after the date of the
execution of this Credit Agreement;
(g) The parties hereto agree that each has contributed to the
drafting of this Credit Agreement and each of the Loan Documents and that the
provisions herein contained shall not be construed against Borrowers or Banks as
having been the person or persons responsible for the preparation thereof;
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(h) All accounting terms used herein which are not
otherwise specifically defined shall be used in accordance with GAAP;
(i) Each reference to a Loan Document or the Security
Documentation, or any of them, as used in this Credit Agreement shall be deemed
a reference to such Loan Document or the Security Documentation as the same may
be amended, modified, supplemented, replaced or restated from time to time; and
(j) Every affirmative duty, covenant and obligation
of Borrowers hereunder shall be equally applicable to each of the Borrowers
individually and where the context would result in the best interests or rights
of Banks shall be construed to mean "Borrowers or any of them" or "Borrowers and
each of them", as applicable.
Section 1.03. USE OF DEFINED TERMS. Unless otherwise defined
or the context otherwise requires, terms for which meanings are provided in this
Credit Agreement shall have such meanings when used in the Notes and in each
Loan Document and other communication delivered from time to time in connection
with this Credit Agreement or any other Loan Document.
Section 1.04. CROSS-REFERENCES. Unless otherwise specified,
references in this Credit Agreement and in each other Loan Document to any
Article or Section are references to such Article or Section of this Credit
Agreement or such other Loan Document, as the case may be, and, unless
otherwise specified, references in any Article, Section or definition to any
clause are references to such clause of such Article, Section or definition.
Section 1.05. EXHIBITS AND SCHEDULES. All Exhibits and
Schedules to this Credit Agreement, either as originally existing or as the same
may from time to time be supplemented, modified or amended, are incorporated
herein by this reference and made a part hereof.
ARTICLE II
AMOUNT, TERMS AND SECURITY OF THE FACILITIES
Section 2.01. THE CREDIT FACILITY.
a. Subject to the conditions and upon the terms
hereinafter set forth and in accordance with the terms and provisions of the
Revolving Credit Note, Lenders severally agree in the proportions set forth on
the Schedule of Lenders' Proportions in Credit Facility to advance the Closing
Disbursement on the Closing Date and thereafter to advance Borrowings to
Borrowers, in the aggregate up to the Maximum Permitted Balance in the
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initial amount of Two Hundred Million Dollars ($200,000,000.00), subject to
increase as provided in Section 2.15(a) and 2.15(b), in such amounts as
Borrowers may request by Notice of Borrowing duly executed by an Authorized
Officer and delivered to Agent Bank from time to time as provided in Section
2.03.
b. Subject to the uses and purposes set forth in
Section 2.02, on and after the Closing Date, Borrowers may borrow, repay and
reborrow the Available Borrowings up to the Maximum Permitted Balance from time
to time; provided further, however, amounts of Funded Outstandings bearing
interest with reference to a LIBO Rate shall be subject to Breakage Charges
incident to prepayment as provided in Section 2.07(c). The Credit Facility shall
be for a term commencing on the Closing Date and terminating on the Maturity
Date, on which date the entire outstanding balance of the Credit Facility shall
be fully paid and Bank Facility Termination shall occur. In no event shall any
Lender be liable to fund any amounts under the Credit Facility in excess of its
respective Syndication Interest in any Borrowing. In the event the Aggregate
Outstandings exceed the Maximum Permitted Balance at any time, Borrowers shall
immediately cause the Aggregate Outstandings to be reduced by such amount as may
be necessary to cause the Aggregate Outstandings to be equal to or less than the
Maximum Permitted Balance.
c. Borrowers may voluntarily reduce the Maximum
Permitted Balance from time to time (a "Voluntary Permanent Reduction") on the
following conditions:
(i) that each such Voluntary Permanent
Reduction be in the minimum amount of Five Million Dollars
($5,000,000.00) (or, if less the remaining Maximum Permitted
Balance) and in increments of One Million Dollars
($1,000,000.00) and made in writing by an Authorized
Representative, effective on the fifth (5th) Banking Business
Day following receipt by Agent Bank;
(ii) that each such Voluntary Permanent
Reduction shall be irrevocable and a permanent reduction to
the Maximum Permitted Balance; and
(iii) in the event any Voluntary Permanent
Reduction reduces the Maximum Permitted Balance to less than
the sum of the Aggregate Outstandings, the Borrowers shall
immediately cause the Aggregate Outstandings to be reduced by
such amount as may be necessary to cause the Aggregate
Outstandings to be equal to or less than the Maximum Permitted
Balance.
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Section 2.02. USE OF PROCEEDS OF THE CREDIT FACILITY.
Available Borrowings shall be used for the following purposes:
a. On the Closing Date a Borrowing shall be advanced
(the "Closing Disbursement") for the purposes of:
(i) paying in full the fees due Agent Bank as set
forth in the Fee Side Letter, the costs, fees and expenses of
Title Company incurred in connection with the issuance of the
Title Insurance Policies, the costs, fees and expenses of
Henderson & Morgan, LLC, attorneys for Agent Bank, and
associate counsel and insurance consultants retained by them
incurred to the Closing Date; and
(ii) financing a portion of the costs and funds to be
advanced by Borrowers for the Redemption Consideration and
the Consent Solicitation Consideration;
(iii) financing a portion of the costs and funds to
be advanced by Borrowers as Defeasance Consideration;
(iv) paying other costs, fees and expenses incurred
by Borrowers, including attorneys' fees and related costs,
incurred in connection with the Bank Facilities and the New
Indenture; and
(v) financing working capital requirements of the
Borrower Consolidation.
b. Subsequent to the Closing Date up to the Maximum
Permitted Balance for the purpose of:
(i) providing financing for general corporate
purposes, including financing Capital Expenditures, working
capital requirements (including funding all or any portion of
the costs of acquisition of a Minority Interest Percentage)
and New Venture Investments of the Borrower Consolidation
subject to the terms, covenants and limitations hereinafter
set forth; and
(ii) financing a portion of the costs and funds to be
advanced by Borrowers to cause the Convertible Notes to be
fully paid on or before July 1, 2000.
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c. On and after the Commitment Increase Effective
Date up to the Maximum Permitted Balance, after giving effect to the Commitment
Increase, for the additional purpose of:
(i) financing a portion of the costs of acquiring one
hundred percent (100%) ownership within the Borrower
Consolidation of IGCLP and the Lawrenceburg Casino Facilities;
and
(ii) paying other costs, fees and expenses incurred
by Borrowers, including attorneys fees and related costs, of
acquiring one hundred percent (100%) ownership within the
Borrower Consolidation of IGCLP and the Lawrenceburg Casino
Facilities.
Section 2.03. NOTICE OF BORROWINGS AND EXERCISE OF INTEREST
RATE OPTIONS.
a. An Authorized Representative shall give Agent
Bank, no later than 9:00 a.m. on a Banking Business Day at Agent Bank's
office specified in Section 2.07, three (3) full Banking Business Days prior
notice in the form of (i) verbal notice by telephone by an Authorized
Representative, and (ii) written notice by a Notice of Borrowing ("Notice of
Borrowing"), a copy of which is marked "Exhibit C", affixed hereto, for each
proposed Borrowing to be made with reference to a LIBO Rate and at least one
(1) full Banking Business Days prior notice for all other Borrowings,
specifying the date and amount of each proposed Borrowing. Agent Bank shall
give prompt notice of each Notice of Borrowing to Lenders of the amount to be
funded and specifying the Funding Date. Not later than 11:00 a.m. on the
Funding Date specified, each Lender shall disburse to Agent Bank its Pro Rata
Share of the amount to be advanced by each such Lender in lawful money of the
United States of America and in immediately available funds. Agent Bank shall
make the proceeds of such fundings received by it on or before 11:00 a.m.
from the Lenders available to Borrowers by depositing, prior to 1:00 p.m. on
the day so received (but not prior to the Funding Date), in the Designated
Deposit Account maintained with Agent Bank the amounts received from the
Lenders. No Borrowing may exceed the Available Borrowings. Each Borrowing to
be made with reference to the Base Rate shall be in a minimum amount of One
Million Dollars ($1,000,000.00) and in increments of One Hundred Thousand
Dollars ($100,000.00). Borrowers shall be entitled to no more than five (5)
Borrowings during each calendar month, exclusive of Borrowings made for the
sole purpose of funding repayment of a Swingline Advance or L/C Reimbursement
Obligation.
b. The failure of any Lender to fund its Pro Rata
Share of any Borrowing on any Funding Date shall neither relieve any other
Lender of any obligation hereunder to fund its Pro Rata Share of such Borrowing
on such Funding Date nor relieve the Lender which has failed to fund its Pro
Rata Share of its obligations to Borrowers
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hereunder. No Lender shall be responsible for the failure of any other Lender
to fund its Pro Rata Share of such Borrowing on any Funding Date nor shall
any Lender be responsible for the failure of any other Lender to perform its
respective obligations hereunder. The provisions set forth in Section
10.10(d) shall be applicable to a Defaulting Lender to the same extent as if
such Defaulting Lender was found to be an Unsuitable Lender.
Section 2.04. CONDITIONS OF BORROWINGS. The Closing
Disbursement and all Borrowings, other than Borrowings made at the request of
Agent Bank for the purpose of funding repayment of Swingline Outstandings and/or
L/C Reimbursement Obligations as hereinafter provided, will only be made so long
as Borrowers are in full compliance with each of the requirements and conditions
precedent set forth in Article III A and B of this Credit Agreement and with
Article III C with respect to the advance of the Commitment Increase; provided,
however, upon the consent of the Requisite Lenders, Lenders shall advance
Borrowings notwithstanding the existence of less than full compliance with the
requirements of Article III B and Borrowings so made shall be deemed to have
been made pursuant to this Credit Agreement.
Section 2.05. THE REVOLVING CREDIT NOTE AND INTEREST RATE
OPTIONS.
a. The Credit Facility shall be further evidenced
by the Revolving Credit Note payable to the order of Agent Bank on behalf of
the Lenders. Agent Bank shall record manually or electronically the date and
amount of each Borrowing advanced by the Lenders together with the applicable
Interest Period in the case of portions of the unpaid principal under the
Credit Facility bearing interest with reference to a LIBO Rate, and the
amount of each repayment of principal made thereunder by Borrowers and the
entry of such records shall be conclusive absent manifest or demonstrable
error; provided, however, the failure to make such a record or notation with
respect to any Borrowing or repayment thereof, or an error in making such a
record or notation, shall not limit or otherwise affect the obligations of
Borrowers hereunder or under the Revolving Credit Note.
b. Interest shall accrue on the entire outstanding
principal balance of the Credit Facility at a rate per annum equal to the Base
Rate plus the Applicable Margin, unless Borrowers request a LIBOR Loan pursuant
to Section 2.03 or elect pursuant to Section 2.05(c) hereinbelow to have
interest accrue on a portion or portions of the outstanding principal balance of
the Credit Facility at a LIBO Rate ("Interest Rate Option"), in which case
interest on such portion or portions shall accrue at a rate per annum equal to
such LIBO Rate plus the Applicable Margin in effect as of the second Banking
Business Day prior to the first day of the applicable Interest Period, as long
as: (i) each such LIBOR Loan is in a minimum amount of Five Million Dollars
($5,000,000.00) and in increments of One Million Dollars ($1,000,000.00), and
(ii) no more than ten (10) LIBOR Loans may be outstanding at any one time.
Interest accrued on each Base Rate Loan shall be due and
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payable quarterly on the first day of each Fiscal Quarter following the
Closing Date, and on the Maturity Date. For each LIBOR Loan, accrued interest
shall be due and payable at the end of each Interest Period applicable
thereto, but in any event no less frequently than at the end of each three
(3) month period during the term of such LIBOR Loan. Except as qualified
above, the outstanding principal balance of the Credit Facility may be a Base
Rate Loan or one or more LIBOR Loans, or any combination thereof, as
Borrowers shall specify.
c. So long as no Default or Event of Default shall
have occurred and remains continuing, Borrowers may Convert from one Interest
Rate Option to another Interest Rate Option or continue an Interest Rate
Option for another Interest Period by giving irrevocable notice to Agent Bank
of such Conversion or Continuation by 9:00 a.m., on a day which is at least
three (3) Banking Business Days prior to the proposed date of such Conversion
to or Continuation of each LIBOR Loan or one (1) Banking Business Day prior
to the proposed date of such Conversion to each Base Rate Loan. Each such
notice shall be made by an Authorized Representative by telephone and
thereafter immediately confirmed in writing by delivery to Agent Bank of a
Continuation/Conversion Notice specifying the date of such Conversion or
Continuation, the amounts to be so Converted or Continued and the Interest
Period if the Conversion or Continuation is being made with reference to a
LIBOR Loan. Upon receipt of such Continuation/Conversion Notice, Agent Bank
shall promptly set the applicable interest rate (which in the case of a LIBOR
Loan shall be the LIBO Rate plus the Applicable Margin as of the second
Banking Business Day prior to the first day of the applicable Interest
Period) and the applicable Interest Period if the Conversion or Continuation
is being made with reference to a LIBOR Loan and shall confirm the same in
writing to Borrowers and Lenders. Each Conversion or Continuation shall be on
a Banking Business Day. No LIBOR Loan shall be converted to a Base Rate Loan
or renewed on any day other than the last day of the current Interest Period
relating to such amounts outstanding unless Borrowers pay any applicable
Breakage Charges. All Borrowings advanced at the request of Agent Bank under
Sections 2.08 or 2.09 of the Credit Agreement shall bear interest with
reference to the Base Rate plus the Applicable Margin, subject to Borrowers'
right to Convert such Borrowing to a LIBOR Loan or LIBOR Loans as provided
herein. If Borrowers fail to give a Continuation/Conversion Notice for the
continuation of a LIBOR Loan as a LIBOR Loan for a new Interest Period in
accordance with this Section 2.05(c), such LIBOR Loan shall automatically
become a Base Rate Loan at the end of its then current Interest Period.
d. Each interest period (each individually an
"Interest Period" and collectively the "Interest Periods") for a LIBOR Loan
shall commence on the date such LIBOR Loan is made or the date of Conversion or
Continuation of any amount or amounts of the outstanding Borrowings hereunder to
a LIBOR Loan, as the case may be, and shall end on the date which is one (1),
two (2), three (3) or six (6) months thereafter, as elected by Borrowers.
However, no Interest Period may extend beyond the Maturity Date and no
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Interest Period may extend beyond any Reduction Date unless the sum of (i)
the aggregate amount of LIBOR Loans having an Interest Period ending after
such Reduction Date, plus (ii) the L/C Exposure and Potential L/C Exposure of
all Letters of Credit outstanding and requested for which the Stated Expiry
Date is after such Reduction Date, does not exceed the Maximum Permitted
Balance after giving effect to the Scheduled Reduction on such Reduction
Date. Each Interest Period for a LIBOR Loan shall commence and end on a
Banking Business Day. If any Interest Period commences on a date for which
there is no corresponding date in the month in which it is scheduled to end,
such Interest Period shall end on the last Banking Business Day of such
month. If any Interest Period would otherwise expire on a day which is not a
Banking Business Day, the Interest Period shall be extended to expire on the
next succeeding Banking Business Day, unless the result of such extension
would be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding Banking
Business Day.
e. The applicable LIBO Rate and Base Rate shall be
determined by the Agent Bank, and notice thereof shall be given promptly to
Borrowers and Lenders. Each determination of the applicable Base Rate and LIBO
Rate shall be conclusive and binding upon the Borrowers, in the absence of
manifest or demonstrable error. The Agent Bank shall, upon written request of
Borrowers or any Lender, deliver to Borrowers or such Lender, as the case may
be, a statement showing the computations used by the Agent Bank in determining
any rate hereunder.
f. Computation of interest on all Base Rate Loans
shall be calculated on the basis of a 365, or, when applicable, 366 day year
based on the actual number of days elapsed. Computation of interest on all LIBOR
Loans shall be calculated on the basis of a year of three hundred sixty (360)
days and the actual number of days elapsed. The applicable Base Rate shall be
effective the same day as a change in the Base Rate is announced by WFB as being
effective.
g. If with respect to any Interest Period, (a) the
Agent Bank reasonably determines (which determination shall be binding and
conclusive on Borrowers) that by reason of circumstances affecting the
inter-bank eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable LIBO Rate, or (b) Requisite Lenders advise Agent
Bank that the LIBO Rate as determined by Agent Bank will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding, for such
Interest Period, a LIBOR Loan under the Credit Facility, then so long as such
circumstances shall continue: (i) Agent Bank shall promptly notify Borrowers
thereof, (ii) the Lenders shall not be under any obligation to make a LIBOR Loan
or Convert a Base Rate Loan into a LIBOR Loan for which such circumstances
exist, and (iii) on the last day of the then current Interest Period, the LIBOR
Loan for which such circumstances exist shall, unless then repaid in full,
automatically Convert to a Base Rate Loan.
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h. Notwithstanding any other provisions of the
Credit Agreement, if, after the Closing Date, any law, rule, regulation, treaty,
interpretation or directive (whether having the force of law or not) or any
change therein shall make it unlawful for any Lender to make or maintain LIBOR
Loans, then (i) the commitment and agreement to maintain LIBOR Loans as to such
Lender shall immediately be suspended, and (ii) unless required to be terminated
earlier, LIBOR Loans as to such Lender, if any, shall be Converted on the last
day of the then current Interest Period applicable thereto to Base Rate Loans.
If it shall become lawful for such Lender to again maintain LIBOR Loans, then
Borrowers may once again as to such Lender request Conversions to the LIBO Rate.
During any period of such suspension, such Lender shall make Base Rate Loans.
i. The Borrowers agree that upon written notice
by: (y) Agent Bank or (z) any Lender to the Borrowers (with a copy of such
notice concurrently delivered to Agent Bank) to the effect that a promissory
note or other evidence of indebtedness is required for such Lender by a
Governmental Authority, banking regulatory agency or regulatory audit in
order for such Lender to evidence (whether for the purposes of pledge,
enforcement or otherwise) the Syndication Interest held by such Lender:
(i) The Borrowers shall promptly execute and deliver
to each Lender a promissory note payable to the order of each
such Lender (each individually a "Replacement Note" and
collectively the "Replacement Notes") in the form of the
Revolving Credit Note in the amount of each Lender's
respective Syndication Interest in the Credit Facility subject
to Scheduled Reductions to be allocated amongst Lenders in
accordance with their respective Syndication Interests;
(ii) The Replacement Notes shall, in the aggregate,
fully replace the Revolving Credit Note and each reference to
the Revolving Credit Note in this Credit Agreement and each
of the Loan Documents shall be deemed to be a collective
reference to the Replacement Notes;
(iii) Borrowings, Interest Rate Options,
Continuation/Conversion Notices and all other provisions for
the disbursement of funds, setting of interest rates and
collection of repayments of interest and principal shall
continue to be made by Agent Bank as the administrative and
collateral agent for the Lenders in the same manner and to the
same extent as provided in the Revolving Credit Note and this
Credit Agreement as fully applicable to each of the
Replacement Notes;
(iv) the Agent Bank, upon the consent of Requisite
Lenders, shall cause the Title Insurance Company to issue, at
the expense of Borrowers,
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such endorsements to the Title Insurance Policies as may be
reasonably necessary to assure the aggregate obligation
evidenced by the Replacement Notes is secured by the insured
Security Documentation with the same coverage and priority
as the obligation evidenced by the Revolving Credit Note; and
(v) Concurrently with the delivery of the Replacement
Notes, Agent Bank shall return the original Revolving Credit
Note to Borrowers marked as superseded and replaced by the
Replacement Notes.
Section 2.06. SECURITY FOR THE CREDIT FACILITY. As security
for the due and punctual payment and performance of the terms and provisions of
this Credit Agreement, the Notes and all of the other Security Documentation
shall be executed and delivered to Agent Bank, as of the Closing Date, by the
respective parties to each of the Security Documentation and recorded and/or
filed in each applicable jurisdiction as required by the Closing Instructions.
The Security Documentation shall be subordinate to the Senior Indenture Security
Documents with respect to the Senior Indenture Collateral until the Senior
Indenture Security Documents are terminated and released.
Section 2.07. PLACE AND MANNER OF PAYMENT.
a. All amounts payable by Borrowers to the
Lenders shall be made to Agent Bank on behalf of Lenders pursuant to the terms
of this Credit Agreement and the Notes and shall be made on a Banking Business
Day in lawful money of the United States of America and in immediately available
funds. Other than in connection with: (i) the Scheduled Reductions of principal,
or (ii) principal payments which may be required to decrease the Aggregate
Outstandings to an amount equal to or less than the Maximum Permitted Balance,
Borrowers shall not make repayments ("Principal Prepayments") of the outstanding
balance of principal owing under the Revolving Credit Note more frequently
than five (5) such Principal Prepayments during each calendar month. Each such
Principal Prepayment of a Base Rate Loan shall be in a minimum amount of One
Million Dollars ($1,000,000.00) (or, if less, the outstanding principal amount
of Base Rate Loans) and in increments of One Hundred Thousand Dollars
($100,000.00) in excess thereof. Each such Principal Prepayment of a LIBOR Loan
shall be in a minimum amount of Five Million Dollars ($5,000,000.00) and in
increments of One Million Dollars ($1,000,000.00) in excess thereof; provided,
that in no event shall any outstanding LIBOR Loan have a principal balance of
less then Five Million Dollars ($5,000,000.00).
b. All such amounts payable by Borrowers shall
be made to Agent Bank at its office located at Wells Fargo Bank, Syndications
Division, 201 Third Street, Eighth Floor, San Francisco, California 94103, or at
such other address as may be
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directed in writing by Agent Bank from time to time. If such payment is
received by Agent Bank prior to 11:00 a.m., Agent Bank shall credit Borrowers
with such payment on the day so received and shall disburse to the
appropriate Lenders on the same day the Pro Rata Share of payments relating
to the Credit Facility in immediately available funds. If such payment is
received by Agent Bank after 11:00 a.m., Agent Bank shall credit Borrowers
with such payment as of the next Banking Business Day and disburse to the
appropriate Lenders on the next Banking Business Day such Pro Rata Share of
such payment relating to the Credit Facility, in immediately available funds.
Any payment on the Credit Facility made by Borrowers to Agent Bank pursuant
to the terms of this Credit Agreement or the Revolving Credit Note for the
account of Lenders shall constitute payment to the appropriate Lenders. If
the Revolving Credit Note or any payment required to be made thereon or
hereunder, is or becomes due and payable on a day other than a Banking
Business Day, the due date thereof shall be extended to the next succeeding
Banking Business Day and interest thereon shall be payable at the then
applicable rate during such extension.
c. Subject to Section 2.07(a), the
outstanding principal owing under the Credit Facility and the Revolving
Credit Note may be prepaid at any time in whole or in part without penalty;
provided, however, that any portion or portions of the unpaid principal
balance which is accruing interest at a LIBO Rate may only be prepaid or
repaid on the last day of the applicable Interest Period unless Borrowers
give three (3) days prior written notice to Agent Bank and additionally pay
concurrently with such prepayment or repayment such additional amount or
amounts as will compensate Lenders for any losses, costs or expenses which
they may incur as a result of such payment, including, without limitation,
any loss (including loss of anticipated profits), cost or expense incurred by
the liquidation of deposits or other funds acquired by such Lender to fund or
maintain such LIBOR Loan ("Breakage Charges"). A certificate of a Lender
setting forth in reasonable detail as to amounts payable hereunder shall be
conclusive and binding on Borrowers for all purposes, absent manifest or
demonstrable error. Any calculation hereunder shall be made on the assumption
that each Lender that regularly funds in the London interbank market has
funded or will fund each LIBOR Loan in the London interbank market; PROVIDED
that no Lender shall have any obligation to actually fund any LIBOR Loan in
such manner.
d. Unless the Agent Bank receives notice from
an Authorized Officer prior to the date on which any payment is due to the
Lenders that the Borrowers will not make such payment in full as and when
required, the Agent Bank may assume that the Borrowers have made such payment in
full to the Agent Bank on such date in immediately available funds and the Agent
Bank may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Borrowers have not made such payment
in full to the Agent Bank, each Lender shall repay to the Agent Bank on demand
such amount
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distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such
Lender until the date repaid.
e. If, other than as expressly provided
elsewhere herein, any Lender shall obtain any payment with respect to the Bank
Facilities (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Syndication Interest, such Lender shall
immediately (a) notify the Agent Bank of such fact, and (b) purchase from the
other Lenders such participations in the Credit Facility as shall be necessary
to cause such purchasing Lender to share the excess payment with each of them in
proportion to their respective Syndication Interests; PROVIDED, however, that if
all or any portion of such excess payment is thereafter recovered from the
purchasing Lender, such purchase shall to that extent be rescinded and each
other Lender shall repay to the purchasing Lender the purchase price paid
therefor, together with an amount equal to such paying Lender's ratable share
(according to the proportion of (i) the amount of such paying Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrowers agree that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrowers in the amount of such participation. The Agent Bank will keep records
(which shall be conclusive and binding in the absence of manifest or
demonstrable error) of each participation purchased under this section and will
in each case notify the Lenders and the Borrowers following any such purchases
or repayments.
Section 2.08. THE SWINGLINE FACILITY.
a. Subject to the conditions and upon the
terms hereinafter set forth and in accordance with the terms and provisions
of the Swingline Note, a copy of which is marked Exhibit B affixed hereto,
Swingline Lender agrees to lend and advance Swingline Advances to Borrowers
in the amounts and at the times provided below. Notwithstanding anything
herein contained to the contrary, however, Borrowers shall not be entitled to
any Swingline Advances on and after ten (10) calendar days prior to the
Maturity Date.
b. With respect to each proposed Swingline
Advance, an Authorized Representative shall give Swingline Lender written notice
in the form of the Notice of Swingline Advance ("Notice of Swingline Advance"),
a copy of which is marked "Exhibit E", affixed hereto, to be received by
Swingline Lender no later than 12:00 noon on the date for each proposed
Swingline Advance specifying the requested amount to be funded or oral notice to
be received by Swingline Lender no later than 12:00 noon on such date, to be
followed by a duly completed and executed Notice of Swingline Advance no later
than
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3:00 p.m. on the same date. Swingline Lender shall, on the date for each
proposed Swingline Advance, deposit into the Designated Deposit Account in
lawful money of the United States of America in immediately available funds
such amounts as Borrowers may request; provided, that: (i) after giving
effect to such Swingline Advance, the Swingline Outstandings do not exceed
(x) Ten Million Dollars ($10,000,000.00) at any time prior to either the
Level One Commitment Increase Effective Date or the Level Two Commitment
Increase Effective Date, (y) Fifteen Million Dollars ($15,000,000.00) at any
time on and after Level One Commitment Increase Effective Date so long as the
Level One Commitment Increase is at least a like amount, or (z) Twenty
Million Dollars ($20,000,000.00) at any time on and after the Level Two
Commitment Increase Effective Date so long as the Level Two Commitment
Increase is at least a like amount, (ii) the amount requested does not exceed
the Available Borrowings, (iii) no Default or Event of Default has occurred
and is continuing, and (iv) the Closing Date shall have occurred and the
conditions precedent set forth in Sections 3.28 and 3.29 shall have been
satisfied. No more than five (5) Swingline Advances may be outstanding at any
one time. Within the foregoing limitations, Borrowers may borrow, repay and
reborrow under the Swingline Facility. Each Swingline Advance shall be in an
integral multiple of One Hundred Thousand Dollars ($100,000.00). Promptly
after receipt of each request for a Swingline Advance, Swingline Lender shall
obtain telephonic verification from Agent Bank that the amount of such
request does not exceed the then Available Borrowings (such verification to
be promptly confirmed in writing). Unless notified to the contrary by the
Swingline Lender, each repayment of a Swingline Advance shall be in an amount
which is an integral multiple of One Hundred Thousand Dollars ($100,000.00),
together with the accrued interest thereon. The Swingline Lender shall
promptly notify the Agent Bank of the Swingline Outstandings each time there
is a change therein.
c. Each Swingline Advance shall bear
interest at the Base Rate less one percent (1%) per annum and shall be
payable at the times and in the manner set forth below and, in any event, on
or before ten (10) days prior to the Maturity Date. Unless otherwise paid,
interest accrued on the unpaid balance of Swingline Outstandings shall be
paid monthly on or before the fifth (5th) day following receipt by Borrowers
of an invoice from Swingline Lender setting forth the amount of such accrued
interest. In the event any Swingline Advance is outstanding for five (5)
consecutive Banking Business Days, then on the next Banking Business Day
(unless Borrowers have made other arrangements acceptable to the Swingline
Lender to pay the Swingline Outstanding in full), Borrowers shall request a
Borrowing under the Credit Facility in an amount sufficient to pay the
applicable Swingline Advance in full, together with all interest accrued
thereon. Upon receipt of the amount of the Borrowing from the Lenders, the
Agent Bank shall provide such amount to the Swingline Lender for repayment of
the applicable Swingline Advance and the balance of the Borrowing, if any,
shall be deposited in immediately available funds to the Designated Deposit
Account. In the event Borrowers fail to request a Borrowing within the period
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specified above, Agent Bank shall, without notice to or consent of the
Borrowers and without regard to any other conditions precedent for the making of
Borrowings under the Credit Facility, including, without limitation the remedies
set forth in Section 7.02, promptly (but subject to the notice periods for
Borrowings set forth in Section 2.03) cause a Borrowing to be made and funded by
the Lenders under the Credit Facility in the amount necessary to pay the
applicable Swingline Advance in full, together with all interest accrued
thereon, to the extent of Available Borrowings, and the Borrowers shall be
deemed to have requested such Borrowing and consented to its being made as
provided for herein.
d. Each Lender's obligation to advance
Borrowings in the proportionate amount of its Syndication Interest in the Credit
Facility of any unreimbursed Swingline Outstandings pursuant hereto is several,
and not joint or joint and several. The failure of any Lender to perform its
obligation to advance a Borrowing in a proportionate amount of such Lender's
Syndication Interest of any unreimbursed Swingline Outstandings shall neither
relieve any other Lender of its obligation hereunder to advance such Borrowing
in the amount of such other Lender's proportionate Syndication Interest of such
amount, nor relieve the Lender which has failed to fund its obligations to
Borrowers hereunder. The Borrowers agree to accept the Borrowings for payment of
Swingline Outstandings as provided hereinabove, whether or not such Borrowings
could have been made pursuant to the terms of Article III B or any other section
of this Credit Agreement.
Section 2.09. ISSUANCE OF LETTERS OF CREDIT.
a. Any Authorized Representative of Borrowers
may from time to time request that a Letter of Credit be issued by delivering to
L/C Issuer (with a telecopy to the Agent Bank) on a Banking Business Day, at
least five (5) Banking Business Days prior to the date of such proposed
issuance, an L/C Agreement in L/C Issuer's then standard form (consistent with
the terms of the Credit Agreement), completed to the satisfaction of L/C Issuer
and such other certificates as the L/C Issuer may reasonably request; provided,
however, that no Letter of Credit shall be issued (a) if any Default or Event of
Default has occurred and remains continuing, or (b) if after giving effect to
the issuance thereof, the aggregate Stated Amount of outstanding Letters of
Credit would exceed (x) Ten Million Dollars ($10,000,000.00) at any time prior
to either the Level One Commitment Increase Effective Date or the Level Two the
Commitment Increase Effective Date, or (y) Fifteen
Million Dollars ($15,000,000.00) at any time on and after the Level One
Commitment Increase Effective Date, so long as the Level One Commitment Increase
is at least a like amount, or (z) Twenty-Five Million Dollars ($25,000,000.00)
at any time on and after the Level Two Commitment Increase Effective Date so
long as the Level Two Commitment Increase is at least a like amount, or (c) the
Stated Amount of the requested Letter of Credit exceeds the Maximum
Availability. Each Letter of Credit shall be issued by the L/C Issuer on the
Banking Business Day specified in the Borrowers' application therefor. Each
request
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for a Letter of Credit and each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits, International Chamber
of Commerce Publication New 1994 Revision No. 500, or any successor
publication then in effect. In no event shall any Letter of Credit have a
Stated Expiry Date later than thirty (30) days prior to the Maturity Date.
Promptly after receipt of each request for the issuance of a Letter of Credit
and immediately prior to the issuance thereof, L/C Issuer shall obtain
telephonic verification from Agent Bank that the amount of such request does
not exceed the then Available Borrowings. The L/C Issuer shall promptly
notify the Agent Bank of the aggregate L/C Exposure of outstanding Letters of
Credit each time there is a change therein. Each Lender (other than the L/C
Issuer) agrees that, upon the issuance of any Letter of Credit it shall
automatically acquire a participation interest in the L/C Issuer's liability
under such Letter of Credit in an amount equal to such Lender's Pro Rata
Share of such liability, and each Lender (other than the L/C Issuer) thereby
shall absolutely, unconditionally and irrevocably assume, as primary obligor
and not as surety, and shall be unconditionally obligated to the L/C Issuer
to pay and discharge when due, its Pro Rata Share of the L/C Issuer's
liability under such Letter of Credit.
b. Upon presentation of a draft drawn under
any Letter of Credit, L/C Issuer shall promptly notify the Agent Bank and
Borrowers of the amount under such draft and the date upon which such draft
is to be funded. On or before two (2) Banking Business Days following such
notice (unless Borrowers have made other arrangements acceptable to the L/C
Issuer to pay the amount of such draft in full), Borrowers shall request a
Borrowing under the Credit Facility in an amount sufficient to pay the amount
of such draft in full. The Agent Bank, upon receipt of such funds from the
Lenders, shall automatically provide such amount to the L/C Issuer for
payment of the amount of such draft and the balance of the Borrowing shall be
deposited in immediately available funds to the Designated Deposit Account.
In the event Borrowers fail to advance to the L/C Issuer the amount of such
draft from Borrowers' available funds or request a Borrowing within two (2)
Banking Business Days from receipt of the notice as specified above, on the
third (3rd) Banking Business Day following Agent Bank's receipt of such
notice, Agent Bank shall, without notice to or consent of the Borrowers and
without regard to any other conditions precedent for the making of Borrowings
under the Credit Facility, including, without limitation the remedies set
forth in Section 7.02, cause (subject to the notice periods for Borrowings
set forth in Section 2.03) a Borrowing to be made and funded by the Lenders
under the Credit Facility in the amount necessary to pay the amount of such
draft in full. Upon the occurrence of any Event of Default, L/C Issuer shall,
without notice or further authorization or consent of Borrowers whatsoever,
be authorized to immediately cause the Cash Collateral Account to be
established and funded by Lenders with a Borrowing advanced to Agent Bank
equal to the aggregate amount of the L/C Exposure then outstanding. All
amounts held by L/C Issuer in the Cash Collateral Account shall be held as
security for the repayment of any L/C Reimbursement Obligation thereafter
arising
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pursuant to the terms of the L/C Agreement(s) and the Cash Collateral Pledge
Agreement. Borrowings advanced by Lenders to pay drafts drawn upon or to
secure repayment of the L/C Exposure under Letters of Credit pursuant to this
subsection shall: (i) constitute Borrowings under the Credit Facility, (ii)
initially be Base Rate Loans and (iii) be subject to all of the provisions of
this Credit Agreement concerning Borrowings under the Credit Facility, except
that such Borrowings shall be made upon demand of the Agent Bank as set forth
above rather than upon Notice of Borrowing by Borrowers and shall be made,
notwithstanding anything in this Credit Agreement to the contrary, without
regard to any other conditions precedent to the making of Borrowings under
the Credit Facility and notwithstanding any Default or Event of Default
thereunder. All amounts paid by L/C Issuer on a draft drawn under any Letter
of Credit which has not been funded or concurrently reimbursed by Borrowers
or through a Borrowing as provided hereinabove, shall bear interest at the
Base Rate plus the Applicable Margin per annum until repaid or reimbursed to
L/C Issuer.
c. Each Lender's obligation to advance
Borrowings in the proportionate amount of its Syndication Interest in the Credit
Facility of any unreimbursed amounts outstanding under any Letter of Credit
pursuant hereto is several, and not joint or joint and several. The failure of
any Lender to perform its obligation to advance a Borrowing in a proportionate
amount of such Lender's Syndication Interest of any unreimbursed amounts
outstanding under a Letter of Credit will not relieve any other Lender of its
obligation hereunder to advance such Borrowing in the amount of such other
Lender's proportionate Syndication Interest of such amount, nor relieve the
Lender which has failed to fund of its obligation to fund hereunder. The
Borrowers agree to accept the Borrowings for payment of Letters of Credit as
provided hereinabove, whether or not such Borrowings could have been made
pursuant to the terms of Article III B or any other section of this Credit
Agreement.
d. Letters of Credit shall be used and issued
for the benefit of Borrowers for the general corporate purposes of Borrowers, or
any of them, relating to the Hotel/Casino Facilities or any New Venture.
Section 2.10. FEES.
a. On the date of execution of this Credit
Agreement, on the Closing Date and on each other applicable date, Borrowers
shall pay the fees as required in the Fee Side Letter, each of such fees to
be retained by Agent Bank or distributed to Lenders as agreed between Agent
Bank and each Lender.
b. Borrowers shall pay a quarterly nonusage
fee (the "Commitment Fee") to the Agent Bank for the account of Lenders based on
the Leverage
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Ratio, calculated as of each Fiscal Quarter end with reference to the
Borrower Consolidation, to determine applicable Commitment Percentage
determined as set forth in Table Two of the definition of Applicable Margin.
The Commitment Fee shall be calculated as the product
of (i) the applicable Commitment Percentage multiplied by (ii) the daily average
of the Maximum Permitted Balance less the daily average of the Funded
Outstandings and less the daily average of the amount of L/C Exposure
attributable to all outstanding Standby Letters of Credit, computed on the basis
of a three hundred sixty-five (365), or three hundred sixty-six (366) when
appropriate, day year based on the number of actual days elapsed. Each
Commitment Fee shall be payable in arrears on a quarterly basis on or before the
first (1st) day of the third (3rd) month following each applicable Fiscal
Quarter end and upon termination of this Credit Agreement, whether at maturity,
by acceleration or otherwise. Each Commitment Fee shall be promptly distributed
by Agent Bank to Lenders in proportion to their respective Syndication Interests
in the Credit Facility.
c. In connection with the issuance of each
Standby Letter of Credit, Borrowers shall pay the following fees (collectively
the "Standby L/C Fee"): (i) concurrently with such issuance an issuance fee to
L/C Issuer for its own account in an amount equal to the Stated Amount of each
such Standby Letter of Credit multiplied by one-quarter of one percent (.25%);
and (ii) a standby fee to the Agent Bank for the account of Lenders to be
promptly distributed by Agent Bank to Lenders in proportion to their respective
Syndication Interests in the Credit Facility following receipt of each such
standby fee by Agent Bank, in an amount equal to the L/C Exposure of each such
Standby Letter of Credit multiplied by the Applicable Margin percentage for
LIBOR Loans made as of the date of issuance of each such Standby Letter of
Credit, calculated on a per annum basis commencing on such date of issuance and
continuing until the Stated Expiry Date of each such Standby Letter of Credit,
payable in advance on a quarterly basis on the issuance date and on or before
the second Banking Business Day following the beginning of each Fiscal Quarter.
Concurrently with the issuance of each Commercial Letter of Credit, Borrowers
shall pay a commercial letter of credit issuance fee to the L/C Issuer for its
own account ("Commercial L/C Fee") in an amount equal to the Stated Amount of
each such Commercial Letter of Credit multiplied by one-quarter of one percent
(.25%), calculated on a per annum basis for the number of days elapsing from the
issuance date to the Stated Expiry Date of each such Commercial Letter of
Credit. All L/C Fees paid by Borrowers are nonrefundable and shall be deemed
fully earned upon issuance of the applicable Letter of Credit.
Section 2.11. INTEREST ON OVERDUE AMOUNTS AND DEFAULT RATE.
a. If any payment due under the Revolving
Credit Note is not paid when due, Borrowers shall additionally pay interest on
such overdue amounts
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(including on overdue interest to the extent permitted by applicable law) at
a rate per annum equal to two percent (2%) over the Base Rate.
b. In the event of the existence of an Event
of Default, commencing on the first (1st) Banking Business Day following the
receipt by Borrowers of written notice of the occurrence of such Event of
Default from Agent Bank, the total of the unpaid balance of the principal and
the then accrued and unpaid interest owing under the Revolving Credit Note shall
collectively commence accruing interest at a rate equal to two percent (2%) over
the interest rate or rates otherwise accruing under the Credit Facility (the
"Default Rate") until such time as all payments and additional interest are
paid, together with the curing of any Events of Default which may exist, at
which time the interest rate shall revert to that rate of interest otherwise
accruing pursuant to the terms of the Revolving Credit Note.
c. In the event of the occurrence of an Event
of Default, Borrowers agree to pay all reasonable costs of collection, including
all reasonable attorneys' fees and costs, in addition to and at the time of the
payment of such sum of money and/or the performance of such acts as may be
required to cure such default. In the event legal action is commenced for the
collection of any sums owing hereunder or under the terms of the Notes the
Borrowers agree that any judgment issued as a consequence of such action against
Borrowers and/or any Subsidiary Guarantor shall bear interest at a rate equal to
the Default Rate until fully paid.
Section 2.12. NET PAYMENTS. All payments under this Credit
Agreement, the Revolving Credit Note, the Swingline Note and/or a L/C
Reimbursement Obligation shall be made without set-off, counterclaim,
recoupment or defense of any kind (other than prior payment) and in such
amounts as may be necessary in order that all such payments, after deduction
or withholding for or on account of any future taxes, levies, imposts, duties
or other charges of whatsoever nature imposed by the United States or any
Governmental Authority, other than franchise taxes or any tax on or measured
by the gross receipts or overall net income of any Lender pursuant to the
income tax laws of the United States or any State, or the jurisdiction where
each Lender's principal office is located (collectively "Taxes"), shall not
be less than the amounts otherwise specified to be paid under this Credit
Agreement and the Revolving Credit Note. A certificate as to any additional
amounts payable to the Lenders under this Section 2.12 submitted to the
Borrowers by the Lenders shall certify that such payments were actually
incurred by the applicable Lenders and shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in
good faith such amount and shall be conclusive absent manifest or
demonstrable error. Any amounts payable by the Borrowers under this Section
2.12 with respect to past payments shall be due within ten (10) days
following receipt by the Borrowers of such certificate from the Lenders; any
such amounts payable with respect to
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future payments shall be due within ten (10) days after demand for such
future payments. With respect to each deduction or withholding for or on
account of any Taxes, the Borrowers shall promptly furnish to the Lenders
such certificates, receipts and other documents as may be required (in the
reasonable judgment of the Lenders) to establish any tax credit to which the
Lenders may be entitled.
Section 2.13. INCREASED COSTS. If after the Closing Date the
adoption of, or any change in, any applicable law, rule or regulation (including
without limitation Regulation D of the Board of Governors of the Federal Reserve
System and any successor thereto), or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender with any future request or future directive (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency:
a. Shall subject any Lender to any tax, duty
or other charge with respect to the Credit Facility, the Revolving Credit Note,
the Swingline Note and/or a L/C Reimbursement Obligation or such Lender's
obligation to make any funding of the Credit Facility, or shall change the basis
of taxation of payments to such Lender of the principal of, or interest on, the
Credit Facility or any other amounts due under the Revolving Credit Note, the
Swingline Note and/or a L/C Reimbursement Obligation in respect of the Credit
Facility or such Lender's obligation to fund the Credit Facility (except for
changes in the rate of tax on the overall net income of such Lender imposed by
the United States or any Governmental Authority pursuant to the income tax laws
of the United States or any State, or the jurisdiction where each Lender's
principal office is located); or
b. With respect to the Bank Facilities or the
obligation of the Lenders to advance Borrowings under the Credit Facility or to
issue or participate in Letters of Credit under the L/C Facility, shall impose,
modify or deem applicable any reserve imposed by the Board of Governors of the
Federal Reserve System, special deposit, capitalization, capital adequacy or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender; or
c. Shall impose on any Lender any other
condition affecting the Credit Facility, the Revolving Credit Note or such
Lender's obligation to advance Borrowings under the Credit Facility;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D or reserve requirements referred to above or a successor
thereto, to impose a cost on) such Lender of making or maintaining the Credit
Facility, or to reduce the amount of any sum received or receivable by such
Lender under the Revolving Credit Note, in each case in a
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manner not otherwise given effect on the calculation of amounts payable by
Borrowers hereunder, then within ten (10) days after demand by such Lender,
the Borrowers shall pay directly to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost (or in the
case of Regulation D or reserve requirements referred to above or a successor
thereto, such costs which may be imposed upon such Lender) or such reduction
of any sum received or receivable under the Revolving Credit Note. A
certificate as to any additional amounts payable to any Lender under this
Section 2.13 submitted to the Borrowers by such Lender shall certify that
such costs were actually incurred by such Lender and shall show in reasonable
detail an accounting of the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent manifest
or demonstrable error.
Section 2.14. MITIGATION; EXCULPATION; REPLACEMENT LENDER.
a. Each Lender further agrees that it will use
reasonable efforts not materially disadvantageous to it (in its reasonable
determination) in order to avoid or minimize, as the case may be, the payment by
the Borrowers of any additional amounts pursuant to Section 2.12 or 2.13. Each
Lender represents, to the best of its knowledge, that as of the Closing Date no
such amounts are payable to it.
b. Borrowers shall not be liable to any Lender
for any payments under Section 2.12 or 2.13 arising to the extent of such
Lender's gross negligence or willful misconduct or for amounts which were
incurred more than ninety (90) days prior to the date Borrowers are notified of
the incurrence of such amount. If Borrowers make any payment to any Lender under
Section 2.12 or 2.13 and such Lender subsequently receives a refund or a credit
from the applicable Governmental Authority as a result of such payment, such
Lender shall promptly pay the amount of such refund or credit to the Borrowers
to the extent such Lender shall have previously received such amounts from the
Borrowers.
c. If the Borrowers become obligated to pay
additional amounts to any Lender described in Section 2.12 or 2.13, the
Borrowers may designate a financial institution reasonably acceptable to the
Agent Bank to replace such Lender by purchasing for cash and receiving an
assignment of such Lender's Syndication Interest in the Credit Facility without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding amounts owing to such Lender, or, so long as no Default
or Event of Default has occurred and remains continuing, may remove such Lender
by paying to such Lender such purchase price and reducing the Credit Facility by
an amount equal to the product of the Pro Rata Share of such Lender multiplied
by the Aggregate Commitment then in effect prior to such removal.
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Section 2.15. COMMITMENT INCREASES AND TERM LOANS.
Concurrently with the written notice to be given to Agent Bank and Lenders in
connection with the Commitment Increases and Term Loans as provided below,
Borrowers may in their discretion offer to each Lender the opportunity to
participate in such Commitment Increases and Term Loans on the same terms as are
offered to other prospective lenders which are solicited by Borrowers as sources
of funding for such Commitment Increases and/or Term Loans.
a. LEVEL ONE COMMITMENT INCREASE. Borrowers
may, by written notice to the Agent Bank and the Lenders, increase the Aggregate
Commitment by an additional principal amount up to the lesser of (x) Fifty
Million Dollars ($50,000,000.00), and (y) the then amount of Level One
Availability (the actual amount of such increase to the Aggregate Commitment
being herein referred to as the "Level One Commitment Increase") subject to the
satisfaction of each of the following conditions precedent ("Level One
Commitment Increase Conditions"): (i) more than six (6) calendar months shall
have elapsed following the Closing Date, (ii) the Second Anniversary Date shall
not have occurred, (iii) the obligation to fund the Level One Commitment
Increase is assumed by a Lender or Lenders then party to this Credit Agreement
or by a Person or Persons that are Eligible Assignees, in each case acceptable
to Borrowers and, in the latter case, reasonably acceptable to the Agent Bank,
and in each instance evidenced in writing by execution of an Assumption and
Consent Agreement in substantially the form of Exhibit K attached hereto,
executed by each such assuming Lender or Eligible Assignee, Agent Bank and
Borrowers, provided that no Lender shall have any obligation to increase its
Syndication Interest in effect as of the Closing Date, (iv) each such assuming
Lender or Eligible Assignee concurrently purchases a Pro Rata Share of the
Funded Outstandings (and each Lender hereby agrees to sell the appropriate
proportion of its Pro Rata Share at par value to such assuming Lender or
Eligible Assignee) that is equivalent to the increased new Pro Rata Share of
each such assuming Lender or Eligible Assignee after giving effect to the Level
One Commitment Increase and such Lender's Syndication Interest in the Aggregate
Commitment; (v) Borrowers pay Agent Bank the appropriate fees as set forth in
the Fee Side Letter and any amount owing under Section 2.07(c), (vi) the Level
One Commitment Increase shall not increase the Pro Rata Share of the Aggregate
Commitment and the Pro Rata Share of the amount of the Funded Outstandings held
by any other Lender absent the express written consent of that Lender, (vii)
Borrowers, at Borrowers' expense, shall cause the Title Insurance Policies to be
endorsed with a 110.5 or other appropriate endorsements for the purpose of
assuring continuing coverage of the Security Documentation insured thereunder,
as such Security Documentation may be amended or modified in connection with the
Level One Commitment Increase, (viii) the Level One Commitment Increase shall be
made on a one-time basis only, and (ix) the Level One Commitment Increase shall
not be available for advance by Lenders until each condition precedent set forth
in Sections 3.33, 3.38, 3.41 (giving pro forma effect only to the Level One
Commitment Increase) and 3.43
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of Article III C shall have occurred and been fully satisfied. Giving effect
to the Level One Commitment Increase and purchase of Pro Rata Shares of the
Funded Outstandings, adjustments shall be made to the Pro Rata Shares of the
Lenders in the Aggregate Commitment and the Pro Rata Shares of Funded
Outstandings such that the Pro Rata Shares of each Lender in the Aggregate
Commitment shall be identical to its Pro Rata Share of the Funded
Outstandings. The Agent Bank shall promptly thereafter prepare and circulate
to Borrowers and the Banks a revised Schedule of Lenders' Proportions in
Credit Facility reflecting such increased Aggregate Commitment and the
revised Pro Rata Shares of the Lenders in the Credit Facility, and such
revised Schedule of Lenders' Proportions in Credit Facility shall supersede
and replace the then existing Schedule of Lenders' Proportions in Credit
Facility.
b. LEVEL TWO COMMITMENT INCREASE. Borrowers
may, by written notice to the Agent Bank and the Lenders, increase the Aggregate
Commitment by an additional principal amount up to the lesser of (x) One Hundred
Fifty Million Dollars ($150,000,000.00), and (y) the then amount of Level Two
Availability (the actual amount of such increase to the Aggregate Commitment
being herein referred to as the "Level Two Commitment Increase") subject to the
satisfaction of each of the following conditions precedent ("Level Two
Commitment Increase Conditions"): (i) the Second Anniversary Date shall not have
occurred, (ii) the obligation to fund the Level Two Commitment Increase is
assumed by a Lender or Lenders then party to this Credit Agreement or by a
Person or Persons that are Eligible Assignees, in each case acceptable to
Borrowers and, in the latter case, reasonably acceptable to the Agent Bank, and
in each instance evidenced in writing by execution of an Assumption and Consent
Agreement in substantially the form of Exhibit K attached hereto, executed by
each such assuming Lender or Eligible Assignee, Agent Bank and Borrowers,
provided that no Lender shall have any obligation to increase its Syndication
Interest in effect as of the Closing Date, (iii) each such assuming Lender or
Eligible Assignee concurrently purchases a Pro Rata Share of the Funded
Outstandings (and each Lender hereby agrees to sell the appropriate proportion
of its Pro Rata Share at par value to such assuming Lender or Eligible Assignee)
that is equivalent to the increased new Pro Rata Share of each such assuming
Lender or Eligible Assignee after giving effect to the Level Two Commitment
Increase and such Lender's Syndication Interest in the Aggregate Commitment;
(iv) Borrowers pay Agent Bank the appropriate fees as set forth in the Fee Side
Letter and any amounts owing under Section 2.07(c), (v) the Level Two Commitment
Increase shall not increase the Pro Rata Share of the Aggregate Commitment and
the Pro Rata Share of the amount of the Funded Outstandings held by any other
Lender absent the express written consent of that Lender, (vi) Borrowers, at
Borrowers' expense, shall cause the Title Insurance Policies to be endorsed with
a 110.5 or other appropriate endorsements for the purpose of assuring continuing
coverage of the Security Documentation insured thereunder, as such Security
Documentation may be amended or modified in connection with the Level Two
Commitment Increase, (vii) the Level Two Commitment Increase shall be
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made on a one-time basis only, and (viii) the Level Two Commitment Increase
shall not be available for advance by Lenders until each condition precedent
set forth in Article III C with reference to the Level Two Commitment
Increase shall have occurred and been fully satisfied. Giving effect to the
Level Two Commitment Increase and purchase of Pro Rata Shares of the Funded
Outstandings, adjustments shall be made to the Pro Rata Shares of the Lenders
in the Aggregate Commitment and the Pro Rata Shares of Funded Outstandings
such that the Pro Rata Shares of each Lender in the Aggregate Commitment
shall be identical to its Pro Rata Share of the Funded Outstandings. The
Agent Bank shall promptly thereafter prepare and circulate to Borrowers and
the Banks a revised Schedule of Lenders' Proportions in Credit Facility
reflecting such increased Aggregate Commitment and the revised Pro Rata
Shares of the Lenders in the Credit Facility, and such revised Schedule of
Lenders' Proportions in Credit Facility shall supersede and replace the then
existing Schedule of Lenders' Proportions in Credit Facility.
c. LEVEL ONE TERM LOAN. Borrowers may, by
written notice to the Agent Bank and the Lenders, incur the Level One Term Loan
in an aggregate principal amount up to the lesser of (x) Seventy-Five Million
Dollars ($75,000,000.00), and (y) the then amount of Level One Availability,
subject to the satisfaction of each of the following conditions precedent
("Level One Term Loan Conditions"): (i) the Borrowers shall not solicit the
participation of any commercial bank or any of their respective Subsidiaries or
Affiliates (other than the Lenders) for funding all or any portion of the Level
One Term Loan until six (6) calendar months shall have elapsed following the
Closing Date, (ii) the Second Anniversary Date shall not have occurred, (iii)
the Level One Term Loan is funded by a Person or Persons that are Eligible Term
Lenders, in each case acceptable to Borrowers and reasonably acceptable to the
Agent Bank, (iv) all material covenants, terms and conditions of such Level One
Term Loan shall be reasonably acceptable to the Requisite Lenders, (v) Agent
Bank and the holders of all Pari Passu Notes evidencing such Level One Term Loan
or the authorized agent, trustee or other representative thereof shall execute
an Intercreditor Agreement providing for such terms, conditions and
understandings as may be reasonably required by Agent Bank upon the approval of
Requisite Lenders, (vi) the Level One Term Loan shall be made on a one-time
basis only, (vii) Agent Bank and Lenders shall have received such information
concerning the Level One Term Loan and the holders of the applicable Pari Passu
Notes as may be reasonably requested, (viii) Agent Bank shall have received such
legal opinions and other assurances as the Requisite Lenders may reasonably
request, (ix) Borrowers shall deliver to Agent Bank a duly executed and
completed Compliance Certificate as of the end of the most recently ended Fiscal
Quarter, prepared on a pro forma basis based on the assumption that the Level
One Term Loan had occurred one (1) year prior to the end of the most recently
ended Fiscal Quarter showing no Default or Event of Default, (x) no Default or
Event of Default shall have occurred and remains continuing, and (xi) Borrowers
shall have reimbursed Agent Bank for all reasonable fees and out-of-pocket
expenses incurred by Agent Bank in connection with the Level One Term
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Loan, including, but not limited to, escrow charges, title insurance
premiums, recording fees, reasonable attorney's fees of Henderson & Morgan,
LLC and co-counsel retained by Henderson & Morgan, LLC and all other like
reasonable fees and expenses remaining unpaid as of the closing of the Level
One Term Loan, provided that the amount then invoiced shall not thereafter
preclude Borrowers' obligation to pay such costs and expenses relating to the
closing of the Level One Term Loan or to reimburse Agent Bank for the payment
thereof.
d. LEVEL TWO TERM LOAN. Borrowers may, by
written notice to the Agent Bank and the Lenders, incur the Level Two Term Loan
in an aggregate principal amount up to the lesser of (x) One Hundred Fifty
Million Dollars ($150,000,000.00), and (y) the then amount of Level Two
Availability, subject to the satisfaction of each of the following conditions
precedent ("Level Two Term Loan Conditions"): (i) the Second Anniversary Date
shall not have occurred, (ii) the Level Two Term Loan is funded by a Person or
Persons that are Eligible Term Lenders, in each case acceptable to Borrowers and
reasonably acceptable to the Agent Bank, (iii) each condition precedent set
forth in Sections 3.30, 3.31, 3.32, 3.34, 3.35, 3.36, 3.37, 3.39, 3.40, 3.42 and
3.43 of Article III C shall have occurred and been fully satisfied, (iv) all
material covenants, terms and conditions of such Level Two Term Loan shall be
reasonably acceptable to the Requisite Lenders, (v) Agent Bank and the holders
of all Pari Passu Notes evidencing such Level Two Term Loan or the authorized
agent, trustee or other representative thereof shall execute an Intercreditor
Agreement providing for such terms, conditions and understandings as may be
reasonably required by Agent Bank upon the approval of Requisite Lenders, (vi)
the Level Two Term Loan shall be made on a one-time basis only, (vii) Agent Bank
and Lenders shall have received such information concerning the Level Two Term
Loan and the holders of the applicable Pari Passu Notes as may be reasonably
requested, (viii) Agent Bank shall have received such legal opinions and other
assurances as the Requisite Lenders may reasonably request, (ix) Borrowers shall
deliver to Agent Bank a duly executed and completed Compliance Certificate as of
the end of the most recently ended Fiscal Quarter, prepared on a pro forma basis
based on the assumption that the Level Two Term Loan had occurred one (1) year
prior to the end of the most recently ended Fiscal Quarter showing no Default or
Event of Default, (ix) no Default or Event of Default shall have occurred and
remains continuing.
ARTICLE III
CONDITIONS PRECEDENT TO THE CLOSING DATE
A. CLOSING CONDITIONS. The obligation of each of the Banks
hereunder is subject to the following conditions precedent, each of which shall
be satisfied prior to July 31, 1999 (unless all of the Banks, in their sole and
absolute discretion, shall agree
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otherwise). The occurrence of the Closing Date is subject to and contingent
upon Agent Bank having received, in each case in form and substance
reasonably satisfactory to Agent Bank, or in the case of an occurrence,
action or event, the occurrence of, each of the following:
Section 3.01. CREDIT AGREEMENT. On or before the Closing Date,
executed counterparts of this Credit Agreement in sufficient duplicate originals
for Borrowers and each of the Banks shall be executed by Borrowers and Banks and
delivered to Agent Bank.
Section 3.02. THE NOTES.
a. The Revolving Credit Note duly executed by
the Borrowers in favor of Agent Bank.
b. The Swingline Note duly executed by the
Borrowers in favor of Swingline Lender.
Section 3.03. SECURITY DOCUMENTATION. The Security
Documentation duly executed by each applicable Borrower or other party thereto,
consisting of the following:
a. Security Agreement (Argosy), together with
a fully executed Irrevocable Stock Power for each stock certificate and an
allonge in favor of Agent Bank for each Intercompany Note which is pledged
thereunder;
b. Security Agreement (AGC), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
c. Security Agreement (AOLI), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
d. Security Agreement (CQP), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
e. Security Agreement (TIGC), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
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f. Security Agreement (IGC), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
g. Security Agreement (Jazz), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
h. Security Agreement (MGC), together with a
fully executed Irrevocable Stock Power for each stock certificate and an allonge
in favor of Agent Bank for each Intercompany Note which is pledged thereunder;
i. Cash Collateral Pledge Agreement executed
by each of the Borrowers;
j. Argosy I Ship Mortgage;
k. Alton Belle II Ship Mortgage;
l. Argosy III Ship Mortgage;
m. Argosy IV Ship Mortgage;
n. Argosy V Ship Mortgage;
o. Spirit of America Ship Mortgage;
p. Alton Landing Ship Mortgage;
q. Baton Rouge Mortgage;
r. Riverside Deed of Trust;
s. Financing Statements (Argosy);
t. Financing Statements (AGC);
u. Financing Statements (AOLI);
v. Financing Statements (CQP);
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w. Financing Statements (TIGC);
x. Financing Statements (IGC);
y. Financing Statements (Jazz);
z. Financing Statements (MGC);
aa. Trademark Security Agreement;
bb. Alton Assignment of Permits, Contracts,
Rents and Revenues;
cc. Baton Rouge Assignment of Permits,
Contracts, Rents and Revenues;
dd. Riverside Assignment of Permits, Contracts,
Rents and Revenues;
ee. Sioux City Assignment of Permits,
Contracts, Rents and Revenues;
ff. Assignment of Alton Development Agreement;
gg. Defeasance Account Agreement; and
hh. Baton Rouge Collateral Assignment.
Section 3.04. OTHER LOAN DOCUMENTS. The following Loan
Documents duly executed by each applicable Borrower and any other applicable
party thereto consisting of the following:
a. Environmental Certificate; and
b. Alton Development Agreement Estoppel
Certificate.
Section 3.05. ARTICLES OF INCORPORATION, BYLAWS, CORPORATE
RESOLUTION AND CERTIFICATE OF GOOD STANDING. Agent Bank shall have received from
each of Argosy, MGC, AGC, IGC, Jazz, AOLI and TIGC (collective the "Corporate
Borrowers"): (i) a Certificate of Good Standing each issued by the Secretary of
State for the State of the applicable state of incorporation and each dated
within thirty (30) calendar days of the Closing Date, (ii) a
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copy of the respective articles of incorporation and by-laws certified as of
the Closing Date to be true, correct and complete by a duly Authorized
Representative of each of the Corporate Borrowers, respectively, (iii) an
original Certificate of Corporate Resolution and Certificate of Incumbency
executed by the Secretary of each of the Corporate Borrowers and attested to
by its respective President, Vice President, or Treasurer authorizing each
such Corporate Borrower to enter into all documents and agreements to be
executed by it pursuant to this Credit Agreement and further authorizing and
empowering the officer or officers who will execute such documents and
agreements with the authority and power to execute such documents and
agreements on behalf of each respective corporation.
Section 3.06. PARTNERSHIP DOCUMENTATION. Agent Bank shall have
received each of the Partnership Agreements, together with all amendments,
modifications and attachments to each such agreement, each certified as of the
Closing Date to be true, correct and complete by an Authorized Representative.
Section 3.07. CLOSING CERTIFICATE AND AUTHORIZED
REPRESENTATIVES CERTIFICATE. Agent Bank shall have received from each of the
Borrowers: (i) designation by corporate/partnership certificate ("Authorized
Representative Certificate"), substantially in the form of the Authorized
Representative Certificate marked "Exhibit I", affixed hereto and by this
reference incorporated herein and made a part hereof, of the officers/partners
of Borrowers who are authorized to give Notices of Borrowing,
Continuation/Conversion Notices, Pricing Certificates, Notices of Swingline
Advances, request for the issuance of Letters of Credit and all other notices,
requests, reports, consents, certifications, actions and authorizations on
behalf of the Borrowers (each individually an "Authorized Representative" and
collectively the "Authorized Representative") and (ii) an original closing
certificate ("Closing Certificate"), substantially in the form of the Closing
Certificate marked "Exhibit J", affixed hereto and by this reference
incorporated herein and made a part hereof, duly executed by an Authorized
Representative of each of the Borrowers.
Section 3.08. OPINION OF COUNSEL. One or more opinions of
counsel to the Borrowers and addressed to the Agent Bank on behalf of itself and
each of the Banks, together with their respective successors and assigns,
opining as to each of the matters set forth in the form of the legal opinion
marked "Exhibit O", affixed hereto and by this reference incorporated herein and
made a part hereof.
Section 3.09. TITLE INSURANCE POLICIES. The Title Insurance
Policies, and endorsements thereto, (or proforma commitment for the issuance
thereof) insuring the priority of the Riverside Deed of Trust and the Baton
Rouge Mortgage consistent with the requirements of the Closing Instructions.
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Section 3.10. SURVEY. If the Title Insurance Company requires
a survey as a condition of issuing the Title Insurance Policies consistent with
the Closing Instructions, a current boundary and location survey for the real
property encumbered by the Shore Mortgages, which must (i) be certified to Agent
Bank and the Title Insurance Company, (ii) show the applicable real property to
be free of encroachments, overlaps, and other survey defects, (iii) show the
courses and distances of the lot lines for the real property, (iv) show that all
existing improvements are located within said lot and building lines, and (v)
show the location of all above and below ground easements, improvements,
appurtenances, utilities, rights-of-way, water rights and ingress and egress, by
reference to book and page numbers and/or filed map reference.
Section 3.11. PRIORITY OF SHIP MORTGAGES. The Ship Mortgages
shall be junior in priority only to (a) Permitted Encumbrances and (b) the
Senior Indenture Security Documents until no later than October 1, 2000.
Section 3.12. INDENTURES. On or before the Closing Date,
Agent Bank shall have received true and correct final execution copies of:
a. the Senior Indenture;
b. the Purchase/Solicitation Statement;
c. the Convertible Notes Indenture; and
d. the New Indenture.
Section 3.13. CONSUMMATION OF TENDER OFFER AND CONSENT
SOLICITATION.
a. Holders of the First Mortgage Notes shall
have tendered no less than 85.0% in aggregate principal amount of the First
Mortgage Notes in accordance with the Tender Offer and the Purchase/Solicitation
Statement.
b. The First Mortgage Notes Redemption shall
have occurred;
c. The Redemption Consideration and the
Consent Solicitation Consideration shall have been paid; and
d. The amendments to the Senior Indenture set
forth in the Consent Solicitation shall be in full force and effect and Agent
Bank should have received a true and correct fully executed copy of the Senior
Indenture Amendment.
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Section 3.14. OUTSTANDING FIRST MORTGAGE NOTES PAYMENT
FUND. On or before the Closing Date, each of the following shall have occurred:
a. Borrowers, the Defeasance Custodian and
Agent Bank shall have executed and delivered the Defeasance Account Agreement
and the Defeasance Account Agreement shall be binding and enforceable on the
parties thereto in all respects; and
b. The Defeasance Consideration shall be
funded into the Defeasance Account or Agent Bank shall have been irrevocably
instructed by Borrowers to fund the Defeasance Account with the amount of the
Defeasance Consideration from the Closing Disbursement.
Section 3.15. NEW INDENTURE. The New Indenture shall be
prepared in a form and content acceptable to Agent Bank, consistent with the
requirements contained in the definition of Subordinated Debt, and executed by
all applicable parties thereto, the Initial Senior Subordinated Notes shall have
been issued by Argosy and Argosy shall have received the proceeds thereof, net
of any expenses, discounts and any other amounts due to the initial purchasers
or third parties in connection with offering and issuance of the Initial Senior
Subordinated Notes (the "Senior Subordinated Notes Effective Date").
Section 3.16. INSURANCE. Copies of the declaration pages of
each of the insurance policies certified to be true and correct by an Authorized
Representative of the Borrowers, together with original binders evidencing
Borrowers as named insured, and original certificates of insurance, loss payable
and mortgagee endorsements naming Agent Bank as mortgagee, loss payee and
additional insured, as required by the applicable insurance provisions set forth
in Section 5.09 of this Credit Agreement.
Section 3.17. PAYMENT OF FEES. Payment by Borrowers to
Agent Bank of the fees to the extent then due and payable on the Closing Date
as provided in Section 2.10(a) hereinabove.
Section 3.18. REIMBURSEMENT FOR EXPENSES AND FEES.
Reimbursement by Borrowers for all reasonable fees and out-of-pocket expenses
incurred by Agent Bank in connection with the Credit Facility, including, but
not limited to, escrow charges, title insurance premiums, environmental
examinations, recording fees, reasonable attorney's fees of Henderson & Morgan,
LLC and co-counsel retained by Henderson & Morgan, LLC and all other like fees
and expenses remaining unpaid as of the Closing Date to the extent then due and
payable on the Closing Date, provided that the amount then invoiced shall not
thereafter preclude Borrowers' obligation to pay such costs and expenses
relating to the
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closing of the Credit Facility following the Closing Date or to reimburse
Agent Bank for the payment thereof.
Section 3.19. DEVELOPMENT AGREEMENTS AND LEASES. On or
before the Closing Date a true and correct copy of: (i) each of the
Development Agreements and of all amendments and modifications to any of such
instruments, and (ii) all leases of any portion of the Baton Rouge Real
Property and of all amendments and modifications to any of such instruments.
Section 3.20. ESTOPPEL CERTIFICATE. The Alton Development
Agreement Estoppel Certificate shall be duly executed by the respective
parties thereto. In the event it is not possible or practical to procure the
above-referenced estoppel certificate prior to the Closing Date, Agent Bank
may, in its discretion, permit Borrowers additional time to procure such
certificate, under such terms as Agent Bank shall reasonably determine.
Section 3.21. REGULATORY APPROVALS, PERMITS, CONSENTS, ETC.
Copies of those material permits, approvals or consents by all Governmental
Authorities permitting the use and operation of the Hotel/Casino Facilities,
together with all supporting documents and materials, reasonably requested by
Agent Bank.
Section 3.22. PRICING CERTIFICATE. A Pricing Certificate
prepared as of the end of the most recently ended Fiscal Quarter, giving pro
forma effect to the occurrence of the First Mortgage Notes Redemption, the First
Mortgage Notes Defeasance, the Closing Disbursement and the Senior Subordinated
Notes Effective Date.
Section 3.23. SCHEDULE OF ALL SIGNIFICANT LITIGATION. A
Schedule of Significant Litigation (Schedule 3.23) involving any member of the
Borrower Consolidation, in each instance setting forth the names of the other
parties thereto, a brief description of such litigation, whether or not such
litigation is covered by insurance and, if so, whether the defense thereof and
liability therefor has been accepted by the applicable insurance company
indicating whether such acceptance of such defenses with or without a
reservation of rights, the commencement date of such litigation and the amount
sought to be recovered by the adverse parties thereto or the amount which is
otherwise in controversy.
Section 3.24. FINANCIAL STATEMENTS. Audited financial
statements of Argosy on a consolidated basis, for the last Fiscal Year for which
such financial statements are available, together with a statement from the
Chief Financial Officer or Treasurer of Argosy to the effect that no Material
Adverse Change has occurred with respect to the Borrower Consolidation since the
date of the financial statements most recently given to Agent Bank.
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Section 3.25. NO INJUNCTION OR OTHER LITIGATION. No law or
regulation shall prohibit, and no order, judgment or decree of any Governmental
Authority shall, and no litigation shall be pending or threatened which in the
reasonable judgment of the Agent Bank would or would reasonably be expected to,
enjoin, prohibit, limit or restrain the execution and delivery of this Credit
Agreement or the making of the Base Rate Loans or the LIBOR Loans or the
performance by the Borrowers of any other material obligations in respect
thereof or the ability of the Borrowers to conduct their business substantially
as presently conducted.
Section 3.26. ADDITIONAL DOCUMENTS AND STATEMENTS. Such
additional documents, affidavits, certificates and opinions as Lenders may
reasonably require to insure compliance with this Credit Agreement. The
statements set forth in Section 3.28 shall be true and correct.
B. CONDITIONS PRECEDENT TO ALL BORROWINGS. The
obligation of each Lender and Agent Bank to make any Borrowing requested to
be made on any Funding Date, except Borrowings made upon the demand of Agent
Bank for the purpose of funding repayment of Swingline Outstandings and/or
L/C Reimbursement Obligations, is subject to the occurrence of each of the
following conditions precedent as of such Funding Date:
Section 3.27. NOTICE OF BORROWING. With respect to any
Borrowing, the Agent Bank shall have received in accordance with Section 2.03 on
or before such Funding Date an original and duly executed Notice of Borrowing or
facsimile copy thereof, to be promptly followed by an original.
Section 3.28. CERTAIN STATEMENTS. On each such Funding
Date and as of the Closing Date the following statements shall be true and
correct:
a. The representations and warranties made by
the Borrowers contained in Article IV hereof or in any of the Loan Documents
(other than representations and warranties which expressly speak only as of a
different date which shall be true and correct as of such date) are true and
correct on and as of the Funding Date and as of the Closing Date in all material
respects as though made on and as of that date, except to the extent that such
representations and warranties are not true and correct as a result of a change
which is permitted by this Credit Agreement or by any other Loan Document, or
which is otherwise consented to by Agent Bank upon the approval of Requisite
Lenders;
b. Since the date of the financial statements
referred to in Section 3.24, no Material Adverse Change shall have occurred; and
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c. No event or condition has occurred or as a
result of any Borrowings contemplated hereby would occur and is continuing, or
would result from the making thereof, which constitutes a Default or Event of
Default hereunder.
Section 3.29. GAMING PERMITS. The Borrower Consolidation shall
have all Gaming Permits material to or required for the conduct of the gaming
businesses and the conduct of games of chance at the Hotel/Casino Facilities and
such Gaming Permits shall not then be suspended, enjoined or prohibited (for any
length of time) by any Gaming Authority or any other Governmental Authority.
C. ADDITIONAL CONDITIONS PRECEDENT TO COMMITMENT INCREASES
AND TERM LOANS. In addition to the requirements set forth in Articles III A
and B, the obligation of Lenders (as such Lenders are defined as of the
applicable date of determination) and Agent Bank to make available the Level
Two Commitment Increase is subject to and contingent upon (i) satisfaction of
each of the conditions and requirements set forth in Section 2.15(b), and
(ii) Agent Bank having received in each case in form and substance reasonably
satisfactory to Agent Bank or in the case of an occurrence, action or event,
the occurrence of each of the following (or in the case of the Level One
Commitment Increase, Level One Term Loan and Level Two Term Loan (i)
satisfaction of each of the conditions and requirements set forth in Section
2.15(a), 2.15(c) and 2.15(d), respectively, and (ii) Agent Bank having
received in each case in form and substance reasonably satisfactory to Agent
Bank or in the case of an occurrence, action or event, the occurrence of
those Sections set forth below which are incorporated by reference in Section
2.15(a), 2.15(c) and 2.15(d), respectively):
Section 3.30. EVIDENCE OF LAWRENCEBURG BUYOUT. The
Lawrenceburg Buyout Effective Date shall have occurred and Agent Bank shall have
received all applicable documentation evidencing the Borrower Consolidation's
one hundred percent (100%) ownership of IGCLP and the Lawrenceburg Casino
Facilities subject only to the Lawrenceburg Permitted Encumbrances.
Section 3.31. ADDITIONAL SECURITY DOCUMENTS. The Security
Documentation duly executed by each applicable Borrower or other party thereto,
consisting of the following:
a. Lawrenceburg Mortgage;
b. Argosy VI Ship Mortgage;
c. Security Agreement (IGCLP);
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d. Financing Statements (IGCLP);
e. Lawrenceburg Assignment of Permits,
Contracts, Rents and Revenues; and
f. A Subsidiary Guaranty duly executed by
IGCLP or other owner of the Lawrenceburg Casino Facilities if other than TIGC.
Section 3.32. OTHER LOAN DOCUMENTS. The following Loan
Documents duly executed by Borrowers and any other applicable party thereto
consisting of the following:
a. With respect to the Commitment Increases an
amendment and restatement of the Revolving Credit Note, in a form reasonably
acceptable to Agent Bank, in the amount of the Total Commitment as of the Level
One Commitment Effective Date or the Level Two Commitment Increase Effective
Date, as applicable; and
b. Environmental Certificate with respect to
the Lawrenceburg Casino Facilities executed by Borrowers.
Section 3.33. OPINION OF COUNSEL - COMMITMENT INCREASE. One or
more opinions of counsel to the Borrowers and addressed to the Agent Bank on
behalf of itself and each of the Banks, together with their respective
successors and assigns, opining as to such matters as are reasonably required by
Agent Bank and the Requisite Lenders.
Section 3.34. LAWRENCEBURG TITLE INSURANCE POLICY. As of
the Commitment Increase Effective Date, the Lawrenceburg Title Policy (or
proforma commitment for the issuance thereof) consistent with the requirements
of the Lawrenceburg Closing Instructions.
Section 3.35. SURVEY. If the Title Insurance Company requires
a survey as a condition of issuing the Lawrenceburg Title Insurance Policy
consistent with the Lawrenceburg Closing Instructions, a current boundary and
location survey for the Lawrenceburg Real Property, which must (i) be certified
to Agent Bank and the Title Insurance Company, (ii) show the Lawrenceburg Real
Property to be free of encroachments, overlaps, and other survey defects, (iii)
show the courses and distances of the lot lines for the Lawrenceburg Real
Property, (iv) show that all existing improvements are located within said lot
and building lines, and (v) show the location of all above and below ground
easements, improvements, appurtenances, utilities, rights-of-way, water rights
and ingress and egress, by reference to book and page numbers and/or filed map
reference.
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Section 3.36. PAYMENT OF TAXES. Evidence satisfactory to Agent
Bank that all past and current real and personal property taxes and assessments
which are presently due and payable applicable to the Lawrenceburg Real Property
have been paid in full.
Section 3.37. LAWRENCEBURG INSURANCE. With respect to the
Lawrenceburg Casino Facilities, copies of the declaration pages of each of the
insurance policies certified to be true and correct by an Authorized
Representative of the Borrowers, together with original binders evidencing
Borrowers as named insured, and original certificates of insurance, loss payable
and mortgagee endorsements naming Agent Bank as mortgagee, loss payee and
additional insured, as required by the applicable insurance provisions set forth
in Section 5.09 of this Credit Agreement.
Section 3.38. REIMBURSEMENT FOR EXPENSES AND FEES.
Reimbursement by Borrowers for all reasonable fees and out-of-pocket expenses
incurred by Agent Bank in connection with the requirements of Article III C,
including, but not limited to, escrow charges, title insurance premiums,
environmental examinations, recording fees, reasonable attorney's fees of
Henderson & Morgan, LLC and co-counsel and insurance consultants retained by
Henderson & Morgan, LLC and all other like fees and expenses remaining unpaid as
of the Commitment Increase Effective Date, provided that the amount then
invoiced shall not thereafter preclude Borrowers' obligation to pay such costs
and expenses relating to the closing of the Credit Facility following the
Closing Date and the Commitment Increase Effective Date or to reimburse Agent
Bank for the payment thereof.
Section 3.39. PHASE I ENVIRONMENTAL SITE ASSESSMENTS.
a. A Phase I Environmental Site Assessment or
Assessments of the Lawrenceburg Real Property prepared in conformance with the
scope and limitations of ASTM Standard Designation E1527-94 and approved by
Agent Bank. Any recommended action to resolve any breach of Hazardous Materials
Laws shall have been completed by Borrowers.
b. Borrowers shall confirm the representations
contained in Sections 2.1 and 2.2 of the Environmental Certificate are true and
correct in all respects.
Section 3.40. NO INJUNCTION OR OTHER LITIGATION. No law or
regulation shall prohibit, and no order, judgment or decree of any Governmental
Authority shall, and no litigation shall be pending or threatened which in the
reasonable judgment of the Agent Bank would or would reasonably be expected to,
enjoin, prohibit, limit or restrain the acquisition of 100% ownership of the
Lawrenceburg Casino Facilities by the Borrower Consolidation and the perfection
of the Liens on the Lawrenceburg Casino Facilities to be evidenced by the
Security Documentation set forth in Section 3.31.
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Section 3.41. PRO FORMA FINANCIAL COMPLIANCE. The Borrowers
shall deliver a duly executed and completed Compliance Certificate, as of the
end of the most recently ended Fiscal Quarter, prepared on a pro forma basis
based on the assumption that the Commitment Increase, the Lawrenceburg Buyout
and the designation of IGCLP, or other Subsidiary of Argosy which is the owner
of the Lawrenceburg Casino Facilities, as a Restricted Subsidiary, had occurred
one (1) year prior to the end of the most recently ended Fiscal Quarter.
Section 3.42. DESIGNATION OF RESTRICTED SUBSIDIARY.
Designation in writing by an Authorized Representative of IGCLP, or other
Subsidiary of Argosy which is (or will be as of the Lawrenceburg Buyout
Effective Date) the owner of the Lawrenceburg Casino Facilities, as a Restricted
Subsidiary.
Section 3.43. ADDITIONAL DOCUMENTS AND STATEMENTS. Such
additional documents, affidavits, certificates and opinions as Agent Bank may
reasonably require to insure compliance with this Credit Agreement. The
statements set forth in Section 3.28 shall be true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Banks to enter into this Credit Agreement, Borrowers
make the following representations and warranties:
Section 4.01. ORGANIZATION; POWER AND AUTHORIZATION.
a. Argosy is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
MGC is a corporation duly organized, validly existing and in good standing under
the laws of the State of Missouri; AGC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois; Jazz and
AOLI are each a corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana; IGC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Iowa; and TIGC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana.
b. Each of MGC, AGC, IGC, AOLI, TIGC and Jazz
are wholly owned subsidiaries of Argosy.
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c. CQP is a partnership in commendam duly
organized, validly existing and in good standing under the laws of the State of
Louisiana; AOLI is the owner of a ninety percent (90%) interest and Jazz is the
owner of a ten percent (10%) interest in CQP; TIGC is the holder of a 57.5%
general partnership interest in IGCLP; and IGC is the owner and holder of a
seventy percent (70%) general partnership in BOSCLP.
d. Each Borrower (i) has all requisite power,
authority and legal right to execute and deliver each document, agreement or
certificate to which it is a party or by which it is bound in connection with
the Bank Facilities, to consummate the transactions and perform its obligations
hereunder and thereunder, and to own its properties and assets and to carry on
and conduct its business as presently conducted or proposed to be conducted,
(ii) has taken all necessary action to authorize the execution, delivery and
performance of this Credit Agreement and the other Loan Documents to which it is
a party or by which it is bound and to consummate the transactions contemplated
hereunder and thereunder and (iii) is duly qualified as a foreign corporation or
partnership, as applicable, and is licensed and in good standing under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license and where the
failure to so qualify and be licensed (other than with respect to the Gaming
Permits) would result in a Material Adverse Change.
e. Each Restricted Subsidiary, when formed:
(i) is a corporation duly formed, validly existing and in good standing under
the laws of its jurisdiction of organization, is duly qualified to do business
as a foreign organization and is in good standing as such in each jurisdiction
in which the conduct of its business or the ownership or leasing of its
properties and assets makes such qualification necessary where the failure to so
qualify would result in a Material Adverse Change and has all requisite power
and authority to conduct its business and to own and lease its properties and
assets, and (ii) has taken all necessary action to authorize the execution,
delivery and performance of the Subsidiary Guaranty executed and delivered by it
to Agent Bank as of the date of such execution and delivery.
Section 4.02. NO CONFLICT WITH, VIOLATION OF OR DEFAULT UNDER
LAWS OR OTHER AGREEMENTS. Neither the execution and delivery of this Credit
Agreement, the Revolving Credit Note, the Swingline Note, or any other Loan
Document, or any other agreement, certificate or instrument to which Borrowers
are a party or by which they, or any of them, are bound in connection with the
Bank Facilities, nor the consummation of the transactions contemplated hereunder
or thereunder, or the compliance with or performance of the terms and conditions
herein or therein, is prevented by, limited by, conflicts in any material
respect with, or will result in a material breach or violation of, or a material
default (with due notice or lapse of time or both) under, or the creation or
imposition of any lien, charge, or encumbrance of any nature whatsoever upon any
of their respective property or
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assets by virtue of, the terms, conditions or provisions of (a) the Articles
of Incorporation, Bylaws or other documents of organization or charter of any
of the Borrowers, (b) any indenture, evidence of indebtedness, loan or
financing agreement, or other agreement or instrument of whatever nature to
which they, or any of them, are a party or by which they, or any of them, are
bound, (c) any of the Development Agreements, (d) the BOSCLP Partnership
Agreement; (e) IGCLP Partnership Agreement; or (f) to the best knowledge of
Borrowers, any provision of any existing law, rule, regulation, order, writ,
injunction or decree of any court or Governmental Authority to which they, or
any of them, are subject, where such breach could reasonably be expected to
result in a Material Adverse Change.
Section 4.03. LITIGATION. Except as disclosed on the Schedule
of Significant Litigation delivered in connection with Section 3.23, to the
actual knowledge of Borrowers there is no action, suit, proceeding, inquiry,
hearing or investigation pending or, to the best knowledge of Borrowers,
threatened, in any court of law or in equity, or before any Governmental
Authority, which could reasonably be expected to result in any Material Adverse
Change in the Hotel/Casino Facilities or in their respective business, financial
condition, properties or operations. Borrowers are not in violation of or
default with respect to any order, writ, injunction, decree or demand of any
such court or Governmental Authority where such default could reasonably be
expected to result in a Material Adverse Change.
Section 4.04. AGREEMENTS LEGAL, BINDING, VALID AND
ENFORCEABLE. This Credit Agreement, the Revolving Credit Note, the Swingline
Note, the Security Documentation and all other Loan Documents, when executed
and delivered by Borrowers in connection with the Bank Facilities will
constitute legal, valid and binding obligations of Borrowers, enforceable
against Borrowers in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws
of general application relating to or affecting the enforcement of creditors'
rights and the exercise of judicial discretion in accordance with general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
Section 4.05. INFORMATION AND FINANCIAL DATA ACCURATE;
FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. Any and all financial
statements heretofore furnished to Banks by Borrowers, or any of them: (a)
present fairly the financial position of the entity to which they relate as at
their respective dates and the results of operations and cash flows for the
periods to which they apply, and (b) have been prepared in conformity with GAAP
applied on a consistent basis throughout the periods involved. Since the date of
the most recent financial statements referred to in this Section 3.24., there
has been no Material Adverse Change.
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Section 4.06. GOVERNMENTAL APPROVALS. All consents, approvals,
orders or authorizations of, or registrations, declarations, notices or filings
with any Governmental Authority and any other Person which may be required in
connection with the valid execution and delivery of this Credit Agreement and
the other Loan Documents by Borrowers and the carrying-out or performance of any
of the transactions required or contemplated hereunder, or thereunder, by
Borrowers, have been obtained or accomplished and are in full force and effect,
or can be obtained by Borrowers. All consents, approvals, orders or
authorizations of, or registrations, declarations, notices or filings with any
Governmental Authority and any other Person, the failure of which could
reasonably be expected to result in a Material Adverse Change, which may be
required by Borrowers in connection with the use and operation of the
Hotel/Casino Facilities have been obtained or accomplished and are in full force
and effect.
Section 4.07. PAYMENT OF TAXES. Borrowers, and each of them,
have duly filed or caused to be filed all federal, state and local tax reports
and returns which are required to be filed by them and have paid or made
provisions for the payment of, all material taxes, assessments, fees and other
governmental charges which have or may have become due pursuant to said returns
or otherwise pursuant to any assessment received by Borrowers except such taxes,
assessments, fees or other governmental charges, if any, as are being contested
in good faith by Borrowers by appropriate proceedings and for which Borrowers
have maintained adequate reserves for the payment thereof in accordance with
GAAP.
Section 4.08. TITLE TO PROPERTIES.
a. AGC is the owner of the Alton Casino
Facilities;
b. Argosy is the owner of the Riverside Real
Property; MGC occupies the Riverside Real Property pursuant to an agreement with
Argosy and is the owner of the Riverside Casino Facilities;
c. Jazz is the owner of a portion of the Baton
Rouge Fee Property and AOLI is the owner of the remainder of the Baton Rouge Fee
Property; CQP is the lessee or sublessee of all of the property material to the
operation of the Baton Rouge Casino Facilities and is the owner of the Baton
Rouge Casino Facilities.
d. IGC owns Argosy V; AGC owns Alton Landing
and has authorized IGC to lease the Alton Landing to BOSCLP; pursuant to the
Sioux City Vessel Lease IGC Leases the Sioux City Vessels to BOSCLP, together
with the FF&E situate thereon (other than the Gaming Devices which are owned by
BOSCLP); BOSCLP is the
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grantee under the Sioux City Development Agreement and the owner of the Sioux
City Casino Facilities; and
e. IGCLP is the owner of the Lawrenceburg Casino
Facilities.
f. Borrowers have good and marketable title to
the Collateral as of the Closing Date and at all times during the term of the
Credit Facility. Each of the Borrowers has good and marketable title to: (i)
all of its properties and assets reflected in the most recent financial
statements referred to in Section 4.05 hereof as owned by it, including, but
not limited to, Borrowers' interest in patents, trademarks, tradenames,
servicemarks, and licenses relating to or pertaining to the Hotel/Casino
Facilities, and (ii) all properties and assets acquired by it subsequent to
the date of the most recent financial statements referred to in Section 4.05
hereof (except in each case for those properties and assets disposed of since
the date of said financial statements in the ordinary course of business or
those properties and assets which are no longer used or useful in the conduct
of its business). The Schedule of Intercompany Notes, Schedule 4.08(b), sets
forth the names of the payor, payee, face amount, date and unpaid principal
balance (as of the Closing Date) of each of the Intercompany Notes. The
Collateral is not subject to any liens, encumbrances or restrictions except
Permitted Encumbrances.
Section 4.09. NO UNTRUE STATEMENTS. All statements,
representations and warranties made by Borrowers, or any of them, in this
Credit Agreement, any other Loan Document and any other agreement, document,
certificate or instrument previously furnished by Borrowers, or any of them,
to Banks pursuant to the provisions of this Credit Agreement, at the time
they were made and on and as of the Closing Date: (a) are and shall be true,
correct and complete in all material respects, and (b) do not and shall not
contain any untrue statement of a material fact, and (iii) do not and shall
not omit to state a material fact necessary in order to make the information
contained herein or therein not misleading or incomplete. Borrowers
understand that all such statements, representations and warranties shall be
deemed to have been relied upon by Banks as a material inducement to
establish the Bank Facilities.
Section 4.10. BROKERAGE COMMISSIONS. No person is entitled to
receive any brokerage commission, finder's fee or similar fee or payment in
connection with the extensions of credit contemplated by this Credit Agreement
as a result of any agreement entered into by Borrowers. No brokerage or other
fee, commission or compensation is to be paid by Banks with respect to the
extensions of credit contemplated hereby as a result of any agreement entered
into by Borrowers, and Borrowers agree to indemnify Banks against any such
claims for brokerage fees or commissions and to pay all expenses including,
without limitation, reasonable attorney's fees incurred by Banks in connection
with the defense of any action or proceeding brought to collect any such
brokerage fees or commissions.
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Section 4.11. NO DEFAULTS. Borrowers are not in violation of
or in default with respect to any applicable laws and/or regulations which
materially and adversely affect the Hotel/Casino Facilities or the business,
financial condition, property of Borrowers or operations of the Borrowers, or
any of them, or of the Hotel/Casino Facilities. Without limiting the generality
of the foregoing, Argosy is not in violation or default (nor is there any waiver
in effect which, if not in effect, would result in a violation or default) under
(a) the Senior Indenture, First Mortgage Notes, the Senior Indenture Security
Documents, Convertible Notes; or (b) under any indenture, evidence of
indebtedness, loan or financing agreement or other material agreement or
instrument of whatever nature to which it is a party or by which it is bound
which violation or default could reasonably be expected to result in a Material
Adverse Change.
Section 4.12. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.
No Reportable Event has occurred and is continuing with respect to any Pension
Plan under ERISA, that gives rise to liabilities that materially adversely
affect the financial condition or operations of Borrowers, or any of them.
Section 4.13. PARTNERSHIP AGREEMENTS, DEVELOPMENT
AGREEMENTS AND BATON ROUGE LEASES.
a. The copies of the Partnership Agreements and
modifications and amendments thereto (if any) which have been delivered to
Agent Bank in accordance with Section 3.06 are a true, correct and complete
copy of the respective original thereof, as in effect on the Closing Date,
and no amendments or modifications have been made to such Partnership
Agreements, except as set forth by documents delivered to Agent Bank in
accordance with said Section 3.06 or otherwise reasonably approved in writing
by Agent Bank or Requisite Lenders, as applicable, in accordance with Section
5.28. None of the Partnership Agreements have been terminated and they are
all in full force and effect. Neither AOLI, Jazz, BOSCLP nor IGCLP are in
default in the observance or performance of any of their respective material
obligations under the Partnership Agreements and have done all things
required to be done as of the Closing Date to keep unimpaired their
respective rights thereunder (except for possible defaults which may be the
subject of any litigation referred to by Schedule 3.23).
b. The copies of the Development Agreements and
modifications and amendments thereto (if any) which have been delivered to
Agent Bank in accordance with Section 3.19 are a true, correct and complete
copy of the respective original thereof, as in effect on the Closing Date,
and no amendments or modifications have been made to such Development
Agreements, except as set forth by documents delivered to Agent Bank in
accordance with said Section 3.19 or otherwise reasonably approved in writing
by Agent Bank or Requisite Lenders, as applicable, in accordance with Section
5.28. None of the
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Development Agreements have been terminated and they are all in full force
and effect. Neither AGC, CQP, MGC, BOSCLP nor IGCLP are in default in the
observance or performance of any of their respective material obligations
under the Development Agreements and have done all things required to be done
as of the Closing Date to keep unimpaired their respective rights thereunder.
c. The copies of the leases of the Baton Rouge Real Property
and modifications and amendments thereto (if any) which have been delivered to
Agent Bank in accordance with Section 3.19 are a true, correct and complete copy
of the respective original thereof, as in effect on the Closing Date, and no
amendments or modifications have been made to such leases, except as set forth
by documents delivered to Agent Bank in accordance with said Section 3.19 or
otherwise reasonably approved in writing by Agent Bank or Requisite Lenders, as
applicable, in accordance with Section 5.28. The leases pursuant to which CQP or
Jazz occupy the Baton Rouge Lease Property: (i) have not been terminated and are
all in full force and effect; (ii) are not subject to any default in the
observance or performance of any material obligation of any lessor or lessee
thereunder; and (iii) CQP or Jazz, as the case may be, has done all things
required to be done as of the Closing Date to keep unimpaired its respective
rights thereunder.
Section 4.14. SENIOR INDENTURE.
a. The copy of the Senior Indenture and all
modifications and amendments thereto (if any) which have been delivered to
Agent Bank in accordance with Section 3.12 is a true, correct and complete
copy of the respective original thereof, as in effect on the Closing Date,
and no amendments or modifications have been made to such Senior Indenture,
except as set forth by documents delivered to Agent Bank in accordance with
said Section 3.12 or otherwise reasonably approved in writing by Requisite
Lenders. The Senior Indenture, as amended, has not been terminated and is in
full force and effect. Argosy is not in default in the observance or
performance of any of its material obligations under any of the Senior
Indenture and has done all things required to be done as of the Closing Date
to keep unimpaired its rights thereunder.
b. As of the Closing Date, Argosy shall have
purchased no less than 85.0% of the First Mortgage Notes and shall have
procured the requisite consents pursuant to the Consent Solicitation required
for the execution and delivery of the Senior Indenture Amendment. On the
Closing Date, the Senior Indenture Amendment shall be executed and delivered
by each Requisite Party thereto and shall be in full force and effect.
c. As of the Closing Date, Argosy shall have
caused the First Mortgage Notes Defeasance to have occurred and shall have
caused the Defeasance Account to be funded with the Defeasance Consideration.
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Section 4.15. CONVERTIBLE NOTES. The copy of the Convertible
Notes Indenture and modifications and amendments thereto (if any) which have
been delivered to Agent Bank in accordance with Section 3.12 is a true, correct
and complete copy of the respective original thereof, as in effect on the
Closing Date, and no amendments or modifications have been made to such
Convertible Notes Indenture, except as set forth by documents delivered to Agent
Bank in accordance with said Section 3.12 or otherwise reasonably approved in
writing by Requisite Lenders. The Convertible Notes Indenture has not been
terminated and is in full force and effect. Argosy is not in default in the
observance or performance of any of its material obligations under the
Convertible Notes or the Convertible Notes Indenture and has done all things
required to be done as of the Closing Date to keep unimpaired its rights
thereunder.
Section 4.16. AVAILABILITY OF UTILITY SERVICES AND FACILITIES.
All utility services and facilities necessary for the Hotel/Casino Facilities
including, without limitation, electrical, water, gas and sewage services and
facilities are available and in use at the respective sites of the Hotel/Casino
Facilities.
Section 4.17. POLICIES OF INSURANCE. As of the date hereof,
each of the copies of the declaration pages, original binders and
certificates of insurance evidencing the Policies of Insurance relating to
the Hotel/Casino Facilities and all Vessels delivered to Agent Bank by
Borrowers is a true, correct and complete copy of the respective original
thereof as in effect on the date hereof, and no amendments or modifications
of any of said documents or instruments not included in such copies have been
made. The Policies of Insurance have not been terminated and is in full force
and effect. Borrowers, and each of them, are not in default in the observance
or performance of their respective obligations under said documents and
instruments, and Borrowers, and each of them, have done all things required
to be done as of the date of this Credit Agreement to keep unimpaired their
rights thereunder.
Section 4.18. GAMING PERMITS. All Gaming Permits required to
be held by Borrowers are current and in full force and effect and Borrowers
presently hold all Gaming Permits necessary for the continued operation of the
Hotel/Casino Facilities. Each of the Gaming Authorities have given all necessary
approvals of this Credit Agreement, the Notes and each Loan Document to be
executed by Borrowers in connection with the Bank Facilities.
Section 4.19. ENVIRONMENTAL CERTIFICATE. The
representations and certifications contained in the Environmental Certificate
are true and correct in all material respects.
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Section 4.20. NEW VENTURE SUBSIDIARIES. A schedule of each
Restricted Subsidiary and Unrestricted Subsidiary existing as of the Closing
Date and a description of the New Venture owned in whole or part by each such
Restricted Subsidiary and Unrestricted Subsidiary is marked "Schedule 4.20",
affixed hereto and by this reference incorporated herein and made a part
hereof.
Section 4.21. COMPLIANCE WITH STATUTES, ETC. Except for
matters related to the compliance by the Borrowers with Hazardous Materials
Laws, which matters are governed by the Environmental Certificate and the Shore
Mortgages, each of the Borrowers is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncompliance as would
not, in the aggregate, reasonably be expected to result in a Material Adverse
Change.
Section 4.22. INVESTMENT COMPANY ACT. Neither Argosy nor
any of its Subsidiaries is an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
Section 4.23. PUBLIC UTILITY HOLDING COMPANY ACT. Neither
Argosy nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 4.24. LABOR RELATIONS. There is no strike or work
stoppage in existence, or to the best knowledge of Borrowers threatened,
involving any member of the Borrower Consolidation or any of the Hotel/Casino
Facilities that could reasonably be expected to result in a Material Adverse
Change.
Section 4.25. PATENTS, LICENSES, FRANCHISES AND FORMULAS.
Except as disclosed in Schedule 4.25, the Borrower Consolidation owns all the
patents, trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or has a valid license or sublicense of rights with
respect to the foregoing, and has obtained assignments of all leases and other
rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, could reasonably be expected to result in a
Material Adverse Change on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower Consolidation taken as a
whole. Each of the patents, trademarks, servicemarks, tradenames and copyrights
owned by the Borrower Consolidation which is registered with any Governmental
Authority is set forth on Schedule 4.25, attached hereto.
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Section 4.26. CONTINGENT LIABILITIES. As of the Closing Date,
Borrowers have incurred no material Contingent Liabilities (without limiting the
generality of the foregoing, any Contingent Liability in excess of One Million
Dollars ($1,000,000.00) being deemed material) other than those described on
Schedule 4.26.
ARTICLE V
GENERAL COVENANTS OF BORROWERS
To induce the Banks to enter into this Credit Agreement,
Borrowers covenant to Lenders as follows:
Section 5.01. FF&E. The Borrower Consolidation shall
furnish, fixture and equip the Hotel/Casino Facilities with FF&E it
reasonably deems appropriate for the operation of the Hotel/Casino
Facilities. All FF&E that is purchased and installed in the Hotel/Casino
Facilities shall be purchased free and clear of any liens, encumbrances or
claims, other than Permitted Encumbrances. If the Borrower Consolidation
should sell, transfer, convey or otherwise dispose of any FF&E to any Person
other than a member of the Borrower Consolidation (other than obsolete or
worn out FF&E or other FF&E no longer useful in the business of the
Borrowers) and not within one hundred twenty (120) days of such sale,
transfer, conveyance or other disposition replace such FF&E with purchased
items of equivalent value and utility or replace such FF&E with leased items
of equivalent value and utility, within the permissible leasing and purchase
agreement limitation set forth in Section 6.09(b) herein, to the extent the
Net Proceeds thereof not used to replace FF&E exceeds a cumulative aggregate
value of Five Million Dollars ($5,000,000.00) during any Fiscal Year or a
cumulative aggregate value of Ten Million Dollars ($10,000,000.00) during the
term of the Credit Facility (in either instance the "Excess Capital
Proceeds"), Borrowers (to the extent required by the Requisite Lenders) on
the later to occur of the one hundred twenty-first (121st) day following such
sale, transfer, conveyance or other dispositions or the fifth (5th) Banking
Business Day following written notice from Agent Bank of the requirement of
permanent reduction from Requisite Lenders, shall permanently reduce the
Maximum Permitted Balance of the Credit Facility by a Voluntary Permanent
Reduction in the amount of the Excess Capital Proceeds of the FF&E so
disposed of, subject, however, to the right of Agent Bank to verify to its
reasonable satisfaction the amount of said Excess Capital Proceeds.
Section 5.02. PERMITS; LICENSES AND LEGAL REQUIREMENTS.
a. Borrowers shall comply in all material
respects with and keep in full force and effect, as and when required, all
Gaming Permits and all material permits, licenses and approvals obtained from
any Governmental Authorities which are required for
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the operation and use of the Hotel/Casino Facilities. Borrowers, and each of
them, shall comply in all material respects with all applicable material
existing and future laws, rules, regulations, orders, ordinances and
requirements of all Governmental Authorities, and with all recorded
restrictions affecting the Premises where the failure of such compliance
could reasonably be expected to result in a Material Adverse Change.
b. The Baton Rouge Real Property includes
sufficient parking areas to satisfy all parking requirements which are
imposed by Governmental Authorities with respect to operation of the Baton
Rouge Casino Facilities, without utilizing the Baton Rouge Parking Lot Parcel
or the Baton Rouge Hotel Property.
Section 5.03. DEVELOPMENT AGREEMENTS. Until Bank Facility
Termination: (i) AGC shall fully perform and comply with all material
agreements, covenants, terms and conditions imposed upon, or assumed by, AGC as
a party to the Alton Development Agreement; (ii) CQP shall fully perform and
comply with all material agreements, covenants, terms and conditions imposed
upon, or assumed by, CQP as a party to the Baton Rouge Development Agreement;
(iii) MGC shall fully perform and comply with all material agreements covenants,
terms and conditions imposed upon, or assumed by, MGC as a party to the
Riverside Development Agreement; (iv) Borrowers shall cause BOSCLP to fully
perform and comply with all material terms and conditions imposed upon, or
assumed by BOSCLP, as a party to the Sioux City Development Agreement; and (v)
Borrowers shall cause IGCLP to fully perform and comply with all material terms
and conditions imposed upon, or assumed by IGCLP as a party to the Lawrenceburg
Development Agreement.
Section 5.04. PROTECTION AGAINST LIEN CLAIMS. Borrowers
shall promptly pay and discharge or cause to be paid and discharged all
claims and liens for labor done and materials and services supplied and
furnished in connection with the Hotel/Casino Facilities in accordance with
this Section 5.04, except such claims and liens, if any, as are being
contested in good faith by Borrowers by appropriate proceedings and for which
Borrowers have maintained adequate reserves for the payment thereof in
accordance with GAAP. If any mechanic's lien or materialman's lien for a sum
in excess of Five Hundred Thousand Dollars ($500,000.00) shall be recorded,
filed or suffered to exist against the Hotel/Casino Facilities, or any of
them, or any interest therein by reason of work, labor, services or materials
supplied, furnished or claimed to have been supplied and furnished in
connection with the Hotel/Casino Facilities, or any of them, at any time
following thirty (30) days after demand for payment is made by such claimant
and such demand has not been satisfied, upon Borrowers receipt of written
notice from Agent Bank demanding the release and discharge of such lien, said
lien or claim shall be paid, released and discharged or expunged of record
within sixty (60) days following its receipt of such notice.
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Section 5.05. NO CHANGE IN CHARACTER OF BUSINESS. Until Bank
Facility Termination, (a) the Hotel/Casino Facilities shall be operated by
members of the Borrower Consolidation, and (b) Borrowers shall not effect a
material change in the nature and character of its existing business at the
Hotel/Casino Facilities as presently conducted and as presently contemplated and
disclosed to Banks. Notwithstanding the foregoing, upon written notice to Agent
Bank, the Borrower Consolidation may make such changes to its business operation
as may be necessary or advisable to remain competitive in the gaming industry.
Section 5.06. PRESERVATION AND MAINTENANCE OF PROPERTIES
AND ASSETS; ACQUISITION OF ADDITIONAL PROPERTY; RELEASE OF BATON ROUGE HOTEL
PROPERTY.
a. Until Bank Facility Termination, Borrowers
shall not remove, demolish, materially alter, discontinue the use of, sell,
transfer, assign, hypothecate or otherwise dispose of to any Person, any part
of their respective properties and assets necessary for the continuance of
their respective businesses, as presently conducted and as presently
contemplated, other than in the normal course of Borrowers' business and as
provided in Sections 5.01, 5.07 and 6.13.
b. In the event any member of the Borrower
Consolidation, or any of them, or any Subsidiary thereof, shall acquire any
other real property, any other material Vessel or rights to the use of real
property, any material Vessel or any interest therein which is used in any
material manner in connection with the Hotel/Casino Facilities, such member
of the Borrower Consolidation shall or shall cause such Subsidiary, as
applicable, concurrently with the acquisition of such real property or Vessel
or the rights to the use of such real property or Vessel, to execute or cause
the execution of such documents as may be necessary to add such real property
or rights to the use of real property as Collateral under the Bank Facilities.
c. Notwithstanding anything herein contained to
the contrary, upon the written request of an Authorized Representative and so
long as no Default or Event of Default shall have occurred and remains
continuing, Agent Bank shall, without further consent or authorization of the
Banks, release the Baton Rouge Hotel Property as Collateral under the
Security Documentation on the condition that concurrently with such release,
title to the Baton Rouge Hotel Property is contributed to an Unrestricted
Subsidiary or conveyed to another Person which is not a member of the
Borrower Consolidation. In no event shall any member of the Borrower
Consolidation make any additional Investment in, to or for the benefit of the
Baton Rouge Hotel Property prior to such contribution or conveyance, other
than in connection with its continued use and maintenance as a parking lot.
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Section 5.07. REPAIR OF PROPERTIES AND ASSETS. Until Bank
Facility Termination, Borrowers shall, at their own cost and expense, (a)
maintain, preserve and keep in a manner consistent with hotel and gaming casino
operating practices generally applicable to hotel/casino operations operating in
the jurisdictions in which such properties are located, their respective assets
and properties, including, but not limited to, the Collateral and all FF&E owned
or leased by Borrowers in good and substantial repair, working order and
condition, ordinary wear and tear excepted, (b) from time to time, make or cause
to be made, all necessary and proper repairs, replacements, renewals,
improvements and betterments to the Hotel/Casino Facilities, and (c) from time
to time, make such substitutions, additions, modifications and improvements as
may be necessary and as shall not materially impair the structural integrity,
operating efficiency and economic value of said assets included within the
Hotel/Casino Facilities. All alterations, replacements, renewals, or additions
made pursuant to this Section 5.07 shall become and constitute a part of said
assets and property and subject, INTER ALIA, to the provisions of Section 5.01
and subject to the lien of the Security Documentation.
Section 5.08. FINANCIAL STATEMENTS; REPORTS; CERTIFICATES
AND BOOKS AND RECORDS.
a. Until Bank Facility Termination, the Borrower
Consolidation shall, unless the Agent Bank (with the written approval of the
Requisite Lenders) otherwise consents, at Borrowers' sole expense, deliver to
the Agent Bank and each of the Lenders a full and complete copy of each of
the following and shall comply with each of the following financial
requirements:
(i) As soon as practicable, and in any
event within forty-five (45) days after the end of the first
three (3) Fiscal Quarters of each Fiscal Year, (a) the
consolidated balance sheet of the Borrower Consolidation as of
the end of such Fiscal Quarter and the consolidated statement
of operations for such Fiscal Quarter, and a statement of cash
flows for the portion of the Fiscal Year ended with such
Fiscal Quarter and (b) the consolidating balance sheets and
statements of operations of the Borrower Consolidation as of
and for the portion of the Fiscal Year ended with such Fiscal
Quarter, all in reasonable detail. Such financial statements
shall be certified by an Authorized Representative of the
Borrower Consolidation as fairly presenting the financial
condition, results of operations and cash flows of the
Borrower Consolidation in accordance with GAAP (other than
footnote disclosures) as at such date and for such periods,
subject only to normal year-end accruals and audit
adjustments;
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(ii) As soon as practicable, and in any
event within forty-five (45) days after the end of each Fiscal
Quarter (including the fourth (4th) Fiscal Quarter in any
Fiscal Year), a pricing certificate in the form marked
"Exhibit G", affixed hereto and by this reference incorporated
herein and made a part hereof (the "Pricing Certificate")
setting forth a preliminary calculation of the Leverage Ratio
as of the last day of such Fiscal Quarter, and providing
reasonable detail as to the calculation thereof, which
calculations shall be based on the preliminary unaudited
financial statements of the Borrower Consolidation for such
Fiscal Quarter, and as soon as practicable thereafter, in the
event of any material variance in the actual calculation of
the Leverage Ratio from such preliminary calculation, a
revised Pricing Certificate setting forth the actual
calculation thereof; provided, however, that in the event that
Borrowers do not deliver a Pricing Certificate when due, then
until (but only until) such Pricing Certificate is delivered
as provided herein, the Leverage Ratio shall be deemed, for
the purpose of determining the Applicable Margin, to be
greater than 4.25 to 1.0 and the Applicable Margin determined
with respect thereto.
(iii) As soon as practicable, and in any
event within one hundred twenty (120) days after the end of
each Fiscal Year, (i) the consolidated and consolidating
balance sheet, statement of operations, statement of
stockholders' equity and cash flows (reconciled with year-end
audited statements) of the Borrower Consolidation as at the
end of such Fiscal year, all in reasonable detail. Such
financial statements shall be prepared in accordance with GAAP
and shall be accompanied by a report of independent public
accountants of recognized standing selected by Borrowers and
reasonably satisfactory to the Agent Bank (it being understood
that any "Big 5" accounting firm shall be automatically deemed
satisfactory to the Agent Bank), which report shall be
prepared in accordance with generally accepted auditing
standards as at such date, and shall not be subject to any
qualifications or exceptions as to the scope of the audit nor
to any other qualification or exception determined by the
Requisite Lenders in their good faith business judgment to be
adverse to the interests of the Banks. Such accountants'
report shall be accompanied by a certificate stating that, in
making the examination pursuant to generally accepted auditing
standards necessary for the certification of such financial
statements and such report, such accountants have obtained no
knowledge of any Default or, if, in the opinion of such
accountants, any such Default shall exist, stating the nature
and status of such Default, and stating that such accountants
have reviewed the Financial Covenants as at the end of such
Fiscal Year (which shall accompany such certificate) under
Sections 6.01 through 6.11, have read
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such Sections (including the definitions of all
defined terms used therein) and that nothing has come to the
attention of such accountants in the course of such
examination that would cause them to believe that the same
were not calculated by the Borrower Consolidation in the
manner prescribed by this Credit Agreement. Such financial
statements shall be certified by an Authorized Representative
of the Borrower Consolidation in the same manner as required
with respect to financial statements delivered pursuant to
Section 5.08(a)(i);
(iv) As soon as practicable, and in any
event no later than forty-five (45) days following the
commencement of each Fiscal Year, a budget (including a
Capital Expenditure budget) and projection by Fiscal Quarter
for that Fiscal Year and by Fiscal Year for the next occurring
two (2) consecutive Fiscal Years, INCLUDING for the first such
Fiscal Year, projected consolidated and consolidating balance
sheets, statements of operations and statements of cash flow
of the Borrower Consolidation, all in reasonable detail;
(v) Concurrently with the financial
statements and reports required pursuant to Sections
5.08(a)(i) and 5.08(a)(iii), a Compliance Certificate signed
by an Authorized Representative;
(vi) As soon as practicable, and in any
event within forty-five (45) days (or, in the case of the
fourth (4th) Fiscal Quarter in each Fiscal Year, ninety (90)
days) after the end of each Fiscal Quarter, a written report
(to the extent not reported under Section 5.08(vii)
hereinbelow), in form and detail reasonably acceptable to the
Agent Bank, with respect to the status of each New Venture,
including the amounts of New Venture Capital Expenditures and
New Venture Investments made, and reasonably anticipated to be
made, with respect thereto; and
(vii) Promptly after the same are
available, copies of each annual report, proxy or financial
statement or other report or communication that shall have
been sent to the stockholders of Argosy, and copies of all
annual, regular, periodic and special reports (including,
without limitation, each 10Q and 10K report) and registration
statements which Argosy shall have filed or be required to
file with the Securities and Exchange Commission under
Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, and not otherwise required to be delivered to the
Banks pursuant to other provisions of this Section 5.08.
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b. Until Bank Facility Termination, Borrowers,
and each of them, shall keep and maintain complete and accurate books and
records in accordance with GAAP in all material respects, consistently applied.
Borrowers, and each of them, shall permit Banks and any authorized
representatives of Banks to have reasonable access to and to inspect, examine
and make copies of the books and records, any and all accounts, data and other
documents of Borrowers and to consult with Borrowers and Borrowers' accountants
and auditors at all reasonable times upon the giving of reasonable notice of
such intent. In addition: (i) in the event of the occurrence of any Default or
Event of Default, or (ii) in the event any Material Adverse Change occurs,
Borrowers shall promptly, and in any event within three (3) Banking Business
Days after actual knowledge thereof by the corporate controller or a senior
executive officer, notify Agent Bank in writing of such occurrence.
c. Until Bank Facility Termination, Borrowers,
and each of them, shall furnish to Agent Bank, with sufficient copies for
distribution to each of the Banks any financial information or other information
bearing on the financial status of the Borrowers or their Subsidiaries, or any
of them, which is reasonably requested by Agent Bank or Requisite Lenders.
Section 5.09. INSURANCE. Until Bank Facility Termination,
Borrowers shall obtain, or cause to be obtained, and shall maintain or cause to
be maintained with respect to the Collateral, including without limitation, the
Vessels, at their own cost and expense, and shall deposit with Agent Bank on or
before the Closing Date:
a. PROPERTY INSURANCE. Borrowers shall
maintain a special causes of loss (ISO form or equivalent), perils policy
covering the buildings and improvements, and any other permanent structures
for one hundred percent (100%) of the replacement cost. Borrowers shall
maintain a Fifty Million Dollar ($50,000,000.00) sublimit of coverage for the
peril of earthquake covering the Collateral (this includes coverage for real
property, personal property and business interruption). Upon the request of
Agent Bank, replacement cost for insurance purposes will be established by an
independent appraiser mutually selected by Borrowers and Agent Bank. The
policy will include Agreed Amount (waiving co-insurance), replacement cost
valuation and building ordinance endorsements. The policy will include a
standard mortgagee clause (ISO form or equivalent, i.e. Borrowers' Acts will
not impair Mortgagee's right to recover, exclusive payment of loss to
Mortgagee and automatic notice of cancellation/non-renewal to Mortgagee) and
provide that all losses in excess of Five Hundred Thousand Dollars
($500,000.00) be adjusted with the Agent Bank. The Borrowers waive any and
all rights of subrogation against Banks resulting from losses to property.
The Borrower Consolidation shall also maintain or cause to be maintained with
respect to each of the Hotel/Casino Facilities which is located within a
flood zone that participates in the National Flood Insurance Program (FEMA),
that maximum
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amount of flood insurance coverage available thereunder that complies
with any applicable regulations of the Board of Governors of the Federal Reserve
System.
b. PERSONAL PROPERTY (INCLUDING MACHINERY,
EQUIPMENT, FURNITURE, FIXTURES, STOCK). Borrowers shall maintain a special
causes of loss perils "All Risk" property coverage for all personal property
owned, leased or for which Borrowers are legally liable. The coverage will
include a lenders' loss payable endorsement in favor of Agent Bank.
The policy providing real property and personal
property coverages, as specified in 5.09(a) and (b) hereinabove, may include
a deductible of no more than One Hundred Thousand Dollars ($100,000.00) for
any single occurrence. Earthquake deductibles can be no more than two percent
(2%) of insured value, if a separate deductible applies.
c. BUSINESS INTERRUPTION/EXTRA EXPENSE. The
Borrower Consolidation shall maintain with respect to each Restricted
Subsidiary Venture which is a land based casino/gaming operation, maintain
combined Business Interruption/Extra Expense coverage with a limit
representing no less than seventy-five percent (75%) of the projected annual
net profit plus continuing expenses (including debt service) for each such
Restricted Subsidiary Venture. Such coverage shall include extensions for off
premises power losses at Two Million Dollars ($2,000,000.00) and extended
period of indemnity of one hundred twenty (120) days endorsement. These
coverages may have deductible of no greater than forty-eight (48) hours, or
One Hundred Thousand ($100,000.00), if a separate deductible applies. This
coverage will be specifically endorsed to include Agent Bank as Loss Payee or
collateral assignee.
d. BOILER AND MACHINERY. Borrowers shall
maintain a Boiler and Machinery policy for the Hotel/Casino Facilities
written on a Comprehensive Form with a combined direct and indirect limit of
no less than Twenty-Five Million Dollars ($25,000,000.00). The policy shall
include extensions for Agreed Amount (waiving co-insurance) and Replacement
Cost Valuation. The policy may contain deductibles of no greater than Fifty
Thousand Dollars ($50,000.00) direct and forty-eight (48) hours indirect.
e. CRIME INSURANCE. Borrowers shall obtain a
comprehensive crime policy, including the following coverages:
(i) employee dishonesty - Three Million Dollars
($3,000,000.00);
(ii) money and securities (inside) - One Million
Dollars ($1,000,000.00);
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(iii) money and securities (outside) - One Million
Dollars ($1,000,000.00);
(iv) depositor's forgery - Three Million Dollars
($3,000,000.00);
(v) computer fraud - Three Million Dollars
($3,000,000.00).
The policy must be amended so that money is defined
to include "tokens and chips". The policy may contain deductibles of no greater
than Five Hundred Thousand Dollars ($500,000.00) for coverages (i), (iv) and (v)
listed above and One Hundred Thousand Dollars ($100,000.00) for coverages (ii)
and (iii) listed above.
f. COMMERCIAL GENERAL LIABILITY (1998 ISO FORM
OR EQUIVALENT). Borrowers shall maintain a Commercial General Liability
policy with a One Million Dollar ($1,000,000.00) combined single limit for
bodily injury and property damage, including Products Liability, Contractual
Liability, and all standard policy form extensions. The policy must provide a
Two Million Dollar ($2,000,000.00) general aggregate (per location, if
multi-location risk) and be written on an "occurrence form". The policy will
be extended to provide watercraft Liability for permanently moored barges
while stationary. The policy will also include extensions for Liquor Legal
Liability and Employee Benefits Legal Liability, Innkeepers Legal and Safe
Deposit Box Legal coverages. If the general liability policy contains a
self-insured retention, it shall be no greater than Fifty Thousand Dollars
($50,000.00) per occurrence, with an aggregate retention of no more than One
Million Dollars ($1,000,000.00) including expenses.
The policy shall be endorsed to include Agent Bank as
an additional insured on behalf of the Banks. Definition of additional insured
shall include all officers, directors, employees, agents and representatives of
the additional insured. The coverage for additional insured shall apply on a
primary basis irrespective of any other insurance whether collectible or not
(ISO Endorsement Form CG 20261185 Additional Insured - Designated Person or
Organization or Equivalent).
g. AUTOMOBILE. Borrowers shall maintain a
comprehensive Automobile Liability Insurance Policy written under coverage
"symbol 1", providing a One Million Dollar ($1,000,000.00) combined single
limit for bodily injury and property damage covering all owned, non-owned and
hired vehicles of the Borrowers. If the policy contains a self insured
retention it shall be no greater than Twenty-Five Thousand Dollars
($25,000.00) per occurrence, with an aggregate retention of no more than One
Million Dollars ($1,000,000.00) including expenses. The following additional
coverages must be purchased by Borrowers:
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(i) GARAGEKEEPERS LEGAL LIABILITY. Evidence that
Borrowers, or each contracting party with whom any member of
the Borrower Consolidation has entered into an agreement for
valet and other parking related services at any of the
Hotel/Casino Facilities, maintains coverage in the amount of a
One Million Dollar ($1,000,000.00) limit, or more, for
comprehensive and collision coverages for physical damage to
vehicles in the Borrowers', or such contracting party, care,
custody and control. Each of such policies can be subject to a
deductible of no greater than Five Thousand Dollars
($5,000.00) for each auto and Twenty-Five Thousand Dollars
($25,000.00) for each loss.
h. WORKERS COMPENSATION AND EMPLOYERS
LIABILITY INSURANCE. Borrowers shall maintain a standard workers compensation
policy covering the states of Indiana, Illinois, Iowa, Missouri and Louisiana
and any other state where the company is operating, including employers
liability coverage subject to a limit of no less than One Million Dollars
($1,000,000.00) each employee, One Million Dollars ($1,000,000.00) each
accident, One Million Dollars ($1,000,000.00) policy limit. The policy shall
include endorsements for Voluntary Compensation, Stop Gap Liability,
Long-Shoreman's and Harbors Workmans Compensation Act and Maritime Coverages (as
applicable). If the Borrowers have elected to self-insure Workers Compensation
coverage in any of the States of Indiana, Illinois, Iowa, Missouri and Louisiana
(or any other state), the Agent Bank must be furnished with a copy of the
certificate from the state(s) permitting self-insurance and evidence of a Stop
Loss Excess Workers Compensation policy with a specific retention of no greater
than Three Hundred Thousand Dollars ($300,000.00) per occurrence.
i. MARINE INSURANCE (FOR ALL VESSELS THAT ARE
OWNED OR LEASED BY ANY MEMBER OF THE BORROWER CONSOLIDATION OR FOR WHICH ANY
MEMBER OF THE BORROWER CONSOLIDATION IS LEGALLY LIABLE).
(i) HULL AND MACHINERY COVERAGE. This policy will
provide the broadest possible scope of property coverage
available including all Traditional Commercial Hull insuring
conditions, American Institute clauses (including liner
negligence, SR&CC, vandalism and theft clauses) covering the
vessel for physical damage at a value that represents one
hundred percent (100%) of the replacement cost for each
Vessel. The policy will include Agreed Amount (waving
co-insurance) and replacement cost valuation endorsements.
The policy shall include appropriate Mortgagee, Breach of
Warranty and Loss Payee endorsements in favor of Agent Bank.
The policy may contain a deductible of no greater than two
percent (2%) of insured value per occurrence.
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(ii) CASINO BOAT BUSINESS INTERRUPTION. Borrowers
will purchase, or cause to be purchased by TIGC with respect
to the Lawrenceburg Casino Facilities, business interruption
coverage under a "comprehensive facility form" indemnifying
each applicable Vessel operation for loss of net profits and
continuing expenses (including debt service) for loss arising
from casualty to the applicable Vessel and any other cause
beyond the control of the Borrowers. The limit purchase must
represent no less than seventy-five percent (75%) of the
annual net profit plus continuing expenses attributable to
TIGC's proportionate share of partnership net profit and
expenses with respect to the Lawrenceburg Casino Facilities
and fifty percent (50%) of the annual net profit plus
continuing expenses with respect to each of the other
Hotel/Casino Facilities. The policy or policies may have a
deductible of no greater than fourteen (14) days for each
Vessel at the Lawrenceburg Casino Facilities and thirty (30)
days for each other Vessel. This coverage will be specifically
endorsed to include Agent Bank as "Loss Payee".
(iii) PROTECTION AND INDEMNITY. Protection and
Indemnity coverage will be written with a One Million Dollar
($1,000,000.00) combined single limit for bodily injury and
property damage, including all standard policy form extensions
and be supplemented by Bumbershoot Liability coverage as
described in Paragraph l below. The policy shall be written on
an occurrence form. The Agent Bank and Banks will be included
as additional insureds under the policy.
(iv) COMPREHENSIVE POLLUTION LIABILITY. Borrowers
shall purchase Comprehensive Pollution Liability coverage with
a limit of no less than Five Million Dollars ($5,000,000.00)
per incident covering any loss or damage resulting from any
discharge, emission, spillage or leakage on or into water,
including governmental mandated clean up and be supplemented
by Bumbershoot Liability coverage as described in Paragraph l
below. The Agent Bank and Banks will be included as additional
insureds under the policy.
j. UNDERGROUND STORAGE TANK LIABILITY. In
the event any underground storage tanks are located on or at any of the
Hotel/Casino Facilities, Borrowers shall maintain an underground storage tank
liability policy providing first party (property damage) and third party
(bodily/property damage) coverages for environmental claims resulting from
underground storage tanks at the Hotel/Casino Facilities. If required to be
maintained hereunder, the policy will include coverage for all governmental
and regulatory agency mandated clean ups. If required to be maintained
hereunder, the policy shall provide limits of no less than Five Million
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Dollars ($5,000,000.00) each incident, Five Million Dollars ($5,000,000.00)
in the aggregate, with a sublimit of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00) for covering defense expenses for first and third
party coverages. If required to be maintained hereunder, the policy may
contain a deductible of no greater than Five Hundred Thousand Dollars
($500,000.00) for first and third party coverages.
k. If Borrowers' general liability and
automobile policies include a self-insured retention, it is agreed and fully
understood that Borrowers are solely responsible for payment of all amounts due
within said self-insured retentions. Any Indemnification/Hold Harmless provision
is extended to cover all liabilities associated with said self-insured
retentions.
l. UMBRELLA/BUMBERSHOOT LIABILITY. An
Umbrella/Bumbershoot Liability policy shall be purchased with a limit of not
less than One Hundred Fifty Million Dollars ($150,000,000.00) providing excess
coverage over all limits and coverages indicated in paragraphs (f), (g), (h),
(i)(iii) and (iv) above. The limits can be secured by a combination of Primary
and Excess Umbrella/Bumbershoot policies, provided that all layers follow form
with the underlying policies indicated in (f), (g), (h) and (i)(iii) and (iv)
and are written on an "occurrence" form. This policy shall be endorsed to
include the Agent Bank as an additional insured on behalf of the Banks.
m. All policies indicated above shall be
written with insurance companies licensed and admitted to do business in all
states where the Borrower Consolidation, or any of them, is operating and shall
be rated no lower than "A XII" in the most recent addition of A.M. Best's and
"AA" in the most recent edition of Standard & Poor's, or such other carrier
reasonably acceptable to Agent Bank. All policies discussed above shall be
endorsed to provide that in the event of a cancellation, non-renewal or material
modification, Agent Bank shall receive thirty (30) days prior written notice
thereof. The Borrowers shall furnish Agent Bank with Certificates of Insurance
executed by an authorized agent evidencing compliance with all insurance
provisions discussed above on an annual basis. The Borrowers, shall also furnish
policy endorsements evidencing Agent Bank's appropriate status (mortgagee, loss
payee, additional insured, etc.) under each policy. Certificates of Insurance
executed by an authorized agent of each carrier providing insurance evidencing
continuation of all coverages will be provided on the Closing Date and annually
on or before ten (10) days prior to the expiration of each policy. All
certificates and other notices related to the insurance program shall be
delivered to Agent Bank concurrently with the delivery of such certificates or
notices to such carrier or to Borrowers, or any of them, as applicable.
n. Any other insurance reasonably requested by
Agent Bank or Requisite Lenders in such amount and covering such risks as may be
reasonably requested.
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Section 5.10. TAXES. Throughout the term of the Credit
Facility, Borrowers shall prepare and timely file or cause to be prepared and
timely filed all material federal, state and local tax returns required to be
filed by them, and Borrowers shall pay and discharge prior to delinquency all
material taxes, assessments and other governmental charges or levies imposed
upon them, or in respect of any of their respective properties and assets except
such taxes, assessments and other governmental charges or levies, if any, as are
being contested in good faith by Borrowers in the manner which is set forth for
such contests by Section 4.07 herein.
Section 5.11. RELEASE OF SENIOR INDENTURE SECURITY DOCUMENTS.
a. Each of the Senior Indenture Security
Documents described on the Schedule of Senior Indenture Security Documents
attached hereto as Schedule 5.11, together with all other Liens securing
repayment or performance under the Senior Indenture and First Mortgage Notes
shall be fully released, terminated and reconveyed on or before October 1, 2000
and the Agent Bank shall have received such documents and other evidence thereof
as it shall reasonably require on or before such date.
b. Concurrently with the release, termination
and reconveyance of the Senior Indenture Security Documents as provided in
subsection (a) hereinabove, Borrowers agree that all Liens and other security
interests held by any member of the Borrower Consolidation securing repayment of
any one or more of the Intercompany Notes, shall be subordinated in priority and
right to payment to the Security Documentation.
Section 5.12. LAWRENCEBURG CASINO FACILITIES.
a. The Borrower Consolidation shall not sell
less than its entire ownership/partnership interest in TIGC or the IGCLP and the
Lawrenceburg Casino Facilities under any Lawrenceburg Sale consummated by them,
or any of them.
b. So long as the Lawrenceburg Sale has not
occurred, in no event shall TIGC approve the incurrence of any Indebtedness by
IGCLP which prohibits or otherwise restricts by its terms the ability of IGCLP:
(i) to pay dividends or make any other Distributions to its partners which
Distributions are permitted by applicable Gaming Laws, or (ii) to pay any
Indebtedness owed or owing to TIGC.
Section 5.13. FURTHER ASSURANCES. Borrowers, Agent
Bank and each of the Banks will, at the expense of the Borrowers, do,
execute, acknowledge and deliver, or cause to be done, executed, acknowledged
and delivered, such amendments or supplements hereto or to any of the Loan
Documents and such further documents, instruments and transfers as any such
party may reasonably require for the curing of any defect in the execution or
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acknowledgment hereof or in any of the Loan Documents, or in the description
of the Collateral or for the proper evidencing of giving notice of each lien
or security interest securing repayment of the Bank Facilities. Further, upon
the execution and delivery of the Mortgages and each of the Loan Documents
and thereafter, from time to time, Borrowers shall cause the Mortgages and
each of the Loan Documents and each amendment and supplement thereto to be
filed, registered and recorded and to be refiled, re-registered and
re-recorded in such manner and in such places as may be reasonably required
by the Agent Bank, in order to publish notice of and fully protect the liens
of the Mortgages and the Loan Documents and to protect or continue to perfect
the security interests created by the Mortgages and Loan Documents in the
Collateral and to perform or cause to be performed from time to time any
other actions required by law and execute or cause to be executed any and all
instruments of further assurance that may be necessary for such publication,
perfection, continuation and protection.
Section 5.14. INDEMNIFICATION. Borrowers agree to and do
hereby jointly and severally indemnify, protect, defend and save harmless
Agent Bank and each of the Banks and their respective directors, trustees,
officers, employees, agents, attorneys and shareholders (individually an
"Indemnified Party" and collectively the "Indemnified Parties") from and
against any and all losses, damages, expenses or liabilities of any kind or
nature from any investigations, suits, claims, demands or other proceedings,
including reasonable counsel fees incurred in investigating or defending such
claim, suffered by any of them and caused by, relating to, arising out of,
resulting from, or in any way connected with this Credit Agreement, with any
other Loan Document or with the transactions contemplated herein and thereby;
provided, however, Borrowers shall not be obligated to indemnify, protect,
defend or save harmless an Indemnified Party if, and to the extent, the loss,
damage, expense or liability was caused by (a) the gross negligence or wilful
misconduct of such Indemnified Party, or (b) the breach of this Credit
Agreement or any other Loan Document by such Indemnified Party as determined
by a court of competent jurisdiction in a final non-appealable judgment or
order. In case any action shall be brought against any Indemnified Party
based upon any of the above and in respect to which indemnity may be sought
against Borrowers, Agent Bank shall promptly notify Borrowers in writing, and
Borrowers shall assume the defense thereof, including the employment of
counsel selected by Borrowers and reasonably satisfactory to Agent Bank, the
payment of all costs and expenses and the right to negotiate and settle any
such action with the prior written consent of Agent Bank, which consent shall
not be unreasonably withheld. Upon reasonable determination made by an
Indemnified Party that such counsel would have a conflict representing such
Indemnified Party and Borrowers, the applicable Indemnified Party shall have
the right to employ, at the expense of Borrowers, separate counsel in any
such action and to participate in the defense thereof. Borrowers shall not be
liable for any settlement of any such action effected without their consent,
which consent shall not be unreasonably withheld. In the event that any
Person is adjudged by a court of competent jurisdiction not to have been
entitled to
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indemnification under this Section 5.14, it shall repay all amounts with
respect to which it has been so adjudged. If and to the extent that the
indemnification provisions contained in this Section 5.14 are unenforceable
for any reason, the Borrowers hereby agree to make the maximum contribution
to the payment and satisfaction of such obligations that is permissible under
applicable law. The provisions of this Section 5.14 shall survive the
termination of this Credit Agreement and the repayment of the Credit Facility.
Section 5.15. INSPECTION OF THE COLLATERAL AND APPRAISAL.
a. Subject to compliance with all applicable
Gaming Laws, at all times during the term of the Credit Facility, Borrowers
shall provide or cause to be provided to Banks and any authorized
representatives of Banks, accompanied by representatives of Borrowers and
coordinated with Agent Bank, the reasonable right of entry and free access to
the Hotel/Casino Facilities to inspect same on reasonable prior notice to
Borrowers.
b. If at any time any Qualified Appraisal of
the Hotel/Casino Facilities, or any of them, is required to be made by any
banking regulatory authority or determined to be necessary by Agent Bank or
Requisite Lenders after the occurrence and continuance of an Event of Default,
Borrowers agree to pay all fees, costs and expenses incurred by Agent Bank in
connection with the preparation of such Qualified Appraisal.
Section 5.16. COMPLIANCE WITH OTHER LOAN DOCUMENTS,
EXECUTION OF SUBSIDIARY GUARANTIES AND PLEDGE OF RESTRICTED SUBSIDIARY STOCK.
Borrowers shall comply with each and every term, condition and agreement
contained in the Loan Documents to which they, or any of them, are a party.
Borrowers shall notify Agent Bank in writing on or before ten (10) days
following the creation thereof, of each Restricted Subsidiary and
Unrestricted Subsidiary, together with a description of each New Venture
owned or to be acquired by such Restricted Subsidiary or Unrestricted
Subsidiary. Borrowers shall further cause each Restricted Subsidiary created
or otherwise occurring from time to time following the Closing Date to join
in the execution of the Subsidiary Guaranty in favor of Agent Bank and to
deliver the original thereof, or a duly executed Certificate of Joinder in
the form attached to the Subsidiary Guaranty as Exhibit A, to Agent Bank
promptly, but in no event later than thirty (30) days following the creation
or other occurrence of such Restricted Subsidiary. Argosy shall execute or
cause to be executed a Restricted Subsidiary Security Agreement no later than
thirty (30) days following the creation or other occurrence of each
Restricted Subsidiary. In the case of a Restricted Subsidiary which is the
holder of Gaming Permits, Argosy shall use its best efforts to cause all
necessary Governmental Authorities to consent to the delivery of the
applicable stock certificates, together with a stock power executed in blank,
to Agent Bank as soon as reasonably practical. Argosy shall deliver the
applicable stock certificates to Agent Bank promptly following receipt of
such approval. In
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the case of a Restricted Subsidiary that is not the holder of any
Gaming Permits, the applicable stock certificates, together with a stock power
executed in blank, shall be delivered to Agent Bank concurrently with the
execution of the Restricted Subsidiary Security Agreement. In each case, the
Restricted Subsidiary Security Agreements and delivery of the applicable stock
certificates shall be subject to the Senior Indenture Security Documents and
Argosy's obligations thereunder until such Senior Indenture Security Documents
have been terminated and released.
Section 5.17. SUITS OR ACTIONS AFFECTING BORROWERS. Until
Bank Facility Termination, Borrowers shall promptly advise Agent Bank in writing
within ten (10) days of an executive officer of any member of the Borrower
Consolidation obtaining actual knowledge of (a) any Significant Litigation, (b)
any material labor controversy resulting in or threatening to result in a strike
against the Hotel/Casino Facilities, (c) any written proposal by any
Governmental Authority to acquire any of the material assets or business of any
member of the Borrower Consolidation, and (d) any tax lien contests involving
amounts in excess of One Million Dollars ($1,000,000.00).
Section 5.18. OCCURRENCE OF SENIOR SUBORDINATED NOTES
EFFECTIVE DATE AND REQUIRED PAYMENTS FROM PROCEEDS OF SENIOR SUBORDINATED NOTES.
As of the Closing Date, Lenders do hereby consent to the issuance of the Senior
Subordinated Notes by Argosy in accordance with and pursuant to the New
Indenture, in the form of the Senior Subordinated Notes and New Indenture (in
form and content as reviewed and approved by Agent Bank consistent with the
requirement contained in the definition of Subordinated Debt), up to the
aggregate outstanding amount at any time of Three Hundred Million Dollars
($300,000,000.00). The Senior Subordinated Notes Effective Date shall occur
prior to or concurrently with the Closing Date. Concurrently with the Senior
Subordinated Notes Effective Date, Borrowers shall cause the First Mortgage
Notes Defeasance to occur.
Section 5.19. CONSENTS OF AND NOTICE TO GAMING AUTHORITIES.
Borrowers shall comply in all material respects with all applicable statutes,
rules and regulations requiring reports and disclosures to all applicable Gaming
Authorities; provided, however, that disciplinary complaints against any member
of the Borrower Consolidation not involving the potential loss of a Gaming
Permit shall not be deemed a violation of this Section 5.19.
Section 5.20. TRADENAMES, TRADEMARKS AND SERVICEMARKS.
Borrowers shall not assign or in any other manner alienate their interest in any
material tradenames, trademarks or servicemarks relating or pertaining to the
Hotel/Casino Facilities during the term of the Credit Facility, except pursuant
to the Security Documentation. Borrowers shall not change their names without
first giving written notice to Agent Bank, together with evidence reasonably
satisfactory to the Agent Bank that all notices and other documents
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required to be delivered, recorded or filed in order to perfect and protect the
security interest granted by the Borrowers to the Banks in such trademarks,
tradenames and servicemarks and the other Collateral have been so delivered,
recorded and/or filed.
Section 5.21. NOTICE OF HAZARDOUS MATERIALS. Within thirty
(30) days after an executive officer of the Borrowers obtaining actual knowledge
thereof, Borrowers shall immediately advise Agent Bank in writing and deliver a
copy of (a) any and all enforcement, clean-up, removal or other governmental or
regulatory actions expected to cost in excess of One Million Dollars
($1,000,000.00) instituted, completed or threatened pursuant to any applicable
federal, state or local laws, ordinances or regulations relating to any
Hazardous Materials (as defined in the Environmental Certificate) affecting the
Collateral ("Hazardous Materials Laws"); and (b) all claims made or threatened
by any third party against Borrowers or the Hotel/Casino Facilities in excess of
One Million Dollars ($1,000,000.00) relating to damage, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous Materials
(the matters set forth in clauses (a) and (b) above are hereinafter referred to
as "Hazardous Materials Claims").
Section 5.22. COMPLIANCE WITH STATUTES, ETC. Argosy will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliance which would not, in the aggregate,
reasonably be expected to result in a Material Adverse Change on the business,
operations, property, assets, or financial condition of the Borrower
Consolidation taken as a whole.
Section 5.23. COMPLIANCE WITH ACCESS LAWS.
a. Borrowers agree that Borrowers, the
Hotel/Casino Facilities shall at all times comply in all material respects
with the requirements of the Americans with Disabilities Act of 1990; the
Fair Housing Amendments Act of 1988; and other federal, state or local laws
or ordinances related to disabled access; or any statute, rule, regulation,
ordinance, order of Governmental Authorities, or order or decree of any court
adopted or enacted with respect thereto, as now existing or hereafter amended
or adopted (collectively, the "Access Laws"). At any time (but no more
frequently than once annually), Agent Bank may require a certificate of
compliance with the Access Laws. Agent Bank may also require a certificate of
compliance (but no more frequently than once annually) with the Access Laws
from an architect, engineer, or other third party acceptable to Agent Bank.
b. Borrowers agree to give prompt written notice
to Agent Bank of the receipt by Borrowers of any claims of violation of any
of the Access Laws and of the
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commencement of any proceedings or investigations which relate to compliance
with any of the Access Laws (except proceedings or investigations which do
not involve material claims of violation or non-compliance).
c. Borrowers shall indemnify, defend and hold
harmless Indemnified Parties from and against any and all claims, demands,
damages, costs, expenses, losses, liabilities, penalties, fines and other
proceedings including, without limitation, reasonable attorneys' fees and
expenses arising directly or indirectly from or out of or in any way connected
with any failure of the Hotel/Casino Facilities to comply with any of the Access
Laws. The obligations and liabilities of Borrowers under this section shall
survive Bank Facility Termination, but shall terminate upon any satisfaction,
assignment, judicial or nonjudicial foreclosure proceeding, or delivery of a
deed in lieu of foreclosure for violations relating to conditions not in
existence as of the date of such satisfaction, assignment, judicial or
nonjudicial foreclosure proceeding or deed in lieu of foreclosure.
Section 5.24. DESIGNATION OF BANK FACILITIES AS DESIGNATED
SENIOR DEBT. Concurrently with the occurrence of the Senior Subordinated Notes
Effective Date, Argosy shall cause the Bank Facilities to be designated as
"Designated Senior Debt" as defined and described in the New Indenture pursuant
to an officers' certificate issued by Argosy and delivered to the trustee under
the New Indenture, all in accordance with the requirements and procedures set
forth in the New Indenture.
Section 5.25. PROHIBITION ON PREPAYMENT OR DEFEASANCE OF
SUBORDINATED DEBT. Notwithstanding anything contained in the Credit Agreement to
the contrary, no member of the Borrower Consolidation shall, except with the
prior written consent of the Requisite Lenders, purchase, redeem, retire or
otherwise acquire for value, or set apart any money for a sinking, defeasance or
other analogous fund for, the purchase, redemption, retirement or other
acquisition of, or make any voluntary payment or prepayment of the principal of
or interest on, or any other amount owing in respect of, the Senior Subordinated
Notes or required pursuant to the terms of any other Subordinated Debt, except
for: (a) regularly scheduled payments of principal and interest in respect of
such Senior Subordinated Notes required pursuant to the instruments evidencing
such Senior Subordinated Notes and the New Indenture or required pursuant to the
terms of any other Subordinated Debt, and (b) full payment of the Convertible
Notes on or before July 1, 2000.
Section 5.26. YEAR 2000 COMPLIANCE. Borrowers shall perform
all acts reasonably necessary to ensure that (i) Borrowers and the hotel casino
and related businesses conducted by Borrowers at the Hotel/Casino Facilities
become Year 2000 Compliant in a timely manner. Such acts shall include, without
limitation, performing a comprehensive review and assessment of all of
Borrowers' material systems and adopting a detailed plan, with itemized budget,
for the remediation, monitoring and testing of such systems. As used
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in this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity,
that all material software, hardware, firmware, equipment, goods or systems
of the Borrower Consolidation material to the business operations or
financial condition of the Borrower Consolidation, will properly perform date
sensitive functions before, during and after the year 2000. Borrowers shall,
promptly upon request, provide to Agent Bank such certifications or other
evidence of Borrowers' compliance with the terms of this paragraph as Agent
Bank or Requisite Lenders may from time to time reasonably require.
Section 5.27. ACCELERATION OF MATURITY DATE. In the event
Borrowers shall fail to fully pay or cause to be fully paid the Convertible
Notes and the Outstanding First Mortgage Notes on or before July 1, 2000, the
Maturity Date shall be automatically accelerated to July 1, 2000.
Section 5.28. RESTRICTION ON AMENDMENTS TO DEVELOPMENT
AGREEMENTS, PARTNERSHIP AGREEMENTS AND BATON ROUGE LEASES. No amendments or
modifications shall be made to, nor shall any agreement be made or entered into
to amend or modify any Development Agreements, Partnership Agreements or Baton
Rouge Leases without the prior written consent of Agent Bank, or if in the
opinion of Agent Bank such amendment or modification is material or in any
manner adverse to the Borrower Consolidation, or any of them, without the prior
written consent of Requisite Lenders, which consent shall not be unreasonably
withheld.
ARTICLE VI
FINANCIAL COVENANTS
From and after the Closing Date, until payment in full of all
sums owing hereunder and under the Notes and the occurrence of Bank Facilities
Termination, the Borrower Consolidation agrees, as set forth below, to comply or
cause compliance, in the case of the Argosy Consolidation, with the following:
Section 6.01. TOTAL LEVERAGE RATIO. Commencing as of the first
Fiscal Quarter ending subsequent to the Closing Date and continuing as of each
Fiscal Quarter end thereafter occurring until Bank Facilities Termination, the
Argosy Consolidation shall maintain a Total Leverage Ratio no greater than the
ratios described in Table A hereinbelow; provided that in the event of the
occurrence of the Lawrenceburg Buyout Effective Date commencing as of the first
Fiscal Quarter ending subsequent to the Lawrenceburg Buyout Effective Date and
continuing as of each Fiscal Quarter end thereafter occurring until Bank
Facilities Termination, the Argosy Consolidation shall maintain a Total Leverage
Ratio no greater than the ratios described in Table B hereinbelow, in either
case to be calculated as of the end of each Fiscal Quarter in accordance with
the following schedule:
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<PAGE>
<TABLE>
<CAPTION>
PERIOD TABLE A TABLE B
- ------------------------------------------------------------------------------
MAXIMUM
MAXIMUM TOTAL TOTAL
FISCAL QUARTER LEVERAGE LEVERAGE
END RATIO RATIO
- ------------------------------------------------------------------------------
<S> <C> <C>
As of the Closing Date
through the Fiscal
Quarter ending
December 31, 1999
4.75 to 1.00 4.75 to 1.00
- ------------------------------------------------------------------------------
As of the Fiscal Quarter
ending March 31, 2000
through the Fiscal
Quarter ending
December 31, 2000
4.50 to 1.00 4.75 to 1.00
- ------------------------------------------------------------------------------
As of the Fiscal Quarter
ending March 31, 2001
through the Fiscal
Quarter ending
December 31, 2001
4.25 to 1.00 4.50 to 1.00
- ------------------------------------------------------------------------------
As of the Fiscal Quarter
ending March 31, 2002
through the Fiscal
Quarter ending
December 31, 2002
3.75 to 1.00 4.00 to 1.00
- ------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PERIOD TABLE A TABLE B
- ------------------------------------------------------------------------------
MAXIMUM
MAXIMUM TOTAL TOTAL
FISCAL QUARTER LEVERAGE LEVERAGE
END RATIO RATIO
- ------------------------------------------------------------------------------
<S> <C> <C>
As of the Fiscal Quarter
ending March 31, 2003
and as of the end of each
Fiscal Quarter thereafter
occurring until the
occurrence of Bank
Facilities Termination
3.50 to 1.00 3.75 to 1.00
==============================================================================
</TABLE>
Section 6.02. SENIOR LEVERAGE RATIO. Commencing as of the
first Fiscal Quarter ending subsequent to the Closing Date and continuing as of
each Fiscal Quarter end until Bank Facilities Termination, the Argosy
Consolidation shall maintain a Senior Leverage Ratio no greater than the ratios
described in Table A hereinbelow; provided that in the event of the occurrence
of the Lawrenceburg Buyout Effective Date commencing as of the first Fiscal
Quarter ending subsequent to the Lawrenceburg Buyout Effective Date and
continuing as of each Fiscal Quarter end thereafter occurring until Bank
Facilities Termination, the Argosy Consolidation shall maintain a Total Leverage
Ratio no greater than the ratios described in Table B hereinbelow, in either
case to be calculated as of the end of each Fiscal Quarter in accordance with
the following schedule:
<TABLE>
<CAPTION>
==============================================================================
PERIOD TABLE A TABLE B
- ------------------------------------------------------------------------------
MAXIMUM MAXIMUM
SENIOR SENIOR
FISCAL QUARTER LEVERAGE LEVERAGE
END RATIO RATIO
- ------------------------------------------------------------------------------
<S> <C> <C>
As of the Closing Date
through the Fiscal
Quarter ending
December 31, 2000
2.75 to 1.00 2.95 to 1.00
- ------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
==============================================================================
PERIOD TABLE A TABLE B
- ------------------------------------------------------------------------------
MAXIMUM MAXIMUM
SENIOR SENIOR
FISCAL QUARTER LEVERAGE LEVERAGE
END RATIO RATIO
- ------------------------------------------------------------------------------
<S> <C> <C>
As of the Fiscal Quarter
ending March 31, 2001
through the Fiscal
Quarter ending
December 31, 2002
2.60 to 1.00 2.75 to 1.00
- ------------------------------------------------------------------------------
As of the Fiscal Quarter
ending March 31, 2003
and as of the end of each
Fiscal Quarter thereafter
occurring until the
occurrence of Bank
Facilities Termination
2.50 to 1.00 2.50 to 1.00
==============================================================================
</TABLE>
Section 6.03. FIXED CHARGE COVERAGE RATIO. Commencing as of
the first Fiscal Quarter ending subsequent to the Closing Date and continuing as
of each Fiscal Quarter end until the occurrence of Bank Facilities Termination,
the Argosy Consolidation shall maintain a Fixed Charge Coverage Ratio no less
than 1.25 to 1.00; provided that in the event of the occurrence of the
Lawrenceburg Buyout Effective Date commencing as of the first Fiscal Quarter
ending subsequent to the Lawrenceburg Buyout Effective Date and continuing as of
each Fiscal Quarter end thereafter occurring until Bank Facilities Termination,
the Argosy Consolidation shall maintain a Fixed Charge Coverage Ratio no less
than 1.10 to 1.00.
Section 6.04. MINIMUM NET WORTH. The Argosy Consolidation
shall maintain as of the end of each Fiscal Quarter following the Closing Date,
a Net Worth equal to or greater than the sum of (a) ninety percent (90%) of the
Net Worth of the Argosy Consolidation as of the most recent Fiscal Quarter end
preceding the Closing Date, plus (b) seventy-five percent (75%) of Net Income of
the Argosy Consolidation after taxes realized as of each Fiscal Quarter end
occurring on and after the Closing Date (without
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reduction for any net losses), plus (c) fifty percent (50%) of the proceeds
received in Cash or Cash Equivalents (net of reasonable expenses, including,
without limitation, underwriting commissions and discounts and legal and
accounting costs, if any) from all additional Equity Offerings made after the
Closing Date, less (d) financing costs, including, without limitation,
premiums, commissions, legal and accounting costs incurred by the Borrower
Consolidation in connection with the First Mortgage Notes Defeasance, full
payment of the Convertible Notes, the closing of the Credit Agreement and the
Bank Facilities (including, without limitation, the Commitment Increases and
Term Loans) and the New Indenture and any Subordinated Debt incurred
subsequent to the Closing Date, less (e) any adjustments to the book value of
AOLI, Jazz and/or CQP relating to the Baton Rouge Casino Facility.
Section 6.05. CAPITAL EXPENDITURE REQUIREMENTS.
a. During each Fiscal Year, commencing with
the Fiscal Year commencing January 1, 1999, the Borrower Consolidation shall
make or cause to be made, Non-Financed Capital Expenditures to the Argosy Owned
Facilities in a minimum aggregate amount equal to or greater than three percent
(3%) of Net Gaming Revenues ("Minimum Cap Ex Requirement") derived from the
Argosy Owned Facilities by the Borrower Consolidation during the immediately
preceding Fiscal Year, but in no event shall Non-Financed Capital Expenditures
to the Argosy Owned Facilities during any Fiscal Year exceed a maximum aggregate
amount equal to six percent (6%) of Net Gaming Revenues ("Maximum Cap Ex Limit")
derived from the Argosy Owned Facilities by the Borrower Consolidation during
the immediately preceding Fiscal Year; provided, however, to the extent the
Borrower Consolidation spends less than the Maximum Cap Ex Limit during any
Fiscal Year, the unused amount may be expended by the Borrower Consolidation for
Non-Financed Capital Expenditures to the Argosy Owned Facilities during the next
occurring Fiscal Year in addition to the Maximum Cap Ex Limit required during
the next occurring Fiscal Year. The amount of any such carryover shall be deemed
the first expenditures made during the next such ensuing Fiscal Year.
b. Notwithstanding and in addition to the
provisions set forth in Section 6.05(a) hereinabove, the Borrower
Consolidation may make the Capital Expenditures to the Argosy Owned
Facilities which are described on the Schedule of Excluded Capital
Expenditures, Schedule 6.05(b), from assets of the Borrower Consolidation and
from advances under the Bank Facilities.
c. During each Fiscal Year, commencing with the
Fiscal Year commencing January 1, 1999, the Borrower Consolidation shall
cause to be made Non- Financed Capital Expenditures to the Lawrenceburg
Casino Facilities in a minimum aggregate amount equal to Five Million Dollars
($5,000,000.00) during each Fiscal Year.
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d. Notwithstanding anything contained to the
contrary in this Section 6.05, in no event shall the Borrower Consolidation
make any Capital Expenditures except to the extent permitted under the
definition of Aggregate Expenditure Availability.
Section 6.06. CONTINGENT LIABILITY(IES). Other than with
respect to the liability of IGC and TIGC in their respective capacities as the
general partners of BOSCLP and IGCLP, respectively, the Borrower Consolidation
shall not directly or indirectly incur any Contingent Liability(ies) in excess
of the cumulative aggregate principal amount of Ten Million Dollars
($10,000,000.00) at any time outstanding without the prior written consent of
Requisite Lenders. In no event shall any Contingent Liabilities be secured by a
Lien on any property or assets of any member of the Borrower Consolidation.
Section 6.07. INVESTMENT RESTRICTIONS. Other than Investments
permitted herein or approved in writing by Requisite Lenders, the Borrower
Consolidation shall not make any Investments (whether by way of loan, stock
purchase, capital contribution or otherwise) other than the following:
a. Cash and Cash Equivalents;
b. Loans and advances to officers, employees and
directors in the ordinary course of business not exceeding Five Hundred
Thousand Dollars ($500,000.00) in the aggregate at any one time;
c. Contribution and/or conveyance of the Baton
Rouge Hotel Property in accordance with the provisions set forth in Section
5.06(c);
d. Investments subsequent to the Closing Date in
BOSCLP, IGCLP or any Unrestricted Subsidiaries at the discretion of Borrowers
up to the maximum amount of the then applicable Aggregate Expenditure
Availability, in each instance measured by the amount actually invested
without adjustment for subsequent increases or decreases in the value of such
Investment;
e. Investments in Restricted Subsidiaries and
any member of the Borrower Consolidation, so long as after giving effect to
such Investment no Default or Event of Default would result from the making
of such Investment;
f. Capital Expenditures for the Hotel/Casino
Facilities, except to the extent restricted by the Aggregate Expenditure
Availability, during each Fiscal Year, up to the maximum amounts permitted
under Section 6.05;
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<PAGE>
g. The Lawrenceburg Buyout in accordance with
the requirements of Sections 2.15(b) and 2.15(d) and Article III C; and
h. Investments outside of the Borrower
Consolidation existing as of the Closing Date which are described on the
Schedule of Existing Unrestricted Subsidiary Investments, Schedule 6.07(h)
affixed hereto.
Section 6.08. TOTAL LIENS. The Borrower Consolidation shall
not directly or indirectly, create, incur, assume or permit to exist any Lien on
or with respect to any of their respective assets or any of the Collateral,
whether now owned or hereafter acquired, or any income or profits therefrom, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any of the
Collateral under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
a. Permitted Encumbrances;
b. The Senior Indenture Security Documents
until October 1, 2000;
c. Liens granted or permitted pursuant to the
Security Documentation, which secure obligations of the Borrower Consolidation
under the Loan Documents and Secured Interest Rate Hedges;
d. Liens on the FF&E and other goods securing
Indebtedness to finance the purchase price thereof; PROVIDED that (i) such Liens
shall extend only to the other goods and FF&E so financed and the proceeds
thereof, and (ii) such Liens shall not secure an outstanding principal amount of
Indebtedness in excess of Fifteen Million Dollars ($15,000,000.00) in the
aggregate at any time; and
e. The Liens set forth on the Schedule of
Liens marked "Schedule 6.09" attached hereto.
Section 6.09. LIMITATION ON INDEBTEDNESS. The Borrower
Consolidation (and the Argosy Consolidation where specifically indicated below)
will not incur any Indebtedness, except as specifically permitted hereinbelow:
a. Interest Rate Hedges up to the maximum
aggregate notional principal amount of One Hundred Fifty Million Dollars
($150,000,000.00) at any time outstanding; provided that upon the occurrence of
the Level Two Commitment Increase Effective Date, Interest Rate Hedges may be
incurred up to the maximum notational
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<PAGE>
principal amount of Two Hundred Fifty Million Dollars ($250,000,000.00) at
any time outstanding;
b. With respect to the Argosy Consolidation,
Secured Indebtedness of the type permitted under Section 6.08(d) and Capital
Lease Liabilities, up to a maximum cumulative aggregate principal amount at any
time outstanding equal to Fifteen Million Dollars ($15,000,000.00);
c. Unsecured Indebtedness up to the maximum
cumulative aggregate principal amount of Five Million Dollars ($5,000,000.00) at
any time outstanding;
d. The Indebtedness evidenced by the New
Indenture and Senior Subordinated Notes;
e. Subordinated Debt incurred subsequent to
the Closing Date, provided that one hundred percent (100%) of the principal
amount of such Subordinated Debt (unless otherwise agreed in writing by
Requisite Lenders), not otherwise applied to repay, retire, redeem, defease or
otherwise acquire other Subordinated Debt, in excess of the sum of (x) the
aggregate amount of the proceeds of such Subordinated Debt used to fund,
directly or indirectly, the costs of the Lawrenceburg Buyout plus (y) all costs,
fees and expenses (including without limitation underwriting, placement,
financial advisory and similar fees and expenses) incurred in connection with
the placement or incurrence of such Subordinated Debt plus (z) all premium and
interest paid with respect to Indebtedness refinanced, retired, defeased,
replaced or repaid with the proceeds of such Subordinated Debt, shall be used by
the Borrower Consolidation to make a Voluntary Permanent Reduction promptly
following the incurrence of such Subordinated Debt;
f. The Indebtedness evidenced by the Bank
Facilities;
g. The Indebtedness evidenced by the
Outstanding First Mortgage Notes until July 1, 2000;
h. Indebtedness evidenced by the Convertible
Notes until July 1, 2000;
i. Indebtedness between members of the
Borrower Consolidation;
j. Indebtedness constituting Investments
permitted under Section 6.08; and
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<PAGE>
k. Indebtedness constituting Contingent
Liabilities permitted to be incurred under Section 6.07.
Section 6.10. MINIMUM SUBORDINATED DEBT. The Borrower
Consolidation shall maintain at all times commencing on the Closing Date and
continuing until the occurrence of Bank Facilities Termination, Subordinated
Debt in an aggregate principal amount no less than One Hundred Fifty Million
Dollars ($150,000,000.00).
Section 6.11. RESTRICTION ON DISTRIBUTIONS AND ARGOSY
DIVIDENDS.
a. No member of the Borrower Consolidation
shall make any Distributions, other than to other members of the Borrower
Consolidation, during any period in which a Default or Event of Default has
occurred and remains continuing.
b. No member of the Borrower Consolidation
shall make any Argosy Dividends (other than Share Repurchases to the extent
hereinafter permitted) without the prior written consent of the Requisite
Lenders.
c. Share Repurchases may be made by Argosy to
its shareholders so long as: (i) eight (8) full Fiscal Quarters shall have
elapsed following the Closing Date; (ii) at the time of the declaration and of
the payment of such Share Repurchases, the Senior Leverage Ratio of the Argosy
Consolidation as of the most recently ended Fiscal Quarter is no greater than
1.5 to 1.0, calculated on a pro forma basis based on the assumption that the
Share Repurchases had occurred during the most recently ended Fiscal Quarter;
(iii) such Share Repurchases do not exceed the amount of the lesser of: (x) Ten
Million Dollars ($10,000,000.00) in the aggregate during any consecutive twelve
(12) month period, or (y) Twenty-Five Million Dollars ($25,000,000.00) in
maximum cumulative aggregate amount during the life of the Bank Facilities; (iv)
the payment of such Share Repurchases does not constitute a Default or Event of
Default; and (v) such Share Repurchases are permitted to be made under the terms
of the New Indenture.
d. In no event shall the aggregate of
Distributions made during any Fiscal Year exceed the Net Income of the
Borrower Consolidation for the most recently ended Fiscal Year.
Section 6.12. NO CHANGE OF CONTROL. Until the occurrence
of Bank Facility Termination, no Change of Control shall occur.
Section 6.13. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
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a. Other than as approved in writing by
Requisite Lenders, no member of the Borrower Consolidation shall wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation (except a merger or consolidation with another entity within the
Borrower Consolidation), or convey, sell, lease or otherwise dispose of (or make
an agreement to do any of the foregoing at any time prior to Bank Facility
Termination) all or any material part of its respective property or assets
(except to another entity within the Borrower Consolidation), except that the
following shall be permitted: (i) the Borrowers may make sales of inventory and
other assets in the ordinary course of business, (ii) so long as no Default or
Event of Default shall have occurred and remains continuing the Borrowers may,
in the ordinary course of business, sell equipment and FF&E as provided in
Section 5.01, and (iii) so long as no Default or Event of Default shall have
occurred and remains continuing, Argosy may sell any Unrestricted Subsidiary or
New Venture Investment (or all or a portion of its Investment therein) in
exchange for its fair value;
b. Notwithstanding the foregoing, however, in
the event the New Indenture or provisions of any Subordinated Debt requires an
amount calculated by reference to proceeds realized by the Borrower
Consolidation from the sale of FF&E, any Unrestricted Subsidiary or New Venture
Investment or any other property or assets to be paid to or for the benefit of
the holders of Senior Subordinated Notes or the Subordinated Debt, as the case
may be, if not paid to the Lenders under the Credit Facility or for redemption
of Subordinated Debt as a result thereof, such Net Proceeds shall be paid to
Agent Bank for the account of the Lenders under the Credit Facility as a
Voluntary Permanent Reduction and not to the holders of such Subordinated Debt
unless otherwise agreed in writing by the Requisite Lenders;
c. In the event of the Lawrenceburg Sale: (i) Net
Proceeds shall be promptly applied by the Borrower Consolidation to the Credit
Facility as a Voluntary Permanent Reduction, and (ii) the Borrower Consolidation
shall immediately cause Bank Facilities Termination to occur unless (x) the
EBITDA attributable to the Lawrenceburg Casino Facilities (after accounting for
the Minority Interest Percentage applicable thereto) for the most recently ended
four (4) consecutive Fiscal Quarter period is less than thirty-three and
one-third percent (33-1/3%) of the EBITDA of the Argosy Consolidation at the
time of such Lawrenceburg Sale for such period and (y) after giving pro forma
effect to such Lawrenceburg Sale, no Default or Event of Default will occur.
Section 6.14. TRANSACTIONS WITH AFFILIATES. Other than: (i)
between and amongst the Borrower Consolidation, or (ii) in connection with
Investments in a New Venture and/or New Venture Subsidiaries, no transactions
shall be made by the Borrower Consolidation with Affiliates or Unrestricted
Subsidiaries of the Borrower Consolidation other than arms length transactions
for fair market value.
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Section 6.15. NO TRANSFER OF OWNERSHIP. Argosy shall not
transfer or hypothecate its ownership interests in any direct or indirect
Subsidiary which is a member of the Borrower Consolidation or any Restricted
Subsidiary except in connection with the Security Documentation; provided,
however, Borrowers shall have the right to sell any Unrestricted Subsidiary
or New Venture Investment (or all or a portion of its Investment therein) in
exchange for its fair value.
Section 6.16. ERISA. Borrowers shall:
a. Not permit at any time any Pension Plan
which is maintained by such Borrower, and use its best efforts not to permit any
Pension Plan with respect to which such Borrower is obligated to contribute on
behalf of its perspective employees, to:
(i) engage in any nonexempt "prohibited
transaction", as such term is defined in Section 4975 of the
Code, which may reasonably be expected to result in material
liability of such Borrower to the Pension Plan or the Pension
Benefit Guaranty Corporation,
(ii) incur any material "accumulated
funding deficiency", as that term is defined in Section 302 of
ERISA, which may reasonably be expected to result in material
liability of such Borrower to the Pension Plan or the Pension
Benefit Guaranty Corporation.
b. Upon such Borrower becoming aware thereof,
promptly notify the Agent Bank of the occurrence of any "reportable event" (as
defined in Section 4043 of ERISA) or of any non-exempt "prohibited transaction"
(as defined in Section 4975 of the Code) with respect to any Pension Plan which
is maintained by such Borrower or to which such Borrower is obligated to
contribute on behalf of its employees or any trust created thereunder.
c. Not, at any time, permit any Pension Plan
which is maintained by such Borrower to fail to comply with ERISA or other
applicable laws that would result in a Material Adverse Change.
Section 6.17. MARGIN REGULATIONS. No part of the proceeds of
the Credit Facility, Swingline Facility or L/C Facility will be used by
Borrowers, or any of them, in violation of or inconsistent with the provisions
of Regulations T, U or X of the Board of Governors of the Federal Reserve
System.
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Section 6.18. LIMITATION ON ADDITIONAL SUBSIDIARIES. No
Subsidiary of Argosy which is a member of the Borrower Consolidation shall
create any additional Subsidiaries without the prior written consent of
Requisite Lenders.
Section 6.19. LIMITATION ON CONSOLIDATED TAX LIABILITY. No
member of the Borrower Consolidation shall be liable for federal income taxes
relating to the taxable income of any Subsidiary or Affiliate of Argosy which
is not a member of the Borrower Consolidation, or any of them, in excess of
the amount of federal income taxes it would pay if reporting as a separate
entity, unless such member of the Borrower Consolidation is fully reimbursed
by such Subsidiary or Affiliate of Argosy on or before the payment of such
taxes.
Section 6.20. CHANGE IN ACCOUNTING PRINCIPLES. Except as
otherwise provided herein, if any changes in accounting principles from those
used in the preparation of the most recent financial statements delivered to
Agent Bank pursuant to the terms hereof are hereinafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrowers with the agreement of their independent certified public accountants
and such changes result in a change in the method of calculation of any of the
financial covenants, standards or terms found herein, the parties hereto agree
to enter into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for evaluating
the financial condition of Borrowers shall be the same after such changes as if
such changes had not been made; provided, however, that no change in GAAP that
would affect the method of calculation of any of the financial covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner reasonably satisfactory to Agent Bank and
Requisite Lenders, to so reflect such change in accounting principles.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. EVENTS OF DEFAULT. Any of the following
events and the passage of any applicable notice and cure periods shall
constitute an Event of Default hereunder:
a. Any representation or warranty made by
Borrowers pursuant to or in connection with this Credit Agreement, the Notes,
the Environmental Certificate, or any other Loan Document or in any report,
certificate, financial statement or other writing furnished by Borrowers in
connection herewith, shall prove to be false, incorrect or misleading in any
materially adverse aspect as of the date when made.
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b. Borrowers shall have defaulted in the
payment of any interest on the Revolving Credit Note or Swingline Note for a
period of five (5) days from the date such payment is due or shall have
defaulted in the payment of any principal on the Revolving Credit Note when due;
c. An event of default, a defined thereunder,
shall occur under any of the Security Documentation or any of the Security
Documentation or any provision thereof shall cease to be in full force and
effect in any material respect or shall cease to give the Agent Bank in any
material respect the liens, rights, powers and privileges purported to be
created thereby or the Borrowers shall default in the due performance or
observance of any term, covenant or agreement on their part to be performed
or observed pursuant to the Security Documentation for a period beyond any
applicable grace period therein defined;
d. Borrowers shall have defaulted in the
payment of any fees required to be paid under the Fee Side Letter, Commitment
Fees, expenses, indemnities or any other amount owing under any Loan Document
for a period of five (5) days after written notice thereof to Borrowers from
Agent Bank;
e. Borrowers or any Restricted Subsidiary
shall fail duly and punctually to perform or comply with: (i) any term,
covenant, condition or promise contained in Sections 5.11, 5.24, 5.25, 5.27,
6.01, 6.02, 6.03, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09, 6.10, 6.11, 6.12, 6.13,
6.15 or 6.17, or (ii) any other term, covenant, condition or promise contained
in this Credit Agreement, the Notes, the Mortgages or any other Loan Document
and, in the case of any term, covenant, condition or promise covered by this
clause (ii), such failure shall continue thirty (30) days after written notice
thereof is delivered to Borrowers by Agent Bank (or such shorter period
following such notice as may be specified in any other Loan Document);
f. Borrowers, or any of them, or IGCLP, or
any Restricted Subsidiary shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to it or its
debts under the Bankruptcy Code or any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official, for all or
substantially all of its property, or shall consent to any such relief or to the
appointment or taking possession by any such official in any involuntary case or
other proceeding against it;
g. An involuntary case or other proceeding
shall be commenced against Borrowers, or any of them, or IGCLP, or any
Restricted Subsidiary seeking liquidation, reorganization or other relief with
respect to itself or its debts under the Bankruptcy Code or any bankruptcy,
insolvency or other similar law now or hereafter in
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effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official, for all or substantially all of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) days;
h. Borrowers or any of them, or IGCLP, or any
Restricted Subsidiary makes an assignment of all or substantially all of their
assets for the benefit of its creditors;
i. Borrowers default, beyond any applicable
grace period, under the terms of the New Indenture or the terms of any
Subordinated Debt or Pari Passu Notes if the effect thereof is to permit the
acceleration or require prepayment, purchase or redemption thereof by the
holders thereof or Borrowers shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, offer to purchase, redemption,
acceleration, demand or otherwise, in each case beyond the grace period provided
with respect to such Indebtedness) on any Indebtedness (other than any
Indebtedness under this Credit Agreement), if the aggregate amount of such
Indebtedness is Five Million Dollars ($5,000,000.00), or more, or any breach,
default or event of default shall occur, or any other event shall occur or
condition shall exist, under any instrument, agreement or indenture pertaining
thereto if the effect thereof is to accelerate the maturity of any such
Indebtedness or require prepayment, purchase or redemption thereof or permit the
holders thereof to accelerate or require prepayment, purchase or redemption
thereof; or any such Indebtedness shall be declared to be due and payable or
shall be required to be prepaid, purchased or redeemed (other than by a
regularly scheduled required prepayment purchase or redemption) prior to the
stated maturity thereof; or the holder of any Lien in any amount, shall commence
foreclosure of such Lien upon property of Borrowers having a value in excess of
Five Million Dollars ($5,000,000.00) and such foreclosure shall continue against
such property to a date less than thirty (30) days prior to the date set for the
occurrence of the foreclosure sale;
j. The occurrence of any event of default,
beyond any applicable grace period, under the terms of any agreement with any
Lender in connection with a Secured Interest Rate Hedge relating to the Credit
Facility;
k. The occurrence of any Reportable Event
which Agent Bank reasonably determines in good faith constitutes proper grounds
for, and could reasonably be expected to result in, the termination of any
employee pension benefit plan or pension plan of Borrowers covered by ERISA by
the Pension Benefit Guaranty Corporation or for the appointment by an
appropriate United States District Court of a trustee to administer any such
plan, should occur and should continue for thirty (30) days after written notice
of such determination shall have been given to Borrowers by Agent Bank;
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l. Any money judgment, writ or warrant of
attachment or similar process involving (i) in any individual case an amount in
excess of Five Million Dollars ($5,000,000.00) or (ii) in the aggregate at any
time an amount in excess of Ten Million Dollars ($10,000,000.00) (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
any Borrower or any of their respective assets and shall remain unpaid,
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days
(or in any event later than five (5) days prior to the date of any proposed sale
thereunder);
m. The loss, revocation, non-renewal or
suspension (for a period in excess of ten (10) consecutive calendar days) of the
Gaming Permits issued by the applicable Gaming Authorities for any of the
Hotel/Casino Facilities as a result of action or inaction by such applicable
Gaming Authorities, or any of them, or the failure of Borrowers to maintain
gaming activities at any of the Hotel/Casino Facilities, other than on account
of force majeure or periodic drydocking in compliance with USCG requirements, at
least to the same general extent as is presently conducted thereon for a period
in excess of thirty (30) consecutive days;
n. Any order, judgment or decree shall be
entered against any Borrower decreeing its involuntary dissolution or split up
and such order shall remain undischarged and unstayed for a period in excess of
sixty (60) days;
o. Argosy sells, transfers, assigns,
hypothecates or otherwise alienates its interest in all or any portion of the
common voting stock of any Subsidiary which is a member of the Borrower
Consolidation, other than in connection with a Restricted Subsidiary Security
Agreement in favor of Agent Bank or sells its interest in the Lawrenceburg
Casino Facilities except on the terms and subject to the conditions herein
contained in Section 6.13(c) in connection with the Lawrenceburg Sale;
p. The occurrence of any Change in Control;
q. AGC shall fail to perform for a period in
excess of thirty (30) consecutive days any material obligation which it may have
under the Alton Development Agreement;
r. The occurrence of a Material Adverse Change
with respect to the Borrower Consolidation taken as a whole;
s. Any Subsidiary Guaranty shall cease to be
in full force or effect in any material respect, or any Subsidiary Guarantor
shall deny or disaffirm such Subsidiary Guarantor's obligations under the
Subsidiary Guaranty, or such Subsidiary
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Guarantor shall default for a period of thirty (30) days after notice thereof
from Agent Bank in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to the Subsidiary
Guaranty.
Section 7.02. DEFAULT REMEDIES. Upon the occurrence of any
Event of Default, Agent Bank may and, upon the consent of Requisite Lenders
shall declare the unpaid balance of the Notes, together with the interest
thereon, to be fully due and payable, and, in addition, the applicable Banks, as
set forth below, may, at their option, or shall, as indicated below, exercise
any or all of the following remedies:
a. Agent Bank may, upon the consent of
Requisite Lenders, or at the direction of the Requisite Lenders shall terminate
the obligation of Lenders to make any advances for Borrowings and/or declare all
or part of the outstanding unpaid Indebtedness hereunder and under the Revolving
Credit Note and other Loan Documents together with all accrued interest thereon
immediately due and payable without presentation, demand, protest or notice of
any kind. This remedy will be deemed to have been automatically exercised on the
occurrence of any event set out in Sections 7.01(f), (g) or (h).
b. The Swingline Lender shall, upon receipt of
written notice of the occurrence of an Event of Default, terminate its
obligation to make any advances under the Swingline Facility and may declare all
outstanding unpaid Indebtedness hereunder and under the Swingline Note, together
with all accrued interest thereon immediately due and payable without
presentation, demand, protest or notice of any kind. This remedy will be deemed
to have been automatically exercised on the occurrence of any event set out in
Sections 7.01(f), (g) or (h).
c. The L/C Issuer shall, upon receipt of
written notice of the occurrence of an Event of Default, terminate its
obligation to issue Letters of Credit and/or any Letter of Credit which may be
terminated in accordance with its terms. This remedy will be deemed to have been
automatically exercised on the occurrence of any event set out in Sections
7.01(f), (g) or (h).
d. Agent Bank and/or L/C Issuer may, or at the
direction of the Requisite Lenders will, direct the Borrowers to pay (and each
of the Borrowers hereby jointly and severally agree upon receipt of such notice
to pay) to the L/C Issuer an amount in Cash equal to the then outstanding L/C
Exposure, such Cash to be held by L/C Issuer in the Cash Collateral Account as
security for the repayment of all L/C Reimbursement Obligations thereafter
occurring.
e. The Banks and/or Agent Bank may exercise
any and all remedies available to Banks or Agent Bank under the Loan Documents.
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f. The Banks and/or Agent Bank may exercise
any other remedies available to Banks or Agent Bank at law or in equity,
including requesting the appointment of a receiver to perform any acts required
of Borrowers, or any of them, under this Credit Agreement.
Agent Bank on behalf of Lenders may exercise one or more of
Lenders' remedies simultaneously and all its remedies are nonexclusive and
cumulative. Lenders shall not be required to pursue or exhaust any Collateral
or remedy before pursuing any other Collateral or remedy. Lenders' failure to
exercise any remedy for a particular default shall not be deemed a waiver of
(i) such remedy, nor their rights to exercise any other remedy for that
default, nor (ii) their right to exercise that remedy for any subsequent
default.
Section 7.03. APPLICATION OF PROCEEDS. All payments and
proceeds received and all amounts held or realized from the sale or other
disposition of all or any part of the Collateral, which are to be applied
hereunder towards satisfaction of Borrowers' obligations under this Credit
Agreement, shall be applied in the following order of priority:
a. First, to the payment of all reasonable
fees, costs and expenses (including reasonable attorney's fees and expenses)
incurred by Agent Bank and Banks, their agents or representatives in connection
with the realization upon any of the Collateral;
b. Next, to the payment in full of any other
amounts due under this Credit Agreement, the Security Documentation, or any
other Loan Documents (other than the Notes and any liability under the Secured
Interest Rate Hedges);
c. Next, to the balance of interest remaining
unpaid on the Notes;
d. Next, to the balance of principal remaining
unpaid on the Notes and any liability under the Secured Interest Rate Hedges on
a pari passu basis;
e. Next, the balance, if any, of such payments
or proceeds to whomever may be legally entitled thereto.
Section 7.04. NOTICES. In order to entitle Agent Bank and/or
Banks to exercise any remedy available hereunder, it shall not be necessary for
Agent Bank and/or Banks to give any notice, other than such notice as may be
required expressly herein.
Section 7.05. AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES.
Upon the occurrence of an Event of Default, as a result of which Agent Bank
and/or Banks shall
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require and employ attorneys or incur other expenses for the collection of
payments due or to become due or the enforcement or performance or observance
of any obligation or agreement on the part of Borrowers contained herein,
Borrowers shall, on demand, pay to Agent Bank and Banks the actual and
reasonable fees of such attorneys (including actual and reasonable allocated
costs of in-house legal counsel) and such other reasonable expenses so
incurred by Agent Bank and Banks.
Section 7.06. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER.
In the event any agreement contained in this Credit Agreement should be
breached by either party and thereafter waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
Section 7.07. LICENSING OF AGENT BANK AND LENDERS. In the
event of the occurrence of an Event of Default hereunder or under any of the
Loan Documents and it shall become necessary, or in the opinion of Requisite
Lenders advisable, for an agent, supervisor, receiver or other representative of
Agent Bank and Banks to become licensed under the provisions of the laws of any
applicable jurisdiction, or rules and regulations adopted pursuant thereto, as a
condition to receiving the benefit of any Collateral encumbered by the Security
Documentation or other Loan Documents for the benefit of Lenders or otherwise to
enforce their rights hereunder, Borrowers do hereby give their consent to the
granting of such license or licenses and agree to execute such further documents
as may be required in connection with the evidencing of such consent.
Section 7.08. EXERCISE OF RIGHTS SUBJECT TO APPLICABLE LAW.
All rights, remedies and powers provided by this Article VII may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of the laws of any Governmental Authority and all of the provisions of
this Article VII are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they will not render this Credit Agreement invalid,
unenforceable or not entitled to be recorded or filed under the provisions of
any applicable law.
Section 7.09. DISCONTINUANCE OF PROCEEDINGS. In case Agent
Bank and/or Banks shall have proceeded to enforce any right, power or remedy
under this Credit Agreement, the Notes, the Security Documentation or any other
Loan Document by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to Banks, then and in every such case Borrowers, Agent Bank and/or
Banks shall be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of Agent Bank and
Banks shall continue as if such proceedings had not been taken, subject to any
binding rule by the applicable court or other tribunal in any such proceeding.
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ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 8.01. NO ABATEMENT OF PAYMENTS. If all or any part
of the Collateral shall be materially damaged or destroyed, or if title to or
the temporary use of the whole or any part of any of the Collateral shall be
taken or condemned by a competent authority for any public use or purpose or
by exercise of the power of eminent domain, there shall be no abatement or
reduction in the amounts payable by Borrowers hereunder or under the Notes,
and Borrowers shall continue to be obligated to make such payments.
Section 8.02. DISTRIBUTION OF CAPITAL PROCEEDS UPON OCCURRENCE
OF FIRE, CASUALTY, OTHER PERILS OR CONDEMNATION. All monies received from
insurance policies under Section 5.09(a) and (b), including flood and
earthquake, covering any of the Collateral or from condemnation or similar
actions in regard to said Collateral, shall be paid directly to Agent Bank. In
the event the amount paid to Agent Bank is equal to or less than Ten Million
Dollars ($10,000,000.00), such amount shall be paid to Borrowers, unless a
Default in the payment of any principal or interest owing under the terms of the
Bank Facilities or an Event of Default shall have occurred hereunder and is
continuing. In the event the amount paid to Agent Bank is greater than Ten
Million Dollars ($10,000,000.00), then, unless a Default or Event of Default has
occurred hereunder and is then continuing, the entire amount so collected or so
much thereof as may be required (any excess to be returned to Borrowers) to
repair or replace the destroyed or condemned property, shall, subject to the
conditions set forth below, be released to Borrowers for repair or replacement
of the property destroyed or condemned or to reimburse Borrowers for the costs
of such repair or replacement incurred prior to the date of such release. If a
Default or Event of Default has occurred hereunder and is then continuing such
amount may, at the option of Requisite Lenders, be applied to pay the
outstanding balance of the Credit Facility. In the event the amount so collected
is applied to pay or reduce the outstanding balance of the Credit Facility, the
amount received by Agent Bank shall be applied in the priority set forth in
Section 7.03. In the event Banks are required to release all or a portion of the
collected funds to Borrower for such repair or re placement of the property
destroyed or condemned, such release of funds shall be made in accordance with
the following terms and conditions:
a. The repairs, replacements and rebuilding
shall be made in accordance with plans and specifications to be reasonably
approved by Requisite Lenders and in accordance with all applicable laws,
ordinances, rules, regulations and requirements of Governmental Authorities;
b. Borrowers shall provide Agent Bank with a
reasonable detailed estimate of the costs of such repairs or restorations;
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c. Borrowers shall satisfy the Requisite
Lenders that after the reconstruction is completed, the value of the Collateral
will not be materially less than the value of the Collateral immediately prior
to the damage, destruction, condemnation or taking;
d. In the Requisite Lenders' sole reasonable
opinion, any undisbursed portion of the Available Borrowings contemplated
hereunder, after deposit of such proceeds, is sufficient to pay all costs of
reconstruction of the Hotel/Casino Facilities or other Collateral; or if the
undisbursed portion of such Credit Facility is not sufficient, Borrowers
deposit additional funds with the Agent Bank or raise additional equity
capital, sufficient to pay such additional costs of reconstructing the
Collateral;
e. Borrowers have delivered to the Agent Bank
a construction contract for the work of reconstruction in form and content,
including insurance requirements, acceptable to the Requisite Lenders with a
contractor reasonably acceptable to the Requisite Lenders;
f. The Requisite Lenders in their reasonable
discretion have determined that after the work of reconstruction is completed,
the Hotel/Casino Facilities will produce income sufficient to pay all costs of
operations and maintenance of the Hotel/Casino Facilities with a reasonable
reserve for repairs, and service all Indebtedness secured by the Security
Documentation;
g. No Default in the payment of any principal
or interest owing under the terms of the Bank Facilities, and no Event of
Default, has occurred and is continuing;
h. Borrowers have deposited with the Agent
Bank that amount reasonably determined by the Requisite Lenders (taking into
consideration the amount of Credit Facility funds available for such purpose,
and the amount of proceeds, if any, of insurance policies covering property
damage and business interruption in connection with the Hotel/Casino Facilities
accruing and immediately forthcoming to the Agent Bank) to be sufficient to
service the Indebtedness secured hereby during the period of reconstruction, as
reasonably estimated by the Requisite Lenders;
i. Before commencing any such work, Borrowers
shall, at their own cost and expense, furnish Agent Bank with appropriate
endorsements, if needed, to the "All Risk" insurance policy which Borrowers are
then presently maintaining to cover all of the risks during the course of such
work; and
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j. Such work shall be commenced by Borrowers
within one hundred twenty (120) days after (i) settlement shall have been made
with the insurance companies, and (ii) all the necessary governmental approvals
shall have been obtained, and such work shall be completed within a reasonable
time, free and clear of all liens and encumbrances other than Permitted
Encumbrances.
ARTICLE IX
AGENCY PROVISIONS
Section 9.01. APPOINTMENT.
a. Each Lender hereby (i) designates and
appoints WFB as the Agent Bank of such Lender under this Credit Agreement and
the Loan Documents, (ii) authorizes and directs Agent Bank to enter into the
Loan Documents other than this Credit Agreement and to act as the collateral and
administrative agent for the benefit of Lenders, and (iii) authorizes Agent Bank
to take such action on its behalf under the provisions of this Credit Agreement
and the Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
including, without limitation execution and filing of a Corporate Securities and
Finance Compliance Affidavit with the Missouri Gaming Commission pursuant to 11
CSR 45-10.040 and other regulatory requirements of any Gaming Authority
consistent with the intents and purposes of this Credit Agreement, subject to
the limitations referred to in Sections 9.10(a) and 9.10(b). Agent Bank agrees
to act as such on the express conditions contained in this Article IX.
b. The provisions of this Article IX are
solely for the benefit of Agent Bank and Lenders, and Borrowers shall not have
any rights to rely on or enforce any of the provisions hereof (other than as set
forth in the provisions of Sections 9.03, 9.09 and 9.10), provided, however,
that the foregoing shall in no way limit Borrowers' obligations under this
Article IX. In performing its functions and duties under this Credit Agreement,
Agent Bank shall act solely as Agent Bank of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrowers or any other Person.
Section 9.02. NATURE OF DUTIES. Agent Bank shall not have any
duties or responsibilities except those expressly set forth in this Credit
Agreement or in the Loan Documents. The duties of Agent Bank shall be
administrative in nature. Subject to the provisions of Sections 9.05 and 9.07,
Agent Bank shall administer the Bank Facilities in the same manner as it
administers its own loans. Promptly following the effectiveness of this Credit
Agreement, Agent Bank shall send to each Lender a duplicate executed original,
to
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the extent the same are available in sufficient numbers, of the Credit
Agreement and a copy of each other Loan Document in favor of Lenders and a
copy of the filed or recorded Security Documentation, with the originals of
the latter to be held and retained by Agent Bank for the benefit of all
Lenders. Agent Bank shall not have by reason of this Credit Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Credit
Agreement or any of the Loan Documents, expressed or implied, is intended or
shall be construed to impose upon Agent Bank any obligation in respect of
this Credit Agreement or any of the Loan Documents except as expressly set
forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Borrowers and the
Collateral in connection with the making and the continuance of the Bank
Facilities hereunder and shall make its own appraisal of the creditworthiness
of the Borrowers and the Collateral, and, except as specifically provided
herein, Agent Bank shall not have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter.
Section 9.03. DISBURSEMENT OF BORROWINGS.
a. Not later than the same Banking Business
Day with respect to Base Rate Loans and the next Banking Business Day with
respect to LIBOR Loans, in each case following receipt of a Notice of Borrowing,
Agent Bank shall send a copy thereof by facsimile to each Lender and shall
otherwise notify each Lender of the proposed Borrowing and the Funding Date.
Each Lender shall make available to Agent Bank (or the funding bank or entity
designated by Agent Bank), the amount of such Lender's Pro Rata Share of such
Borrowing in immediately available funds not later than the times designated in
Section 9.03(b). Unless Agent Bank shall have been notified by any Lender not
later than the close of business (San Francisco time) on the Banking Business
Day immediately preceding the Funding Date in respect of any Borrowing that such
Lender does not intend to make available to Agent Bank such Lender's Pro Rata
Share of such Borrowing, Agent Bank may assume that such Lender shall make such
amount available to Agent Bank. If any Lender does not notify Agent Bank of its
intention not to make available its Pro Rata Share of such Borrowing as
described above, but does not for any reason make available to Agent Bank such
Lender's Pro Rata Share of such Borrowing, such Lender shall pay to Agent Bank
forthwith on demand such amount, together with interest thereon at the Federal
Funds Rate. In any case where a Lender does not for any reason make available to
Agent Bank such Lender's Pro Rata Share of such Borrowing, Agent Bank, in its
sole discretion, may, but shall not be obligated to, fund to Borrowers such
Lender's Pro Rata Share of such Borrowing. If Agent Bank funds to Borrowers such
Lender's Pro Rata Share of such Borrowing and if such Lender subsequently pays
to Agent Bank such corresponding amount, such amount so paid shall constitute
such Lender's Pro Rata Share of such Borrowing. Nothing in this
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Section 9.03(a) shall alter the respective rights and obligations of the
parties hereunder in respect of a Defaulting Lender or a Non-Pro Rata
Borrowing.
b. Requests by Agent Bank for funding by Lenders
of Borrowings will be made by telecopy. Each Lender shall make the amount of
its Pro Rata Share of such Borrowing available to Agent Bank in Dollars and
in immediately available funds, to such bank and account, in San Francisco,
California as Agent Bank may designate, not later than 9:00 A.M. (San
Francisco time) on the Funding Date designated in the Notice of Borrowing
with respect to such Borrowing, but in no event later than one Banking
Business Day notice with respect to Bank Rate Loans and two (2) Banking
Business Days notice with respect to LIBOR Loans, in each case following
Lender's receipt of the applicable Notice of Borrowing.
c. Nothing in this Section 9.03 shall be
deemed to relieve any Lender of its obligation hereunder to make its Pro Rata
Share of Borrowings on any Funding Date, nor shall any Lender be responsible for
the failure of any other Lender to perform its obligations to advance its Pro
Rata Share of any Borrowing hereunder, and the Pro Rata Share of the Aggregate
Commitment of any Lender shall not be increased or decreased as a result of the
failure by any other Lender to perform its obligation to advance its Pro Rata
Share of any Borrowing.
Section 9.04. DISTRIBUTION AND APPORTIONMENT OF PAYMENTS.
a. Subject to Section 9.04(b), payments
actually received by Agent Bank for the account of Lenders shall be paid to them
promptly after receipt thereof by Agent Bank, but in any event within one (1)
Banking Business Day, provided that Agent Bank shall pay to Lenders interest
thereon, at the Federal Funds Rate from the Banking Business Day following
receipt of such funds by Agent Bank until such funds are paid in immediately
available funds to Lenders. Subject to Section 9.04(b), all payments of
principal and interest in respect of Aggregate Outstandings, all payments of the
fees described in this Credit Agreement, and all payments in respect of any
other Obligations shall be allocated among such Lenders as are entitled thereto,
in proportion to their respective Pro Rata Shares or otherwise as provided
herein. Agent Bank shall promptly distribute, but in any event within one (1)
Banking Business Day, to each Lender at its primary address set forth on the
appropriate signature page hereof or on the applicable Assumption and Consent
Agreement or Assignment and Assumption Agreement, or at such other address as a
Lender may request in writing, such funds as it may be entitled to receive,
provided that Agent Bank shall in any event not be bound to inquire into or
determine the validity, scope or priority of any interest or entitlement of any
Lender and may suspend all payments and seek appropriate relief (including,
without limitation, instructions from Requisite Lenders or all Lenders, as
applicable, or an action in the nature of interpleader) in
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the event of any doubt or dispute as to any apportionment or distribution
contemplated hereby. The order of priority herein is set forth solely to
determine the rights and priorities of Lenders as among themselves and may at
any time or from time to time be changed by Lenders as they may elect, in
writing in accordance with Section 10.01. All payments or other sums received
by Agent Bank for the account of Lenders (including, without limitation,
principal and interest payments, the proceeds of any and all insurance
maintained with respect to any of the Collateral, and any and all
condemnation proceeds with respect to any of the Collateral) shall not
constitute property or assets of the Agent Bank and shall be held by Agent
Bank, solely in its capacity as administrative and collateral agent for
itself and the other Lenders, subject to the Loan Documents.
b. Notwithstanding any provision hereof to the
contrary, until such time as a Defaulting Lender has funded its Pro Rata Share
of Borrowing which was previously a Non Pro Rata Borrowing, or all other Lenders
have received payment in full (whether by repayment or prepayment) of the
principal due in respect of such Non Pro Rata Borrowing, all principal sums
owing to such Defaulting Lender hereunder shall be subordinated in right of
payment to the prior payment in full of all principal, in respect of all Non Pro
Rata Borrowing in which the Defaulting Lender has not funded its Pro Rata Share.
This provision governs only the relationship among Agent Bank, each Defaulting
Lender, and the other Lenders; nothing hereunder shall limit the obligation of
Borrowers to repay all Borrowings in accordance with the terms of this Credit
Agreement. The provisions of this section shall apply and be effective
regardless of whether an Event of Default occurs and is then continuing, and
notwithstanding (i) any other provision of this Credit Agreement to the
contrary, (ii) any instruction of Borrowers as to their desired application of
payments or (iii) the suspension of such Defaulting Lender's right to vote on
matters which are subject to the consent or approval of Requisite Lenders or all
Lenders. No Commitment Fee or L/C Fees shall accrue in favor of, or be payable
to, such Defaulting Lender from the date of any failure to fund Borrowings or
reimburse Agent Bank for any Liabilities and Costs as herein provided until such
failure has been cured, and Agent Bank shall be entitled to (A) withhold or
setoff, and to apply to the payment of the defaulted amount and any related
interest, any amounts to be paid to such Defaulting Lender under this Credit
Agreement, and (B) bring an action or suit against such Defaulting Lender in a
court of competent jurisdiction to recover the defaulted amount and any related
interest. In addition, the Defaulting Lender shall indemnify, defend and hold
Agent Bank and each of the other Lenders harmless from and against any and all
Liabilities and Costs, plus interest thereon at the Default Rate, which they may
sustain or incur by reason of or as a direct consequence of the Defaulting
Lender's failure or refusal to abide by its obligations under this Credit
Agreement.
Section 9.05. RIGHTS, EXCULPATION, ETC. Neither Agent Bank,
any Affiliate of Agent Bank, nor any of their respective officers, directors,
employees, agents, attorneys or consultants, shall be liable to any Lender for
any action taken or omitted by them
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hereunder or under any of the Loan Documents, or in connection herewith or
therewith, except that Agent Bank shall be liable for its gross negligence or
willful misconduct. In the absence of gross negligence or willful misconduct,
Agent Bank shall not be liable for any apportionment or distribution of
payments made by it in good faith pursuant to Section 9.04, and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Person to whom payment was due, but not made,
shall be to recover from the recipients of such payments any payment in
excess of the amount to which they are determined to have been entitled.
Agent Bank shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Credit Agreement, any of the Security Documentation or
any of the other Loan Documents, or any of the transactions contemplated
hereby and thereby; or for the financial condition of the Borrowers or any of
their Affiliates. Agent Bank shall not be required to make any inquiry
concerning either the performance or observance of any of the terms,
provisions or conditions of this Credit Agreement or any of the Loan
Documents or the financial condition of the Borrowers or any of their
Affiliates, or the existence or possible existence of any Default or Event of
Default.
Section 9.06. RELIANCE. Agent Bank shall be entitled to rely
upon any written notices, statements, certificates, orders or other documents,
telecopies or any telephone message believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person, and with
respect to all matters pertaining to this Credit Agreement or any of the Loan
Documents and its duties hereunder or thereunder, upon advice of legal counsel
(including counsel for Borrowers), independent public accountant and other
experts selected by it.
Section 9.07. INDEMNIFICATION. To the extent that Agent Bank
is not reimbursed by Borrowers, Lenders will reimburse, within ten (10) Banking
Business Days after notice from Agent Bank, and indemnify and defend Agent Bank
for and against any and all Liabilities and Costs which may be imposed on,
incurred by, or asserted against it in any way relating to or arising out of
this Credit Agreement, the Security Documentation or any of the other Loan
Documents or any action taken or omitted by Agent Bank or under this Credit
Agreement, the Security Documentation or any of the other Loan Documents, in
proportion to each Lender's Pro Rata Share; provided that no Lender shall be
liable for any portion of such Liabilities and Costs resulting from Agent Bank's
gross negligence or willful misconduct. The obligations of Lenders under this
Section 9.07 shall survive the payment in full of all Obligations and the
termination of this Credit Agreement. In the event that after payment and
distribution of any amount by Agent Bank to Lenders, any Lender or third party,
including Borrowers, any creditor of Borrowers or a trustee in bankruptcy,
recovers from Agent Bank any amount found to have been wrongfully paid to Agent
Bank or disbursed by Agent Bank to any Lender, then such Lender shall reimburse
Agent Bank for
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all such amounts. Notwithstanding the foregoing, Agent Bank shall not be
obligated to advance Liabilities and Costs and may require the deposit by
each Lender of its Pro Rata Share of any material Liabilities and Costs
anticipated by Agent Bank before they are incurred or made payable.
Section 9.08. AGENT INDIVIDUALLY. With respect to its Pro
Rata Share of the Credit Facility, Agent Bank shall have and may exercise the
same rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders", "Requisite Lenders" or any similar terms may include Agent
Bank in its individual capacity as a Lender or one of the Requisite Lenders,
but Requisite Lenders shall not include Agent Bank solely in its capacity as
Agent Bank and need not necessarily include Agent Bank in its capacity as a
Lender. Agent Bank and any Lender and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of banking, trust or
other business with Borrowers or any of their Affiliates as if it were not
acting as Agent Bank or Lender pursuant hereto.
Section 9.09. SUCCESSOR AGENT BANK; RESIGNATION OF AGENT
BANK; REMOVAL OF AGENT BANK.
a. Agent Bank may resign from the performance
of all its functions and duties hereunder at any time by giving at least thirty
(30) Banking Business Days' prior written notice to Lenders and Borrowers, and
shall automatically cease to be Agent Bank hereunder in the event a petition in
bankruptcy shall be filed by or against Agent Bank or the Federal Deposit
Insurance Corporation or any other Governmental Authority shall assume control
of Agent Bank or Agent Bank's interests under the Bank Facilities. Further,
Lenders (other than Agent Bank) may unanimously remove Agent Bank at any time
upon the occurrence of gross negligence or wilful misconduct by Agent Bank by
giving at least thirty (30) Banking Business Days' prior written notice to Agent
Bank, Borrowers and all other Lenders. Such resignation or removal shall take
effect upon the acceptance by a successor Agent Bank of appointment pursuant to
clause (b) or (c).
b. Upon any such notice of resignation by or
removal of Agent Bank, Requisite Lenders shall appoint a successor Agent Bank
which appointment shall be subject to Borrowers' consent (other than upon the
occurrence and during the continuance of any Event of Default), which shall not
be unreasonably withheld or delayed. Any successor Agent Bank must be a Bank (i)
the senior debt obligations of which (or such bank's parent's senior unsecured
debt obligations) are rated not less than Baa-2 by Moody's Investors Services,
Inc. or a comparable rating by a rating agency acceptable to Requisite Lenders
and (ii) which has total assets in excess of Ten Billion Dollars
($10,000,000,000.00).
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c. If a successor Agent Bank shall not have
been so appointed within said thirty (30) Banking Business Day period, the
retiring or removed Agent Bank, with the consent of Borrowers (other than upon
the occurrence and during the continuance of any Event of Default) which may not
be unreasonably withheld or delayed, shall then appoint a successor Agent Bank
who shall meet the requirements described in subsection (b) above and who shall
serve as Agent Bank until such time, if any, as Requisite Lenders, with the
consent of Borrowers (other than upon the occurrence and during the continuance
of any Event of Default), appoint a successor Agent Bank as provided above.
Section 9.10. CONSENT AND APPROVALS.
a. Each consent, approval, amendment,
modification or waiver specifically enumerated in this Section 9.10(a) shall
require the consent of Requisite Lenders:
(i) Approval of less than one hundred
percent (100%) ownership of Restricted Subsidiary (definition
of Minority Venture Project);
(ii) Consent to Liens (definition
of Permitted Encumbrances and Restricted Subsidiary Permitted
Encumbrances);
(iii) Approval of Subordinated Debt in
reasonable credit judgment (definition of Subordinated Debt);
(iv) Approval of Borrowings with less than
full compliance with requirements of Article IIIB (Section
2.04);
(v) Advise LIBOR Loan does not
reflect costs (Section 2.05(g));
(vi) Approval of Intercreditor Agreement,
legal opinions and other assurances regarding Term Loans
(Section 2.15(c) and (d));
(vii) Approval of opinions of
counsel (Section 3.33);
(viii) Approval of amendments to
Partnership Agreements (Section 4.13);
(ix) Approval of amendments to
Senior Indenture (Section 4.14);
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(x) Approval of amendments to
Convertible Notes (Section 4.15);
(xi) Approval of use of Excess
Capital Proceeds (Section 5.01);
(xii) Consent to modification of the Alton
Belle Development Agreement (Section 5.03);
(xiii) Consent to modification to or waiver
of financial reporting requirements or production of
additional financial or other information (Section 5.08);
(xiv) Requirement of Qualified
Appraisal after Event of Default (Section 5.15(b));
(xv) Approval of Contingent Liabilities
in excess of Ten Million Dollars ($10,000,000.00) (Section
6.06);
(xvi) Approval of Investments
(Section 6.07);
(xvii) Approval of Argosy Dividends (other
than Share Repurchases) (Section 6.11(b));
(xviii) Approval of merger, consolidation,
sale of assets, etc. (Section 6.13);
(xix) Approval of additional
Subsidiaries by Subsidiaries (Section 6.18);
(xx) Approval of a change in the method of
calculation of any financial covenants, standards or terms as
a result of a change in accounting principle (Section 6.20);
(xxi) Direct Agent Bank to declare the
unpaid balance of the Credit Facility fully due and payable
(Section 7.02);
(xxii) Direct the disposition of insurance
proceeds or condemnation awards under certain circumstances
(Section 8.02);
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(xxiii) Approval of appointment of
successor Agent Bank (Section 9.09);
(xxiv) Approval of a Post-Foreclosure
Plan and related matters (Section 9.11(e));
(xxv) Consent to action or proceeding
against Borrowers or the Collateral by any Lender (Section
9.12);
(xxvi) Except as referred to in subsection
(b) below, approval of any amendment, modification or
termination of this Credit Agreement, or waiver of any
provision herein (Section 10.01); and
(xxvii) Approval of advances (Section
10.14).
b. Each consent, approval, amendment,
modification or waiver specifically enumerated in Section 10.01 shall require
the consent of all Lenders.
c. In addition to the required consents or
approvals referred to in subsection (a) above, Agent Bank may at any time
request instructions from Requisite Lenders with respect to any actions or
approvals which, by the terms of this Credit Agreement or of any of the Loan
Documents, Agent Bank is permitted or required to take or to grant without
instructions from any Lenders, and if such instructions are promptly requested,
Agent Bank shall be absolutely entitled to refrain from taking any action or to
withhold any approval and shall not be under any liability whatsoever to any
Person for refraining from taking any action or withholding any approval under
any of the Loan Documents until it shall have received such instructions from
Requisite Lenders. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against Agent Bank as a result of Agent Bank acting
or refraining from acting under this Credit Agreement, the Security
Documentation or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders or, where applicable, all Lenders. Agent Bank
shall promptly notify each Lender at any time that the Requisite Lenders have
instructed Agent Bank to act or refrain from acting pursuant hereto.
d. Each Lender agrees that any action taken by
Agent Bank at the direction or with the consent of Requisite Lenders in
accordance with the provisions of this Credit Agreement or any Loan Document,
and the exercise by Agent Bank at the direction or with the consent of Requisite
Lenders of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all Lenders, except for actions specifically requiring the approval of all
Lenders. All communications from Agent Bank to Lenders requesting Lenders'
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determination, consent, approval or disapproval (i) shall be given in the
form of a written notice to each Lender, (ii) shall be accompanied by a
description of the matter or thing as to which such determination, approval,
consent or disapproval is requested, or shall advise each Lender where such
matter or thing may be inspected, or shall otherwise describe the matter or
issue to be resolved, (iii) shall include, if reasonably requested by a
Lender and to the extent not previously provided to such Lender, written
materials and a summary of all oral information provided to Agent Bank by
Borrowers in respect of the matter or issue to be resolved, and (iv) shall
include Agent Bank's recommended course of action or determination in respect
thereof. Each Lender shall reply promptly, but in any event within ten (10)
Banking Business Days (the "Lender Reply Period"). Unless a Lender shall give
written notice to Agent Bank that it objects to the recommendation or
determination of Agent Bank (together with a written explanation of the
reasons behind such objection) within the Lender Reply Period, such Lender
shall be deemed to have approved of or consented to such recommendation or
determination. With respect to decisions requiring the approval of Requisite
Lenders or all Lenders, Agent Bank shall submit its recommendation or
determination for approval of or consent to such recommendation or
determination to all Lenders and upon receiving the required approval or
consent shall follow the course of action or determination recommended to
Lenders by Agent Bank or such other course of action recommended by Requisite
Lenders, and each non-responding Lender shall be deemed to have concurred
with such recommended course of action.
Section 9.11. AGENCY PROVISIONS RELATING TO COLLATERAL.
a. In addition to other rights it may have
hereunder, Agent Bank is hereby authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any Collateral
or Loan Document which may be necessary to perfect and maintain Liens of the
Security Documentation upon the Collateral granted pursuant to the Loan
Documents. Agent Bank may make, and shall be reimbursed by Lenders (in
accordance with their Pro Rata Shares), to the extent not reimbursed by
Borrowers, for, Protective Advance(s) (i) expended to pay real estate taxes,
assessments and governmental charges or levies imposed upon such Collateral, and
(ii) expended to pay insurance premiums for policies of insurance related to
such Collateral.
b. Lenders hereby irrevocably authorize Agent
Bank, at its option and in its discretion, to release any Security Documentation
granted to or held by Agent Bank upon any Collateral (i) upon Bank Facility
Termination and repayment and satisfaction of all Borrowings, and all other
Obligations and the termination of this Credit Agreement, or (ii) if approved,
authorized or ratified in writing by Agent Bank at the direction of all Lenders.
Agent Bank shall not be required to execute any document to evidence the release
of the Security Documentation granted to Agent Bank for the benefit
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of Lenders herein or pursuant hereto upon any Collateral if, in Agent Bank's
opinion, such document would expose Agent Bank to liability or create any
obligation or entail any consequence other than the release of such Security
Documentation without recourse or warranty, and such release shall not in any
manner discharge, affect or impair the Obligations or any Security
Documentation upon (or obligations of Borrowers in respect of) any property
which shall continue to constitute part of the Collateral.
c. Except as provided in this Credit
Agreement, Agent Bank shall have no obligation whatsoever to any Lender or to
any other Person to assure that the Collateral exists or is owned by Borrowers
or is cared for, protected or insured or has been encumbered or that the
Security Documentation granted to Agent Bank herein or in any of the other Loan
Documents or pursuant hereto or thereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority.
d. Should Agent Bank (i) employ counsel for
advice or other representation (whether or not any suit has been or shall be
filed) with respect to any Collateral or any part thereof, or any of the Loan
Documents, or the attempt to enforce any security interest or Security
Documentation on any of the Collateral, or (ii) commence any proceeding or in
any way seek to enforce its rights or remedies under the Loan Documents,
irrespective of whether as a result thereof Agent Bank shall acquire title to
any Collateral, either through foreclosure, deed in lieu of foreclosure or
otherwise, each Lender, upon demand therefor from time to time, shall
contribute its share (based on its Pro Rata Share) of the reasonable costs
and/or expenses of any such advice or other representation, enforcement or
acquisition, including, but not limited to, fees of receivers or trustees,
court costs, title company charges, filing and recording fees, appraisers'
fees and fees and expenses of attorneys to the extent not otherwise
reimbursed by Borrowers; provided that Agent Bank shall not be entitled to
reimbursement of its attorneys' fees and expenses incurred in connection with
the resolution of disputes between Agent Bank and other Lenders unless Agent
Bank shall be the prevailing party in any such dispute. Any loss of principal
and interest resulting from any Event of Default shall be shared by Lenders
in accordance with their respective Pro Rata Shares. It is understood and
agreed that in the event Agent Bank determines it is necessary to engage
counsel for Lenders from and after the occurrence of an Event of Default,
said counsel shall be selected by Agent Bank.
e. In the event that all or any portion of the
Collateral is acquired by Agent Bank as the result of a foreclosure or the
acceptance of a deed or assignment in lieu of foreclosure, or is retained in
satisfaction of all or any part of Borrowers' obligations, title to any such
Collateral or any portion thereof shall be held in the name of Agent Bank or a
nominee or subsidiary of Agent Bank, as agent, for the ratable benefit of Agent
Bank and Lenders. Agent Bank shall prepare a recommended course of action for
such Collateral (the "Post-Foreclosure Plan"), which shall be subject to the
approval of the
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Requisite Lenders. In the event that Requisite Lenders do not approve such
Post-Foreclosure Plan, any Lender shall be permitted to submit an alternative
Post-Foreclosure Plan to Agent Bank, and Agent Bank shall submit any and all
such additional Post-Foreclosure Plans to the Lenders for evaluation and the
approval of Requisite Lenders. In accordance with the approved
Post-Foreclosure Plan, Agent Bank shall manage, operate, repair, administer,
complete, construct, restore or otherwise deal with the Collateral acquired
and administer all transactions relating thereto, including, without
limitation, employing a management agent, leasing agent and other agents,
contractors and employees, including agents of the sale of such Collateral,
and the collecting of rents and other sums from such Collateral and paying
the expenses of such Collateral; actions taken by Agent Bank with respect to
the Collateral, which are not provided for in the approved Post-Foreclosure
Plan or reasonably incidental thereto, shall require the consent of Requisite
Lenders by way of supplement to such Post- Foreclosure Plan. In the event a
Post-Foreclosure Plan is not adopted by Lenders, Agent Bank shall have the
right, but no obligation, to do all reasonable acts, and to receive
indemnification from Lenders in proportion to each Lender's Pro Rata Share,
to protect the Collateral until a Post-Foreclosure Plan is adopted by
Lenders. Upon demand therefor from time to time, each Lender will contribute
its share (based on its Pro Rata Share) of all reasonable costs and expenses
incurred by Agent Bank pursuant to the Post-Foreclosure Plan in connection
with the construction, operation, management, maintenance, leasing and sale
of such Collateral. In addition, Agent Bank shall render or cause to be
rendered by the managing agent, to each of the Lenders, monthly, an income
and expense statement for such Collateral, and each of the Lenders shall
promptly contribute its Pro Rata Share of any operating loss for such
Collateral, and such other expenses and operating reserves as Agent Bank
shall deem reasonably necessary pursuant to and in accordance with the Post-
Foreclosure Plan. To the extent there is net operating income from such
Collateral, Agent Bank shall, in accordance with all applicable Gaming Laws
and the Post-Foreclosure Plan, determine the amount and timing of
distributions to Lenders. All such distributions shall be made to Lenders in
accordance with their respective Pro Rata Shares. Lenders acknowledge that if
title to any Collateral is obtained by Agent Bank or its nominee, such
Collateral will not be held as a permanent investment but will be liquidated
as soon as practicable. Agent Bank shall undertake to sell such Collateral,
at such price and upon such terms and conditions as the Requisite Lenders
shall reasonably determine to be most advantageous. Any purchase money
mortgage or deed of trust taken in connection with the disposition of such
Collateral in accordance with the immediately preceding sentence shall name
Agent Bank, as agent for Lenders, as the beneficiary or mortgagee. In such
case, Agent Bank and Lenders shall enter into an agreement with respect to
such purchase money mortgage defining the rights of Lenders in the same Pro
Rata Shares as provided hereunder, which agreement shall be in all material
respects similar to this Article IX insofar as the same is appropriate or
applicable.
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Section 9.12. LENDER ACTIONS AGAINST COLLATERAL AND
RESTRICTION ON EXERCISE OF SET-OFF. Each Lender agrees with the other Lenders
that it will not take any action, nor institute any actions or proceedings,
against Borrowers or any other obligor hereunder, under the Security
Documentation or under any other Loan Documents with respect to exercising
claims against or rights in any Collateral or exercise any set-off under Section
10.23 or under common law without the prior consent of Requisite Lenders.
Section 9.13. RATABLE SHARING. Except as otherwise
expressly provided herein to the contrary, upon the occurrence of an Event of
Default, Lenders agree among themselves that (i) with respect to all amounts
received by them which are applicable to the payment of the Obligations,
equitable adjustment will be made so that, in effect, all such amounts will
be shared among them ratably in accordance with their Pro Rata Shares,
whether received by voluntary payment, by counterclaim or cross action or by
the enforcement of any or all of the Obligations, or the Collateral, (ii) if
any of them shall by voluntary payment or by the exercise of any right of
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of the Obligations held by it which is greater than its Pro Rata Share
of the payments on account of the Obligations, the one receiving such excess
payment shall purchase, without recourse or warranty, an undivided interest
and participation (which it shall be deemed to have done simultaneously upon
the receipt of such payment) in such Obligations owed to the others so that
all such recoveries with respect to such Obligations shall be applied ratably
in accordance with their Pro Rata Shares; provided, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to that party to the extent necessary
to adjust for such recovery, but without interest except to the extent the
purchasing party is required to pay interest in connection with such
recovery. Borrowers agree that any Lender so purchasing a participation from
another Lender pursuant to this Section 9.13 may, to the fullest extent
permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of
Borrowers in the amount of such participation. No Lender shall exercise any
setoff, banker's lien or other similar right in respect to any Obligations
without the prior written approval by Agent Bank.
Section 9.14. DELIVERY OF DOCUMENTS. Agent Bank shall as soon
as reasonably practicable distribute to each Lender at its primary address set
forth on the appropriate counterpart signature page hereof, or at such other
address as a Lender may request in writing, (i)copies of all documents to which
such Lender is a party or of which is executed or held by Agent Bank on behalf
of such Lender, (ii) all documents of which Agent Bank receives copies from
Borrowers pursuant to Article VI and Section 10.03, (iii) all other documents or
information which Agent Bank is required to send to Lenders pursuant to the
terms of this Credit Agreement, (iv) other information or documents received by
Agent Bank at the request of any Lender, and (v) all notices received by Agent
Bank pursuant to Section
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5.21. In addition, within fifteen (15) Banking Business Days after receipt of
a request in writing from a Lender for written information or documents
provided by or prepared by Borrowers, Agent Bank shall deliver such written
information or documents to such requesting Lender if Agent Bank has
possession of such written information or documents in its capacity as Agent
Bank or as a Lender.
Section 9.15. NOTICE OF EVENTS OF DEFAULT. Agent Bank shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default (other than nonpayment of principal of or interest on the Bank
Facilities) unless Agent Bank has received notice in writing from a Lender or
Borrowers referring to this Credit Agreement or the other Loan Documents,
describing such event or condition and expressly stating that such notice is a
notice of a Default or Event of Default. Should Agent Bank receive such notice
of the occurrence of a Default or Event of Default, or should Agent Bank send
Borrowers a notice of Default or Event of Default, Agent Bank shall promptly
give notice thereof to each Lender.
Section 9.16. SYNDICATION AGENT, DOCUMENTATION AGENT AND
MANAGING AGENT. Syndication Agent, Documentation Agent and Managing Agent
shall not have any right, power, obligation, liability, responsibility or
duty under this Credit Agreement or any of the Loan Documents, other than
those applicable to them in their respective capacity as a Lender. Without
limiting the foregoing, neither Syndication Agent, Documentation Agent nor
Managing Agent shall have or be deemed to have any fiduciary or special
relationship with any of the Banks. Notwithstanding the foregoing,
Syndication Agent, Documentation Agent and Managing Agent shall be entitled
to the benefits of Section 5.14. Each Bank acknowledges that it has not
relied, and will not rely, on Syndication Agent, Documentation Agent or
Managing Agent in deciding to enter into this Credit Agreement or in taking
or not taking any action hereunder or under any of the Loan Documents.
ARTICLE X
GENERAL TERMS AND CONDITIONS
The following terms and conditions shall be applicable until
Bank Facility Termination:
Section 10.01. AMENDMENTS AND WAIVERS. (a) No amendment or
modification of any provision of this Credit Agreement shall be effective
without the written agreement of Requisite Lenders (after notice to all Lenders)
and Borrowers (except for rights and priorities of Lenders as amongst themselves
as provided in Section 9.04(a) which do not require the consent of Borrowers),
and (b) no termination or waiver of any provision of this Credit Agreement, or
consent to any departure by Borrowers therefrom shall in any event
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be effective without the written concurrence of Requisite Lenders (after
notice to all Lenders), which Requisite Lenders shall have the right to grant
or withhold at their sole discretion, except that the following amendments,
modifications or waivers shall require the consent of all Lenders:
(i) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the Requisite Lenders,
modify this Section 10.01 or change the definition of "Requisite Lenders";
(ii) removal of Agent Bank under Section
9.09(a) (without regard to the vote of Agent Bank as a Lender);
(iii) except as provided in Section 2.15(a) and
2.15(b) increase the Aggregate Commitment or modify the respective Syndication
Interests of any Lender;
(iv) release any material portion of the
Collateral except as specifically provided in this Credit Agreement in
connection with the Baton Rouge Hotel Property or sale of assets;
(v) extend the Maturity Date or change any
provision expressly requiring the consent of all Lenders;
(vi) reduce any fees described in Section
2.10(b) or (c) or extend the due date for, or reduce or postpone the amount of,
any payments on the Credit Facility, or reduce the rate of interest or postpone
the payment of interest on the Credit Facility; or
(vii) release any Borrower or Subsidiary
Guarantor (except in the event a Restricted Subsidiary is designated as an
Unrestricted Subsidiary in accordance with the terms hereof).
No amendment, modification, termination or waiver of any provision of Article IX
or any other provision referring to Agent Bank shall be effective without the
written concurrence of Agent Bank, but only if such amendment, modification,
termination or waiver alters the obligations or rights of Agent Bank. Any waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrowers in any case
shall entitle Borrowers to any other further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 10.01 shall be binding on each
assignee, transferee or recipient of Agent Bank's or any Lender's respective
Syndication Interest in the Credit Facility at the time outstanding. No
modification of Section 2.08 or the
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Swingline Note shall be made without the consent of the Swingline Lender. No
modification of Section 2.09 shall be made without the consent of the L/C
Issuer.
Section 10.02. FAILURE TO EXERCISE RIGHTS. Nothing herein
contained shall impose upon Banks or Borrowers any obligation to enforce any
terms, covenants or conditions contained herein. Failure of Banks or Borrowers,
in any one or more instances, to insist upon strict performance by Borrowers or
Banks of any terms, covenants or conditions of this Credit Agreement or the
other Loan Documents, shall not be considered or taken as a waiver or
relinquishment by Banks or Borrowers of their right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by Borrowers or Banks with all the terms, covenants
and conditions of this Credit Agreement and the other Loan Documents. The
consent of Banks or Borrowers to any act or omission by Borrowers or Banks shall
not be construed to be a consent to any other or subsequent act or omission or
to waive the requirement for Banks' or Borrowers' consent to be obtained in any
future or other instance.
Section 10.03. NOTICES AND DELIVERY. Unless otherwise
specifically provided herein, any consent, notice or other communication
herein required or permitted to be given shall be in writing and may be
personally served, telecopied or sent by courier service or United States
mail and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of a telecopy (or on the next Banking Business
Day if such telecopy is received on a non-Banking Business Day or after 5:00
p.m. on a Banking Business Day) or four (4) Banking Business Days after
deposit in the United States mail (registered or certified, with postage
prepaid and properly addressed). Notices to Agent Bank pursuant to Articles
II shall not be effective until received by Agent Bank. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof
is delivered as provided in this Section 10.03) shall be as set forth below
each party's name on the signature pages hereof, or, as to each party, at
such other address as may be designated by such party in an Assumption and
Consent Agreement or Assignment and Assumption Agreement or in a written
notice to all of the other parties. All deliveries to be made to Agent Bank
for distribution to the Lenders shall be made to Agent Bank at the addresses
specified for notice on the signature page hereto and in addition, a
sufficient number of copies of each such delivery shall be delivered to Agent
Bank for delivery to each Lender at the address specified for deliveries on
the signature page hereto or such other address as may be designated by Agent
Bank in a written notice.
Section 10.04. MODIFICATION IN WRITING. This Credit Agreement
and the other Loan Documents constitute the entire agreement between the parties
and supersede all prior agreements whether written or oral with respect to the
subject matter hereof, including, but not limited to, the Commitment Letter and
any term sheets furnished by any of the Banks to Borrowers. Neither this Credit
Agreement, nor any other Loan Documents, nor any
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provision herein, or therein, may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
Section 10.05. OTHER AGREEMENTS. If the terms of any
documents, certificates or agreements delivered in connection with this Credit
Agreement are inconsistent with the terms of the Credit Agreement, Borrowers
shall use their best efforts to amend such document, certificate or agreement to
the satisfaction of Agent Bank to remove such inconsistency.
Section 10.06. COUNTERPARTS. This Credit Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which when taken together shall constitute one and the same
instrument. The signature and acknowledgment pages of any counterpart may be
detached therefrom without impairing the legal effect of the signatures and
acknowledgments thereto, provided such signature and acknowledgment pages are
attached to any other counterpart identical thereto except having additional
signature and acknowledgment pages executed by other parties to this Credit
Agreement attached thereto.
Section 10.07. RIGHTS, POWERS AND REMEDIES ARE CUMULATIVE.
None of the rights, powers and remedies conferred upon or reserved to Agent
Bank, Banks or Borrowers in this Credit Agreement are intended to be
exclusive of any other available right, power or remedy, but each and every
such right, power and remedy shall be cumulative and not alternative, and
shall be in addition to every right, power and remedy herein specifically
given or now or hereafter existing at law, in equity or by statute. Any
forbearance, delay or omission by Agent Bank, Banks or Borrowers in the
exercise of any right, power or remedy shall not impair any such right, power
or remedy or be considered or taken as a waiver or relinquishment of the
right to insist upon and to enforce in the future, by injunction or other
appropriate legal or equitable remedy, any of said rights, powers and
remedies given to Agent Bank, Banks or Borrowers herein. The exercise of any
right or partial exercise thereof by Agent Bank, Banks or Borrowers shall not
preclude the further exercise thereof and the same shall continue in full
force and effect until specifically waived by an instrument in writing
executed by Agent Bank or Banks, as the case may be.
Section 10.08. CONTINUING REPRESENTATIONS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Credit Agreement, the making of the Bank Facilities hereunder
and the execution and delivery of each other Loan Document until final payment
of all sums owing under the Bank Facilities and Bank Facility Termination has
occurred.
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Section 10.09. SUCCESSORS AND ASSIGNS. All of the terms,
covenants, warranties and conditions contained in this Credit Agreement shall be
binding upon and inure to the sole and exclusive benefit of the parties hereto
and their respective successors and assigns.
Section 10.10. ASSIGNMENT OF LOAN DOCUMENTS BY BORROWERS OR
SYNDICATION INTERESTS BY LENDERS.
a. This Credit Agreement and the other Loan
Documents to which Borrowers are a party will be binding upon and inure to the
benefit of Borrowers, the Agent Bank, each of the Banks, and their respective
successors and assigns, EXCEPT that, Borrowers may not assign their rights
hereunder or thereunder or any interest herein or therein without the prior
written consent of all the Lenders. Any attempted assignment or delegation in
contravention of the foregoing shall be null and void. Any Lender may at any
time pledge its Syndication Interest in the Credit Facility, the Credit
Agreement and the Loan Documents to a Federal Reserve Bank, but no such pledge
shall release that Lender from its obligations hereunder or grant to such
Federal Reserve Bank the rights of a Lender hereunder absent foreclosure of such
pledge.
b. Each Lender may assign all or any part of
its Syndication Interest in the Credit Facility to any Affiliate of such
Lender or to any other Lender without consent and to one or more financial
institutions that are Eligible Assignees that are not competitors or an
Affiliate of any competitor of the Hotel/Casino Facilities in the gaming
industry (it being acknowledged that a bank or financial institution shall
not be deemed a competitor or Affiliate of a competitor merely because it
lends money or otherwise extends credit to any such competitor or Affiliate
of a competitor) with the prior consent of the Agent Bank (which consent
shall not be unreasonably withheld or delayed) and, so long as no Default or
Event of Default has occurred and remains continuing, with the prior consent
of the Borrowers' (which consent shall not be unreasonably withheld or
delayed); PROVIDED, however, that the minimum amount of each such assignment
shall be Five Million Dollars ($5,000,000.00), or such lesser amount as
constitutes the remaining amount of a Lender's Syndication Interest in the
Credit Facility (except that there shall be no minimum assignment among the
Lenders or to their Affiliates), and as a condition to the effectiveness of
the assignment, each assignee Lender (or assignor if so agreed between the
assignee Lender and such assignor) shall pay to the Agent Bank an assignment
fee of Three Thousand Five Hundred Dollars ($3,500.00) with respect to each
such assignment. Each such assignment shall be evidenced by an assignment
substantially in the form of an Assignment and Assumption Agreement or other
form reasonably acceptable to Agent Bank and Borrowers. Upon any such
assignment, the assignee financial institution shall become a Lender for all
purposes under the Credit Agreement and each of the Loan Documents and the
assigning Lender shall be released from its further obligations hereunder to
the extent of such
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assignment. Notwithstanding the foregoing, the rights of the Lenders to make
assignments shall be subject to the approval by the Gaming Authorities of the
assignee or participant, to the extent required by applicable Gaming Laws,
and to applicable securities laws.
c. Each Lender may sell participations
without notice to or consent of the Borrowers, or any of them, or Agent Bank to
any Eligible Subparticipant which is not a competitor or an Affiliate of any
competitor of the Hotel/Casino Facilities in the gaming industry (it being
acknowledged that a bank or financial institution shall not be deemed a
competitor or Affiliate of a competitor merely because it lends money or
otherwise extends credit to any such competitor or Affiliate of a competitor),
for all or any part of its Syndication Interest in the Credit Facility;
PROVIDED, however, that (i) such Lender shall remain responsible for its total
obligations under the Credit Agreement and each of the Loan Documents, (ii) the
Borrowers and the Agent Bank shall continue to deal solely with such Lender in
connection with such Lender's rights and obligations under the Credit Agreement
and each of the Loan Documents, (iii) each Lender shall remain the holder of the
Obligations for all purposes under the Loan Documents, and (iv) such Lender
shall not sell any participation under which the participant would have rights
to approve any amendment or waiver relating to the Credit Agreement or any Loan
Document except to the extent any such amendment or waiver would (w) extend the
final maturity date or the date for the payment of any installments of fees,
principal or interest due in respect of the Credit Facility, (x) reduce the
interest rates applicable to the Credit Facility or (y) release any material
portion of the Collateral or any Borrower or Subsidiary Guarantor.
Notwithstanding the foregoing, the rights of the Lenders to grant participations
shall be subject to the approval by the Gaming Authorities of the assignee or
participant, to the extent required by applicable Gaming Laws, and to applicable
securities laws.
d. In the event any Lender is found unsuitable
as a Lender under the Credit Facility by the Gaming Authorities or the
Governmental Authorities of any other State of the United States ("Unsuitable
Lender"): (a) Agent Bank shall use its best efforts to find a replacement
Lender, (b) Borrowers shall have the right to make a Voluntary Reduction in
the amount necessary to reduce the Aggregate Commitment by the amount of the
Syndication Interest held by the Unsuitable Lender (without any penalties,
including any Breakage Charges) until a replacement Lender, if any, commits
to acquire the Syndication Interest of the Unsuitable Lender, at which time
the Aggregate Commitment shall be increased by the amount of the Voluntary
Reduction, and (c) upon full payment of all outstanding amounts of principal
and interest owing it, such Unsuitable Lender shall execute such documents as
may be required by Agent Bank, Borrower or any applicable Gaming Authorities
to evidence the termination of its Syndication Interest in the Credit
Facility.
Section 10.11. ACTION BY LENDERS. Whenever Banks shall have
the right to make an election, or to exercise any right, or their consent shall
be required for any action
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under this Credit Agreement or the Loan Documents, then such election,
exercise or consent shall be given or made for all Banks by Agent Bank in
accordance with the provisions of Sections 10.01. Notices, reports and other
documents required to be given by Borrowers to Banks hereunder may be given
by Borrowers to Agent Bank on behalf of Banks, with sufficient copies for
distribution to each of the Banks, and the delivery to Agent Bank shall
constitute delivery to Banks. In the event any payment or payments are
received by a Lender other than Agent Bank, Borrowers consent to such
payments being shared and distributed as provided herein.
Section 10.12. TIME OF ESSENCE. Time shall be of the
essence of this Credit Agreement.
Section 10.13. CHOICE OF LAW AND FORUM. This Credit Agreement
shall be governed by and construed in accordance with the internal laws of the
State of California without regard to principles of conflicts of law. Borrowers
further agree that the full and exclusive forum for the determination of any
action relating to this Credit Agreement, the Loan Documents, or any other
document or instrument delivered in favor of Banks pursuant to the terms hereof
shall be either an appropriate Court of the State of California or the United
States District Court, and the Borrowers hereby irrevocably submit to the
jurisdiction thereof.
Section 10.14. ADVANCES. Until Bank Facility Termination,
if any Borrower should fail (i) to perform or observe, or (ii) to cause to be
performed or observed, any covenant or obligation of such Borrower under this
Credit Agreement or any of the other Loan Documents, the failure of which
could reasonably be expected to result in a Material Adverse Change, then
Agent Bank, upon the giving of reasonable notice and the approval of
Requisite Lenders, may (but shall be under no obligation to) take such steps
as are necessary to remedy any such non-performance or non-observance and
provide for payment thereof. All amounts advanced by Agent Bank or Lenders
pursuant to this Section 10.14 shall become an additional obligation of
Borrowers to Lenders secured by the Security Documentation and other Loan
Documents, shall reduce the amount of Available Borrowings and shall become
due and payable by Borrowers on the next interest payment date, together with
interest thereon at a rate per annum equal to the Default Rate (such interest
to be calculated from the date of such advancement to the date of payment
thereof by Borrowers).
Section 10.15. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, BORROWERS AND EACH OF THE BANKS EACH MUTUALLY HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND,
OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS CREDIT AGREEMENT, THE NOTES
OR ANY
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OF THE LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF BORROWERS AND BANKS WITH RESPECT TO THIS CREDIT
AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS, OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE
MAXIMUM EXTENT PERMITTED BY LAW, BORROWERS AND EACH OF THE BANKS EACH
MUTUALLY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDINGS SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT THE
DEFENDING PARTY MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY
COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF THE COMPLAINING
PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
Section 10.16. SCOPE OF APPROVAL AND REVIEW. Any inspection of
the Hotel/Casino Facilities shall be deemed to be made solely for Banks'
internal purposes and shall not be relied upon by the Borrowers or any third
party. In no event shall Lenders be deemed or construed to be joint venturers or
partners of Borrowers.
Section 10.17. SEVERABILITY OF PROVISIONS. In the event any
one or more of the provisions contained in this Credit Agreement shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
Section 10.18. CUMULATIVE NATURE OF COVENANTS. All
covenants contained herein are cumulative and not exclusive of each other
covenant. Any action allowed by any covenant shall be allowed only if such
action is not prohibited by any other covenant.
Section 10.19. CONFIDENTIALITY. Each of the Banks agrees
to hold any non- public information that it may receive from Borrowers
pursuant to this Credit Agreement (or pursuant to any other Loan Document) in
confidence and consistent with their respective policies for handling
material non-public information, except for disclosure: (a) To the other
Banks; (b) To legal counsel and accountants for Borrowers or any of the
Banks; (c) To the other professional advisors to Borrowers or any of the
Banks, provided that the recipient has accepted such information subject to a
confidentiality agreement substantially similar to this Section 10.19; (d) To
regulatory officials having jurisdiction over that Bank; (e) To any Gaming
Authority having regulatory jurisdiction over Borrowers or their respective
Subsidiaries, provided that each of the Banks agrees to endeavor to notify
Borrowers of any such disclosure; (f) As required by law or legal process or
in connection with any legal proceeding, provided that such disclosing Bank
uses reasonable efforts to notify Borrowers prior to any such disclosure; and
(g) To another financial institution in connection with a
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disposition or proposed disposition to that financial institution of all or
part of that Lender's Syndication Interest hereunder or in the Note, provided
that the recipient has accepted such information subject to a confidentiality
agreement substantially similar to this Section 10.19. For purposes of the
foregoing, "non-public information" shall mean any information respecting
Borrowers or their respective Subsidiaries reasonably considered by Borrowers
to be material and not available to the public, OTHER THAN (i) information
previously filed with any governmental agency and available to the public,
(ii) information which is available to the general public at the time of use
or disclosure, (iii) information which becomes available to the general
public, other than by manner of unauthorized disclosure or use, or (iv)
information previously published in any public medium from a source other
than, directly or indirectly, that Bank. Nothing in this Section shall be
construed to create or give rise to any fiduciary duty on the part of the
Agent Bank or the Banks to Borrowers.
Section 10.20. COSTS TO PREVAILING PARTY. If any action or
arbitration proceeding is brought by any party against any other party under
this Credit Agreement or any of the Loan Documents, the prevailing party shall
be entitled to recover such costs and attorney's fees as the court in such
action or proceeding may adjudge reasonable.
Section 10.21. EXPENSES.
a. GENERALLY. Borrowers agree within ten (10)
Banking Business Days following demand to pay, or reimburse Agent Bank for,
all of Agent Bank's documented reasonable out-of-pocket costs and expenses of
every type and nature incurred by Agent Bank at any time (whether prior to,
on or after the date of this Credit Agreement) in connection with (i) any
requests for consent, waiver or other modification of any Loan Document made
by Borrowers, other than to correct errors attributable to the Banks; (ii)
the negotiation, preparation and execution of this Credit Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any of the conditions set forth in Article III), the Security Documentation
and the other Loan Documents and the advance of Borrowings; (iii) the
subordination of any Collateral, including title charges, recording fees and
reasonable attorneys' fees and costs incurred in connection therewith; (iv)
any appraisals performed after the occurrence of an Event of Default; (v) the
creation, perfection or protection of the Security Documentation on the
Collateral (including, without limitation, any fees and expenses for title
and lien searches, local counsel in various jurisdictions, filing and
recording fees and taxes, duplication costs and corporate search fees); and
(vi) the protection, collection or enforcement of any of the Obligations or
the Collateral, including pre-foreclosure sale Protective Advances.
b. AFTER EVENT OF DEFAULT. Borrowers further
agree to pay, or reimburse Agent Bank and Lenders, for all reasonable
out-of-pocket costs and expenses, including without limitation reasonable
attorneys' fees and disbursements incurred by Agent
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Bank and each Lender after the occurrence of an Event of Default (i) in
enforcing any Obligation or in foreclosing against the Collateral or
exercising or enforcing any other right or remedy available by reason of such
Event of Default; (ii) in connection with any refinancing or restructuring of
the credit arrangements provided under this Credit Agreement in the nature of
a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal
proceeding relating to Borrowers and related to or arising out of the
transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or otherwise); (v)
in protecting, preserving, collecting, leasing, selling, taking possession
of, or liquidating any of the Collateral; or (vi) in attempting to enforce or
enforcing any lien in any of the Collateral or any other rights under the
Security Documentation.
Section 10.22. SECURITY AND LOAN DOCUMENTATION. The Security
Documentation and other Loan Documents (other than this Credit Agreement) may be
held in the name of WFB as the Agent Bank of all Banks hereunder pursuant to the
terms of this Credit Agreement.
Section 10.23. SETOFF. In addition to any rights and
remedies of the Banks provided by law, if any Event of Default exists, each
Bank is authorized at any time and from time to time by the Borrowers,
without prior notice to the Borrowers, any such notice being waived by the
Borrowers to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final)
at any time held by such Bank to or for the credit or the account of
Borrowers against any and all obligations of Borrowers under the Bank
Facilities, now or hereafter existing, irrespective of whether or not the
Agent Bank or any such Bank shall have made demand under this Credit
Agreement or any Loan Document and although such amounts owed may be
contingent or unmatured. Agent Bank agrees promptly to notify the Borrowers
and the Agent Bank (and Agent Bank shall promptly notify each other Bank)
after any such setoff and application made by Agent Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this Section 10.23 are
in addition to the other rights and remedies (including other rights of
setoff) which each such Bank may have.
Section 10.24. BORROWERS' WAIVERS AND CONSENTS.
a. Each Borrower shall be jointly and
severally liable for the repayment of all Aggregate Outstandings.
b. Each Borrower agrees that neither the
Agent Bank nor any Bank shall have any responsibility to inquire into the
apportionment, allocation or
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disposition of any Borrowings, Swingline Advances and/or Letters of Credit as
among the Borrowers.
c. For the purpose of implementing the joint
borrower provisions of this Credit Agreement and each of the Loan Documents,
each Borrower hereby irrevocably appoints each other Borrower as its agent and
attorney-in-fact for all purposes of this Credit Agreement and each of the Loan
Documents, including without limitation the giving and receiving of notices and
other communications, the making of requests for, or conversions or
continuations of, Borrowings, Swingline Advances and/or Letters of Credit, the
execution and delivery of certificates and the receipt and allocation of
disbursements from the Banks.
d. Each Borrower acknowledges that the
handling of the Bank Facilities on a joint borrowing basis as set forth in this
Credit Agreement is solely an accommodation to Borrowers and is done at their
request. Each Borrower agrees that neither the Agent Bank, nor any Bank, shall
incur any liability to any Borrower due to such joint borrowing basis. To induce
the Agent Bank and the Banks to enter into this Credit Agreement, and in
consideration thereof, in accordance with the provisions set forth in Section
5.14 of this Credit Agreement, each Borrower hereby agrees to indemnify the
Agent Bank and each Bank and hold each such entity harmless from and against any
and all liabilities, expenses, losses, damages and/or claims of damage or injury
asserted against such entity by any Borrower or by any other Person arising from
or incurred by reason of the structuring of the Bank Facilities as herein
provided, reliance by the Agent Bank or the Banks on any requests or
instructions from any Borrower, or any other action taken by the Agent Bank or a
Bank hereunder. This Section shall survive termination of this Credit Agreement.
e. Each Borrower represents and warrants to the
Agent Bank and the Banks that (i) it has established adequate means of
obtaining from each other Borrower on a continuing basis financial and other
information pertaining to the business, operations and condition (financial
and otherwise) of each of the other Borrowers and its respective property,
and (ii) each Borrower now is and hereafter will be completely familiar with
the business, operations and condition (financial and otherwise) of each
other Borrower, and its property. Each Borrower hereby waives and
relinquishes any duty on the part of the Agent Bank or any Bank to disclose
to such Borrower any matter, fact or thing relating to the business,
operations or condition (financial or otherwise) of any other Borrower, or
the property of any other Borrower, whether now or hereafter known by the
Agent Bank or any Bank at any time through Bank Facility Termination.
f. Each Borrower acknowledges that the
Aggregate Outstandings, or portions thereof, may derive from value provided
directly to another Person
- 167 -
<PAGE>
and, in full recognition of that fact, each Borrower consents and agrees that
the Agent Bank and any Bank may, at any time and from time to time, without
notice or demand, and without affecting the enforceability or security of the
Loan Documents:
(i) accept partial payments on the Bank
Facilities;
(ii) receive and hold additional security or
guaranties for the Bank Facilities or any part thereof;
(iii) release, reconvey, terminate, waive, abandon,
subordinate, exchange, substitute, transfer and enforce any
security or guaranties, and apply any security and direct the
order or manner of sale thereof, as the Agent Bank or such
Bank in its sole and absolute discretion may determine;
(iv) release any party or any guarantor from any
personal liability with respect to the Bank Facilities or any
part thereof;
(v) settle, release on terms satisfactory to the
Agent Bank or such Bank or by operation of applicable laws or
otherwise liquidate or enforce any Bank Facilities and any
security or guaranty in any manner, consent to the transfer of
any security and bid and purchase at any sale; and/or
(vi) consent to the merger, change or any other
restructuring or termination of the corporate existence of any
other Borrower or any other Person, and correspondingly
restructure the Bank Facilities, continuing existence of any
lien or encumbrance under any other Loan Document to which any
Borrower is a party or the enforceability hereof or thereof
with respect to all or any part of the Bank Facilities.
Each Borrower expressly waives any right to require
the Agent Bank or any Bank to marshal assets in favor of any
Borrower, any other party or any other Person or to proceed
against any other Borrower or any other party or any
Collateral provided by any other Borrower or any other party,
and agrees that the Agent Bank and any Bank may proceed
against Borrowers and/or the Collateral in such order as they
shall determine in their sole and absolute discretion. The
Agent Bank and any Bank may file a separate action or actions
against any Borrower, whether action is brought or prosecuted
with respect to any other security or against any other
Person, or whether any other Person is joined in any such
action or actions. Each Borrower agrees that the Agent Bank or
any Bank and any other Borrower may deal with each other in
connection with the Bank Facilities or otherwise, or alter any
- 168 -
<PAGE>
contracts or agreements now or hereafter existing between any
of them, in any manner whatsoever, all without in any way
altering or affecting the obligations of such Borrower under
the Loan Documents. Each Borrower expressly waives any and all
defenses now or hereafter arising or asserted by reason of:
(a) any disability or other defense of any other Borrower or
any other party with respect to any Bank Facilities, (b) the
unenforceability or invalidity as to any other Borrower or any
other party of the Bank Facilities, (c) the unenforceability
or invalidity of any security or guaranty for the Bank
Facilities or the lack of perfection or continuing perfection
or failure of priority of any security for the Bank
Facilities, (d) the cessation for any cause whatsoever of the
liability of any Borrower or any other party (other than by
reason of the full payment and performance of all Bank
Facilities), (e) to the extent permitted by applicable law,
any failure of the Agent Bank or any Bank to give notice of
sale or other disposition to any Borrower or any defect in any
notice that may be given in connection with any sale or
disposition, (f) any act or omission of the Agent Bank or any
Bank or others that directly or indirectly results in or aids
the discharge or release of any Borrower or any other Person
or the Bank Facilities or any other security or guaranty
therefor by operation of law or otherwise, (g) any law which
provides that the obligation of a surety or guarantor must
neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a
surety's or guarantor's obligation in proportion to the
principal obligation, (h) any failure of the Agent Bank or any
Bank to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person, (i) the election by the
Agent Bank or any Bank, in any bankruptcy proceeding of any
Person, of the application or non-application of Section
1111(b)(2) of the United States Bankruptcy Code, (j) any
extension of credit or the grant of any lien or encumbrance
under Section 364 of the United States Bankruptcy Code, (k)
any use of cash collateral under Section 363 of the United
States Bankruptcy Code, (l) any agreement or stipulation with
respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (m) the avoidance of any
lien or encumbrance in favor of the Agent Bank or any Bank for
any reason, (n) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any of
the obligations (or any interest thereon) in or as a result of
any such proceeding, or (o) any election of remedies by the
Agent Bank or any Bank, even if the effect thereof is to
destroy or impair any Borrower's right to subrogation,
reimbursement, exoneration, indemnification or contribution.
In connection with the foregoing, each Borrower waives, in
accordance with California Civil Code Section 2856, all
- 169 -
<PAGE>
rights and defenses arising out of an election of remedies
by the Agent Bank or any Bank, even though that election of
remedies, such as a nonjudicial foreclosure with respect to
security for a guaranteed obligation, has destroyed the
Borrower's rights of subrogation and reimbursement against
any other Borrower or Subsidiary Guarantor by the operation
of Section 580d of the California Code of Civil Procedure or
otherwise.
Notwithstanding anything to the contrary contained in
the Loan Documents, each Borrower shall be entitled to raise a defense that Bank
Facility Termination has irrevocably occurred and the defense of statute of
limitations, but not any defenses available as a result of any failure of
consideration, lack of authority by Borrowers or fraud by Borrowers.
g. In the event that all or any part of the
Bank Facilities at any time are secured by any one or more deeds of trust or
mortgages creating or granting liens on any interests in real property, each
Borrower authorizes the Agent Bank and any Bank, upon the acceleration of the
Indebtedness then owing under the Bank Facilities, at their sole option, without
any other notice or demand and without affecting any of the Bank Facilities or
the validity or enforceability of any liens or encumbrance in favor of the Agent
Bank or any Bank on any Collateral, to foreclose any or all of such deeds of
trust or mortgages by judicial or nonjudicial sale. To the extent permitted by
applicable law, each Borrower expressly waives any defenses to the enforcement
of the Loan Documents or any liens or encumbrances created or granted under the
Loan Documents or to the recovery by the Agent Bank or any Bank against any
other Borrower or any guarantor or any other Person liable therefor of any
deficiency after a judicial or nonjudicial foreclosure or sale, even though such
a foreclosure or sale may impair the subrogation rights of a Borrower and may
preclude a Borrower from obtaining reimbursement or contribution from any
Borrower.
h. Notwithstanding anything to the contrary
elsewhere contained herein or in any other Loan Document to which any
Borrower is a party, each Borrower hereby expressly agrees with respect to
the other Borrowers and their successors and assigns (including any surety)
and any other Person which is directly or indirectly a creditor of the other
Borrowers or any surety for any other Borrower, not to exercise, until Bank
Facility Termination has irrevocably occurred, any rights at law or in equity
to subrogation, to reimbursement, to exoneration, to contribution, to setoff
or to any other rights that could accrue to a surety against a principal, to
a guarantor against a maker or obligor, to an accommodation party against the
party accommodated, or to a holder or transferee against a maker, and which
such Borrower may have or hereafter acquire against the other Borrowers or
any other such Person in connection with or as a result of such Borrower's
execution, delivery and/or performance of this Credit Agreement or any other
Loan Document to which such Borrower is a party.
- 170 -
<PAGE>
Section 10.25. SCHEDULES ATTACHED. Schedules are
attached hereto and incorporated herein and made a part hereof as follows:
Schedule 2.01(a) - Schedule of Lenders' Proportions in
Credit Facility
Schedule 2.01(c) - Total Commitment Reduction
Schedule
Schedule 3.23 - Schedule of Significant Litigation
Schedule 4.08(b) - Schedule of Intercompany Notes
Schedule 4.20 - Schedule of Restricted and Unrestricted
Subsidiaries
Schedule 4.25 - Schedule of Trademarks, Patents,
Licenses, Franchises, Formulas and
Copyrights
Schedule 4.26 - Schedule of Contingent Liabilities
Schedule 5.11 - Schedule of Senior Indenture Security
Documents
Schedule 6.05(b) - Schedule of Excluded Capital
Expenditures
Schedule 6.07(h) - Schedule of Existing Unrestricted
Subsidiary Investments
Schedule 6.09 - Schedule of Liens
Section 10.26. EXHIBITS ATTACHED. Exhibits are attached
hereto and incorporated herein and made a part hereof as follows:
Exhibit A - Revolving Credit Note - Form
Exhibit B - Swingline Note - Form
Exhibit C - Notice of Borrowing - Form
- 171 -
<PAGE>
Exhibit D - Continuation/Conversion Notice - Form
Exhibit E - Notice of Swingline Advance - Form
Exhibit F - Compliance Certificate - Form
Exhibit G - Pricing Certificate - Form
Exhibit H - Defeasance Account Agreement - Form
Exhibit I - Authorized Representative Certificate - Form
Exhibit J - Closing Certificate - Form
Exhibit K - Assumption and Consent Agreement - Form
Exhibit L - Assignment and Assumption Agreement - Form
Exhibit M - Cash Collateral Pledge Agreement
Exhibit N - Subsidiary Guaranty - Form
Exhibit O - Legal Opinion - Form
Exhibit P - Alton Real Property Description
Exhibit Q - Riverside Real Property Description
Exhibit R - Sioux City Real Property Description
Exhibit S - Baton Rouge Hotel Property Description
Exhibit T - Baton Rouge Real Property Description
- 172 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed as of the day and year first above written.
BORROWERS:
ARGOSY GAMING COMPANY,
a Delaware corporation
By /s/ Dale R. Black
--------------------------
Name Dale R. Black
------------------------
Title Vice President and CFO
-----------------------
THE MISSOURI GAMING COMPANY,
a Missouri corporation
By /s/ Dale R. Black
--------------------------
Name Dale R. Black
------------------------
Title Treasurer
-----------------------
ALTON GAMING COMPANY,
an Illinois corporation
By /s/ Dale R. Black
--------------------------
Name Dale R. Black
------------------------
Title Treasurer
-----------------------
S-1
<PAGE>
ARGOSY OF LOUISIANA, INC.,
a Louisiana corporation
By /s/ Dale R. Black
---------------------------
Name Dale R. Black
-------------------------
Title Treasurer
------------------------
JAZZ ENTERPRISES, INC.,
a Louisiana corporation
By /s/ Dale R. Black
---------------------------
Name Dale R. Black
-------------------------
Title Treasurer
------------------------
S-2
<PAGE>
CATFISH QUEEN PARTNERSHIP IN
COMMENDAM, a Louisiana
partnership in commendam
By: ARGOSY OF LOUISIANA, INC., a
Louisiana corporation,
General Partner
By /s/ Dale R. Black
-----------------------
Name Dale R. Black
---------------------
Title Treasurer
--------------------
By: JAZZ ENTERPRISES, INC.,
a Louisiana corporation,
General Partner
By /s/ Dale R. Black
-----------------------
Name Dale R. Black
---------------------
Title Treasurer
--------------------
IOWA GAMING COMPANY,
an Iowa corporation
By /s/ Dale R. Black
--------------------------------
Name Dale R. Black
------------------------------
Title Treasurer
-----------------------------
S-3
<PAGE>
THE INDIANA GAMING COMPANY,
an Indiana corporation
By /s/ Dale R. Black
--------------------------------
Name Dale R. Black
------------------------------
Title Treasurer
Address for Borrowers:
219 Piasa Street
Alton, Illinois 62002-6232
Attn: Dale Black, CFO
Telephone: (618) 474-7668
Facsimile: (618) 474-7420
BANKS:
WELLS FARGO BANK,
National Association,
Agent Bank, Lender, Swingline Lender
and L/C Issuer
By
---------------------------------
Casey Potter,
Vice President
Address:
One East First Street
Reno, NV 89501
Telephone: (775) 334-5631
Facsimile: (775) 334-5637
S-4
<PAGE>
BANKS:
WELLS FARGO BANK,
National Association,
Agent Bank, Lender, Swingline Lender
and L/C Issuer
By /s/ Casey Potter
---------------------------------
Casey Potter,
Vice President
Address:
One East First Street
Reno, NV 89501
Telephone: (775) 334-5631
Facsimile: (775) 334-5637
SOCIETE GENERALE,
as a Syndication Agent and
a Lender
By
----------------------------------
Donald L. Schubert,
Managing Director
Address:
Societe Generale
2029 Century Park East
Suite 2900
Los Angeles, CA 90067
Attn: Donald L. Schubert,
Managing Director
Telephone: (310) 788-7104
Facsimile: (310) 551-1537
S-4
<PAGE>
BANKS:
WELLS FARGO BANK,
National Association,
Agent Bank, Lender, Swingline Lender
and L/C Issuer
By
---------------------------------
Casey Potter,
Vice President
Address:
One East First Street
Reno, NV 89501
Telephone: (775) 334-5631
Facsimile: (775) 334-5637
SOCIETE GENERALE,
as a Syndication Agent and
a Lender
By /s/ Alex Y. Kim
----------------------------------
Alex Y. Kim
Vice President
Address:
Societe Generale
2029 Century Park East
Suite 2900
Los Angeles, CA 90067
Attn: Donald L. Schubert,
Managing Director
Telephone: (310) 788-7104
Facsimile: (310) 551-1537
S-4
<PAGE>
KEYBANK NATIONAL ASSOCIATION,
as a Documentation Agent
and a Lender
By /s/ Mary K. Young
---------------------------
Name Mary K. Young
-------------------------
Title Assistant Vice President
-------------------------
Address:
700 Fifth Avenue
46th Floor
Seattle, WA 98104
Attn: Tom Crandell, V.P.
Telephone: (206) 684-6037
Facsimile: (206) 684-6035
THE FIRST NATIONAL BANK
OF CHICAGO, as a Managing
Agent and Lender
By
-------------------------
James Junker,
Vice President
Address:
777 S. Figueroa Street
4th Floor
Los Angeles, CA 90017-5801
Attn: James Junker
Telephone: (213) 683-4948
Facsimile: (213) 683-4999
S-5
<PAGE>
KEYBANK NATIONAL ASSOCIATION,
as a Documentation Agent
and a Lender
By
------------------------
Name
----------------------
Title
----------------------
Address:
700 Fifth Avenue
46th Floor
Seattle, WA 98104
Attn: Tom Crandell, V.P.
Telephone: (206) 684-6037
Facsimile: (206) 684-6035
THE FIRST NATIONAL BANK
OF CHICAGO, as a Managing
Agent and Lender
By /s/ Mark A. Isley
-------------------------
Mark A. Isley
First Vice President
Address:
777 S. Figueroa Street
4th Floor
Los Angeles, CA 90017-5801
Attn: Mark A. Isley, 1st V.P.
Telephone: (213) 683-4948
Facsimile: (213) 683-4999
S-5
<PAGE>
LASALLE BANK, N.A.,
as a Lender
By /s/ James M. Minich
-------------------------------
Name James. M. Minich
-----------------------------
Title First Vice President
----------------------------
Address:
135 South LaSalle Street
2nd Floor
Chicago, IL 60603
Attn: Jim Minich, V.P.
Telephone: (312) 904-2121
Facsimile: (312) 904-0432
CIBC, INC.,
as a Lender
By
------------------------------
Name
----------------------------
Title
---------------------------
Address:
350 S. Grand Ave., Ste. 2600
Los Angeles, CA 90017
Attn: Dean Decker
Telephone: (213) 617-6245
Facsimile: (213) 346-0157
S-6
<PAGE>
LASALLE BANK, N.A.,
as a Lender
By
-------------------------------
Name
-----------------------------
Title
----------------------------
Address:
135 South LaSalle Street
2nd Floor
Chicago, IL 60603
Attn: Jim Minich, V.P.
Telephone: (312) 904-2121
Facsimile: (312) 904-0432
CIBC, INC.,
as a Lender
By /s/ Dean Decker
------------------------------
Name Dean Decker
----------------------------
Title Executive Director
---------------------------
CIBC World Markets Corp., AS AGENT
Address:
350 S. Grand Ave., Ste. 2600
Los Angeles, CA 90017
Attn: Dean Decker
Telephone: (213) 617-6245
Facsimile: (213) 346-0157
S-6
<PAGE>
FIRSTAR BANK,
as a Lender
By /s/ Thomas D. Gibbons
-----------------------------
Name Thomas D. Gibbons
---------------------------
Title Vice President
--------------------------
Address:
425 Walnut Street
M.L. 8160
Cincinnati, OH 45201
Attn: Brian Gallagher, A.V.P.
Telephone: (513) 632-4716
Facsimile: (513) 632-2068
HIBERNIA NATIONAL BANK,
as a Lender
By
------------------------------
Name
---------------------------
Title
---------------------------
Address:
313 Carondelet St.
New Orleans, LA 70130
Attn: Ross Wales, V.P.
Telephone: (504) 533-5719
Facsimile: (504) 533-2060
S-7
<PAGE>
FIRSTAR BANK,
as a Lender
By
-----------------------------
Name
---------------------------
Title
---------------------------
Address:
425 Walnut Street
M.L. 8160
Cincinnati, OH 45201
Attn: Brian Gallagher, A.V.P.
Telephone: (513) 632-4716
Facsimile: (513) 632-2068
HIBERNIA NATIONAL BANK,
as a Lender
By /s/ Ross S. Wales
------------------------------
Name Ross S. Wales
---------------------------
Title Vice President
---------------------------
Address:
313 Carondelet St.
New Orleans, LA 70130
Attn: Ross Wales, V.P.
Telephone: (504) 533-5719
Facsimile: (504) 533-2060
S-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
THREE MONTHS
YEARS ENDED DECEMBER 31 ENDED MARCH 31,
--------------------------------------------- ----------------
1994 1995 1996 1997 1998 1998 1999
------- ------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AVAILABLE FOR FIXED CHARGES
Income (loss) before income taxes and
minority interest........................... $15,893 $13,390 $(41,358) $(34,649) $33,906 $ 2,169 $11,364
Fixed charges................................ 10,587 19,560 41,485 60,216 62,312 15,809 15,040
Less capitalized interest.................... (1,665) (3,203) (3,033) (8,391) (1,086) (578) --
Less minority partner preferred equity
return...................................... -- -- (1,542) (2,307) (2,360) (594) (561)
------- ------- -------- -------- ------- ------- -------
Income (loss) available for fixed
charges.................................. $24,815 $29,747 $ (4,448) $ 14,869 $92,772 $16,806 $25,843
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
FIXED CHARGES
Interest expense............................. $ 8,182 $14,708 $ 34,842 $ 47,116 $57,487 $14,292 $14,134
Minority partner preferred equity return..... -- -- 1,542 2,307 2,360 594 561
Capitalized interest......................... 1,665 3,203 3,033 8,391 1,086 578 --
Interest portion of rent expense............. 740 1,649 2,068 2,402 1,379 345 345
------- ------- -------- -------- ------- ------- -------
Total fixed charges........................ $10,587 $19,560 $ 41,485 $ 60,216 $62,312 $15,809 $15,040
------- ------- -------- -------- ------- ------- -------
------- ------- -------- -------- ------- ------- -------
Ratio of earnings to fixed charges........... 2.3x 1.5x (a) (a) 1.5x 1.1x 1.7x
<CAPTION>
PRO FORMA
-----------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1998 MARCH 31, 1999
------------ --------------
<S> <C> <C>
INCOME AVAILABLE FOR FIXED CHARGES
Income (loss) before income taxes and
minority interest........................... $45,037 $14,147
Fixed charges................................ 51,181 12,257
Less capitalized interest.................... (1,086) --
Less minority partner preferred equity
return...................................... (2,360) (561)
------------ -------
Income (loss) available for fixed
charges.................................. $92,772 $25,843
------------ -------
------------ -------
FIXED CHARGES
Interest expense............................. $46,356 $11,351
Minority partner preferred equity return..... 2,360 561
Capitalized interest......................... 1,086 --
Interest portion of rent expense............. 1,379 345
------------ -------
Total fixed charges........................ $51,181 $12,257
------------ -------
------------ -------
Ratio of earnings to fixed charges........... 1.8x 2.1x
</TABLE>
- ------------------------------
(a) The Company's earnings were inadequate to cover fixed charges for the years
ended 1996 and 1997 by approximately $45.9 million and $45.3 million,
respectively.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Historical Consolidated Financial Data" and to the use of our
report dated January 29, 1999, in the Registration Statement (Form S-4) and
related Prospectus of Argosy Gaming Company for the registration of
$200,000,000 of 10-3/4% Senior Subordinated Notes due 2009.
We also consent to the incorporation by reference therein of our report dated
January 29, 1999, with respect to the financial statement schedule of Argosy
Gaming Company included in the Annual Report (Form 10-K) for the year ended
December 31, 1998 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
July 19, 1999.
<PAGE>
Registration No. __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal executive offices) (Zip Code)
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-5811
(Name, address and telephone number of agent for service)
ARGOSY GAMING COMPANY
(Exact name of obligor as specified in its charter)
Delaware 37-1304247
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
219 Piasa Street 62002
Alton, Illinois (Zip Code)
(Address of principal executive
office)
10 3/4% Senior Subordinated Notes, due 2009
(Title of the Indenture securities)
<PAGE>
GENERAL
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING
AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST
POWERS.
The trustee is authorized to exercise corporate trust
powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY AND QUALIFICATION. (EXHIBITS IDENTIFIED IN PARENTHESES, ON
FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS
EXHIBITS HERETO.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers.
Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
March 31, 1999, published pursuant to the requirements of the Comptroller of the
Company, see attached.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, Bank One, NA, a national banking association organized
under the National Banking Act, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in Columbus, Ohio, on July 20, 1999.
Bank One, NA
By: /s/ David B. Knox
-------------------------
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
FIRST. The title of this Association shall be Bank One, National
Association.
SECOND. The main office of the Association shall be in Columbus, County of
Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time-to-time by resolution of the shareholders at any annual or special meeting
thereof, provided, however, that the Board of Directors, by resolution of a
majority thereof, shall be authorized to increase the number of its members by
not more than two between regular meetings of the shareholders. Each Director,
during the full term of his directorship, shall own, as qualifying shares, the
minimum number of shares of either this Association or of its parent bank
holding company in accordance with the provisions of applicable law. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
<PAGE>
FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year specified
therefor in the Bylaws, but if no election is held on that day, it may be held
on any subsequent business day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall be
12,704,315 shares of common stock of the par value of Ten Dollars ($10) each;
but said capital stock may be increased or decreased from time-to-time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
Association shall have the preemptive or preferential right of subscription to
any share of any class of stock of this Association, whether now or hereafter
authorized or to any obligations convertible into stock of this Association,
issued or sold, nor any right of subscription to any thereof other than such, if
any, as the Board of Directors, in its discretion, may from time-to-time
determine and at such price as the Board of Directors may from time-to-time fix.
This Association, at any time and from time-to-time, may authorize
and issue debt obligations, whether or not subordinated, without the approval of
the shareholders.
SIXTH. The Board of Directors shall appoint one of its members President
of the Association, who shall be Chairman of the Board, unless the Board
appoints another director to be the Chairman. The Board of Directors shall have
the power to appoint one or more Vice Presidents and to appoint a Secretary and
such other officers and employees as may be required to transact the business of
this Association.
The Board of Directors shall have the power to define the duties
of the officers and employees of this Association; to fix the salaries to be
paid to them; to
<PAGE>
dismiss them; to require bonds from them and to fix the penalty thereof; to
regulate the manner in which any increase of the capital of this Association
shall be made; to manage and administer the business and affairs of this
Association; to make all Bylaws that it may be lawful for them to make; and
generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time, place
and purpose of every annual and special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
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TENTH. Every person who is or was a Director, officer or employee of the
Association or of any other corporation which he served as a Director, officer
or employee at the request of the Association as part of his regularly assigned
duties may be indemnified by the Association in accordance with the provisions
of this paragraph against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses) that
may be incurred or paid by him in connection with any claim, action, suit or
proceeding, whether civil, criminal or administrative (all referred to hereafter
in this paragraphs as "Claims") or in connection with any appeal relating
thereto in which he may become involved as a party or otherwise or with which he
may be threatened by reason of his being or having been a Director, officer or
employee of the Association or such other corporation, or by reason of any
action taken or omitted by him in his capacity as such Director, officer or
employee, whether or not he continues to be such at the time such liability or
expenses are incurred, provided that nothing contained in this paragraph shall
be construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal acts,
unless, at the time such indemnification is sought, such indemnification in such
instance is permissible under applicable law and regulations, including
published rulings of the Comptroller of the Currency or other appropriate
supervisory or regulatory authority, and provided further that there shall be no
indemnification of directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association. Every person who may be indemnified under the provisions of
this paragraph and who has been wholly successful on the merits with respect to
any Claim shall be entitled to indemnification as of right. Except as provided
in the preceding sentence, any indemnification under this paragraph shall be at
the sole discretion of the Board of Directors and shall be made only if the
Board of Directors or the Executive Committee acting by a quorum consisting of
<PAGE>
Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or
non-existence of a contract of insurance or indemnity under which the
Association would be wholly or partially reimbursed for such indemnification,
but the existence or non-existence of such insurance is not the sole
circumstance to be considered nor shall it be wholly determinative of whether
such indemnification shall be made. In addition to such finding or opinion, no
indemnification under this paragraph shall be made unless the Board of Directors
or the Executive Committee acting by a quorum consisting of Directors who are
not parties to such Claim shall find or if independent legal counsel (who may be
the regular counsel of the Association) selected by the Board of Directors or
Executive Committee whether or not a disinterested quorum exists shall render
their opinion that the Director, officer or employee acted in good faith in what
he reasonably believed to be the best interests of the Association or such other
corporation and further in the case of any criminal action or proceeding, that
the Director, officer or employee reasonably believed his conduct to be lawful.
Determination of any Claim by judgment adverse to a Director, officer or
employee by settlement with or without Court approval or conviction upon a plea
of guilty or of NOLO CONTENDERE or its equivalent shall not create a presumption
that a Director, officer or employee failed to meet the standards of conduct set
forth in this paragraph. Expenses incurred with respect to any Claim may be
advanced by the Association prior to the final disposition thereof upon receipt
of an undertaking satisfactory to the Association by or on behalf of the
recipient to repay such amount unless it is ultimately determined that he is
entitled to indemnification under this paragraph. The rights of indemnification
provided in this paragraph shall be in addition to any rights to which any
Director, officer or employee may otherwise be entitled by contract or as a
matter of law.
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Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
Articles of Association of Bank One, National Association effective with the
consolidation of banks in Ohio.
<PAGE>
Exhibit 4
BY-LAWS
OF
BANK ONE, NATIONAL ASSOCIATION
ARTICLE I
MEETING OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders of
the Bank for the election of Directors and for the transaction of such business
as may properly come before the meeting shall be held at its main banking house,
or other convenient place duly authorized by the Board of Directors, on the
third Monday of January of each year, or on the next succeeding banking day, if
the day fixed falls on a legal holiday. If from any cause, an election of
directors is not made on the day fixed for the regular meeting of shareholders
or, in the event of a legal holiday, on the next succeeding banking day, the
Board of Directors shall order the election to be held on some subsequent day,
as soon thereafter as practicable, according to the provisions of law; and
notice thereof shall be given in the manner herein provided for the annual
meeting. Notice of such annual meeting shall be given by or under the direction
of the Secretary or such other officer as may be designated by the Chief
Executive Officer by first-class mail, postage prepaid, to all shareholders of
record of the Bank at their respective addresses as shown upon the books of the
Bank mailed not less than ten days prior to the date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
<PAGE>
record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its proceedings
recorded in the manner prescribed in these Bylaws for annual meetings of
shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these Bylaws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns made
by the judges and election and other proceedings to be recorded in the minute
book of the Bank. The presiding officer shall notify the directors-elect of
their election and to meet forthwith for the organization of the new board.
The minutes of the meeting shall be signed by the presiding officer and
the Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many
as three shareholders to be judges of the election, who shall hold and
conduct the same, and who shall, after the election has been held, notify, in
writing over their signatures, the secretary of the shareholders' meeting of
the result thereof and the names of the Directors elected; provided, however,
that upon failure for any reason of any judge or judges of election, so
appointed by the directors, to serve, the presiding officer of the meeting
shall appoint other shareholders or their proxies to fill the vacancies. The
judges of election at the request of the chairman of the meeting, shall act
as tellers of any other vote by ballot taken at such meeting, and shall
<PAGE>
notify, in writing over their signatures, the secretary of the Board of
Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All proxies
used at the annual meeting shall be secured for that meeting only, or any
adjournment thereof, and shall be dated, and if not dated by the shareholder,
shall be dated as of the date of receipt thereof. No officer or employee of this
Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
<PAGE>
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be managed
by the Board of Directors. Each director of the Bank shall be the beneficial
owner of a substantial number of shares of BANC ONE CORPORATION and shall be
employed either in the position of Chief Executive Officer or active leadership
within his or her business, professional or community interest which shall be
located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a person's
eligibility as director of the Bank terminates, whether because of change in
share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until the
<PAGE>
annual meeting for the year in which his term expires and until his successor
shall be elected and shall qualify, subject, however, to his prior death,
resignation, or removal from office. Whenever any vacancy shall occur among the
directors, the remaining directors shall constitute the directors of the Bank
until such vacancy is filled by the remaining directors, and any director so
appointed shall hold office for the unexpired term of his or her successor.
Notwithstanding the foregoing, each director shall hold office and serve at the
pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share- holders
shall meet for organization of the new board at the time fixed by the presiding
officer of the annual meeting. If at the time fixed for such meeting there is no
quorum present, the Directors in attendance may adjourn from time to time until
a quorum is obtained. A majority of the number of Directors elected by the
shareholders shall constitute a quorum for the transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of Directors
shall be held on the third Monday of January, April, July and October, which
meetings will be held at 3:30 p.m. When any regular meeting of the Board falls
on a holiday, the meeting shall be held on such other day as the Board may
previously designate or should the Board fail to so designate, on such day as
the Chairman of the Board or President may fix. Whenever a quorum is not
present, the directors in attendance shall adjourn the meeting to a time not
later than the date fixed by the Bylaws for the next succeeding regular meeting
of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors shall
be held at the call of the Chairman of the Board or President, or at the request
of two or more Directors. Any special meeting may be held at such place in
Franklin County, Ohio, and at such time as may be fixed in the call. Written or
oral notice shall be given to each Director not later than the day next
preceding the day on which special meeting is to be held, which notice may be
waived in writing.
<PAGE>
The presence of a Director at any meeting of the Board shall be deemed a waiver
of notice thereof by him. Whenever a quorum is not present the Directors in
attendance shall adjourn the special meeting from day to day until a quorum is
obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank may
be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall receive
such fees for, and transportation expenses incident to, attendance at Board and
Board Committee Meetings and such fees for service as a Director irrespective of
meeting attendance as from time to time are fixed by resolution of the Board;
provided, however, that payment hereunder shall not be made to a Director for
meetings attended and/or Board service which are not for the Bank's sole benefit
and which are concurrent and duplicative with meetings attended or board service
for an affiliate of the Bank for which the Director receives payment; and
provided further, that payment hereunder shall not be made in the case of any
Director in the regular employment of the Bank or of one of its affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all powers of the Board that may
lawfully be delegated. The Executive Committee shall also exercise the powers of
the Board of Directors in accordance with the Provisions of the "Employees
Retirement Plan" and the "Agreement and Declaration of Trust" as the same now
exist or may be amended hereafter. The Executive Committee shall consist of not
fewer
<PAGE>
than four board members, including the Chairman of the Board and President
of the Bank, one of whom, as hereinafter required by these Bylaws, shall be the
Chief Executive Officer. The other members of the Committee shall be appointed
by the Chairman of the Board or by the President, with the approval of the Board
and shall continue as members of the Executive Committee until their successors
are appointed, provided, however, that any member of the Executive Committee may
be removed by the Board upon a majority vote thereof at any regular or special
meeting of the Board. The Chairman or President shall fill any vacancy in the
Committee by the appointment of another Director, subject to the approval of the
Board of Directors. The regular meetings of the Executive Committee shall be
held on a regular basis as scheduled by the Board of Directors. Special meetings
of the Executive Committee shall be held at the call of the Chairman or
President or any two members thereof at such time or times as may be designated.
In the event of the absence of any member or members of the Committee, the
presiding member may appoint a member or members of the Board to fill the place
or places of such absent member or members to serve during such absence. Not
fewer than three members of the Committee must be present at any meeting of the
Executive Committee to constitute a quorum, provided, however that with regard
to any matters on which the Executive Committee shall vote, a majority of the
Committee members present at the meeting at which a vote is to be taken shall
not be officers of the Bank and, provided further, that if, at any meeting at
which the Chairman of the Board and President are both present, Committee
members who are not officers are not in the majority, then the Chairman of the
Board or President, which ever of such officers is not also the Chief Executive
Officer, shall not be eligible to vote at such meeting and shall not be
recognized for purposes of determining if a quorum is present at such meeting.
When neither the Chairman of the Board nor President are present, the Committee
shall appoint a presiding officer. The Executive Committee shall keep a record
of its proceedings and report its proceedings and the action taken by it to the
Board of Directors.
SECTION 2.10 COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE. There
shall be a standing committee of the Board of Directors known as
<PAGE>
the Community Reinvestment Act and Compliance Policy Committee the duties of
which shall be, at least once in each calendar year, to review, develop and
recommend policies and programs related to the Bank's Community Reinvestment
Act Compliance and regulatory compliance with all existing statutes, rules
and regulations affecting the Bank under state and federal law. Such
Committee shall provide and promptly make a full report of such review of
current Bank policies with regard to Community Reinvestment Act and
regulatory compliance in writing to the Board, with recommendations, if any,
which may be necessary to correct any unsatisfactory conditions. Such
Committee may, in its discretion, in fulfilling its duties, utilize the
Community Reinvestment Act officers of the Bank, Banc One Ohio Corporation
and Banc One Corporation and may engage outside Community Reinvestment Act
experts, as approved by the Board, to review, develop and recommend policies
and programs as herein required. The Community Reinvestment Act and
regulatory compliance policies and procedures established and the
recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The
Community Reinvestment Act and Compliance Policy Committee shall consist of
not fewer than four board members, one of whom shall be the Chief Executive
Officer and a majority of whom are not officers of the Bank. Not fewer than
three members of the Committee, a majority of whom are not officers of the
Bank, must be present to constitute a quorum. The Chairman of the Board or
President of the Bank, whichever is not the Chief Executive Officer, shall be
an ex officio member of the Community Reinvestment Act and Compliance Policy
Committee. The Community Reinvestment Act and Compliance Policy Committee,
whose chairman shall be appointed by the Board, shall keep a record of its
proceedings and report its proceedings and the action taken by it to the
Board of Directors.
SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees known as
the Trust Management Committee and the Trust Examination Committee appointed as
hereinafter provided.
<PAGE>
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such special
committees from time to time as are in its judgment necessary in the interest of
the Bank.
<PAGE>
ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one or
more Vice Chairmen, one or more Vice Presidents (which may include
one or more Executive Vice Presidents and/or Senior Vice
Presidents) and one or more Assistant Secretaries, all of whom
shall be elected by the Board. All other officers may be elected
by the Board or appointed in writing by the Chief Executive
Officer. The salaries of all officers elected by the Board shall
be fixed by the Board. The Board from time-to-time shall designate
the President or Chairman of the Board to serve as the Bank's
Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be
elected by the Board from their own number. The President and
Chairman of the Board shall be re-elected by the Board annually
at the organizational meeting of the Board of Directors following
the Annual Meeting of Shareholders. Such officers as the Board
shall elect from their own number shall hold office from the date
of their election as officers until the organization meeting of
the Board of Directors following the next Annual Meeting of
Shareholders, provided, however, that such officers may be
relieved of their duties at any time by action of the Board in
which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are
members of the Board, all officers, whether elected or
appointed, shall hold office at the pleasure of the Board.
Except as otherwise limited by law or these Bylaws, the Board
assigns to Chief Executive Officer and/or his
<PAGE>
designees the authority to appoint and dismiss any elected or
appointed officer or other member of the Bank's management
staff and other employees of the Bank, as the person in charge
of and responsible for any branch office, department, section,
operation, function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected by
the Board, officers appointed by the Chief Executive Officer, and
such other persons in the employment of the Bank who, pursuant to
written appointment and authorization by a duly authorized officer
of the Bank, perform management functions and have management
responsibilities. Any two or more offices may be held by the same
person except that no person shall hold the office of Chairman of
the Board and/or President and at the same time also hold the
office of Secretary.
(e) The Chief Executive Officer of the Bank and any other officer of
the Bank, to the extent that such officer is authorized in writing
by the Chief Executive Officer, may appoint persons other than
officers who are in the employment of the Bank to serve in
management positions and in connection therewith, the appointing
officer may assign such title, salary, responsibilities and
functions as are deemed appropriate by him, provided, however,
that nothing contained herein shall be construed as placing any
limitation on the authority of the Chief Executive Officer as
provided in this and other sections of these Bylaws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these Bylaws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the employment of such personnel and officers as he may deem necessary,
including the
<PAGE>
fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem proper.
The Chief Executive Officer shall perform all duties incident to his office and
such other and further duties, as may, from time-to-time, be required of him by
the Board of Directors or the shareholders. The specification of authority in
these Bylaws wherever and to whomever granted shall not be construed to limit in
any manner the general powers of delegation granted to the Chief Executive
Officer in conducting the business of the Bank. The Chief Executive Officer or,
in his absence, the Chairman of the Board or President of the Bank, as
designated by the Chief Executive Officer, shall preside at all meetings of
shareholders and meetings of the Board. In the absence of the Chief Executive
Officer, such officer as is designated by the Chief Executive Officer shall be
vested with all the powers and perform all the duties of the Chief Executive
Officer as defined by these Bylaws. When designating an officer to serve in his
absence, the Chief Executive Officer shall select an officer who is a member of
the Board of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement of any right or obligation; to adjust, settle
and compromise all claims of every kind and description in favor of or against
the Bank, and to give receipts, releases and discharges therefor; to borrow
money and in connection therewith to make, execute and deliver
<PAGE>
notes, bonds or other evidences of indebtedness; to pledge or hypothecate any
securities or any stocks, bonds, notes or any property real or personal held
or owned by the Bank, or to rediscount any notes or other obligations held or
owned by the Bank, to employ or direct the employment of all personnel,
including elected and appointed officers, and the dismissal of them at
pleasure, and in furtherance of and in addition to the powers herein above
set forth to do all such acts and to take all such proceedings as in his
judgment are necessary and incidental to the operation of the Bank.
Other persons in the employment of the Bank, including but not limited to
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
Chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer being a member of the Bank's management staff
who is also a person in charge of and responsible for any department within the
Bank and any other officer to the extent such officer is so designated and
authorized by the Chief Executive Officer, the Chairman of the Board, the
President, or any other officer who is a member of the Bank's management staff
who is in charge of and responsible for any department within the Bank, are
hereby authorized on behalf of the Bank to sell, assign, lease, mortgage,
transfer, deliver and convey any real or personal property now or hereafter
owned by or standing in the name of the Bank or its nominee, or held by this
Bank as collateral security, and to execute and
<PAGE>
deliver such deeds, contracts, leases, assignments, bills of sale, transfers
or other papers or documents as may be appropriate in the circumstances; to
execute any loan agreement, security agreement, commitment letters and
financing statements and other documents on behalf of the Bank as a lender;
to execute purchase orders, documents and agreements entered into by the Bank
in the ordinary course of business, relating to purchase, sale, exchange or
lease of services, tangible personal property, materials and equipment for
the use of the Bank; to execute powers of attorney to perform specific or
general functions in the name of or on behalf of the Bank; to execute
promissory notes or other instruments evidencing debt of the Bank; to execute
instruments pledging or releasing securities for public funds, documents
submitting public fund bids on behalf of the Bank and public fund contracts;
to purchase and acquire any real or personal property including loan
portfolios and to execute and deliver such agreements, contracts or other
papers or documents as may be appropriate in the circumstances; to execute
any indemnity and fidelity bonds, proxies or other papers or documents of
like or different character necessary, desirable or incidental to the conduct
of its banking business; to execute and deliver settlement agreements or
other papers or documents as may be appropriate in connection with a
dismissal authorized by Section 3.01(c) of these Bylaws; to execute
agreements, instruments, documents, contracts or other papers of like or
difference character necessary, desirable or incidental to the conduct of its
banking business; and to execute and deliver partial releases from and
discharges or assignments of mortgages, financing statements and assignments
or surrender of insurance policies, now or hereafter held by this Bank.
The Chief Executive Officer, Chairman of the Board, President, any officer
being a member of the Bank's management staff who is also a person in charge of
and responsible for any department within the Bank, and any other officer of the
Bank so designated and authorized by the Chief Executive Officer, Chairman of
the Board, President or any officer who is a member of the Bank's management
staff who is in charge of and responsible for any department within the Bank are
authorized for and on behalf of the Bank to sign and issue checks, drafts, and
certificates of deposit; to sign and endorse bills of exchange, to sign and
countersign foreign and domestic letters of credit, to receive and receipt for
payments of principal, interest, dividends, rents, fees and payments of every
kind and description paid to the Bank, to sign receipts for
<PAGE>
property acquired by or entrusted to the Bank, to guarantee the genuineness
of signatures on assignments of stocks, bonds or other securities, to sign
certifications of checks, to endorse and deliver checks, drafts, warrants,
bills, notes, certificates of deposit and acceptances in all business
transactions of the Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management staff,
may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall be
bonded for the honest and faithful performance of their duties for such amount
as may be prescribed by the Board of Directors.
<PAGE>
ARTICLE IV
TRUST DEPARTMENT
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to this
Bank under the provisions of Federal Law and Regulations of the Comptroller of
the Currency, there shall be maintained a separate Trust Department of the Bank,
which shall be operated in the manner specified herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing Committee
known as the Trust Management Committee, consisting of at least five members, a
majority of whom shall not be officers of the Bank. The Committee shall consist
of the Chairman of the Board who shall be Chairman of the Com- mittee, the
President, and at least three other Directors appointed by the Board of
Directors and who shall continue as members of the Committee until their
successors are appointed. Any vacancy in the Trust Management Committee may be
filled by the Board at any regular or special meeting. In the event of the
absence of any member or members, such Committee may, in its discretion, appoint
members of the Board to fill the place of such absent members to serve during
such absence. Three members of the Committee shall constitute a quorum. Any
member of the Committee may be removed by the Board by a majority vote at any
regular or special meeting of the Board. The Committee shall meet at such times
as it may determine or at the call of the Chairman, or President or any two
members thereof.
The Trust Management Committee, under the general direction of the Board
of Directors, shall supervise the policy of the Trust Department which shall be
formulated and executed in accordance with Law, Regulations of the Comptroller
of the Currency, and sound fiduciary principles.
<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing Commit- tee
known as the Trust Examination Committee, consisting of three directors
appointed by the Board of Directors and who shall continue as members of the
committee until their successors are appointed. Such members shall not be active
officers of the Bank. Two members of the Committee shall constitute a quorum.
Any member of the Committee may be removed by the Board by a majority vote at
any regular or special meeting of the Board. The Committee shall meet at such
times as it may determine or at the call of two members thereof.
This Committee shall, at least once during each calendar year and within
fifteen months of the last such audit, or at such other time(s) as may be
required by Regulations of the Comptroller of the Currency, make suitable audits
of the Trust Department or cause suitable audits to be made by auditors
responsible only to the Board of Directors, and at such time shall ascertain
whether the Department has been administered in accordance with Law, Regulations
of the Comptroller of the Currency and sound fiduciary principles.
The Committee shall promptly make a full report of such audits in writing
to the Board of Directors of the Bank, together with a recommendation as to what
action, if any, may be necessary to correct any unsatisfactory condition. A
report of the audits together with the action taken thereon shall be noted in
the Minutes of the Board of Directors and such report shall be a part of the
records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the management and
supervision of an officer of the Bank or of the trust affiliate of the Bank
designated by and subject to the advice and direction of the Chief Executive
Officer. Such officer having supervisory responsibility over the Trust
Department shall do or cause to be done all things necessary or proper in
carrying on the business of the Trust Department in accordance with provisions
of law and applicable regulations.
<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department
may be carried in the name of the Bank in its fiduciary capacity, in the name
of Bank, or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary capacity
awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify the
character or class of investments to be made and does not vest in the Bank any
discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from any discharges or assignments or mortgages and
assignments or surrender of insurance
<PAGE>
policies, to execute and deliver deeds, contracts, leases, assignments, bills
of sale, transfers or such other papers or documents as may be appropriate in
the circumstances for property now or hereafter held by this Bank in any
fiduciary capacity or owned by any principal for whom this Bank may now or
hereafter be acting under a power of attorney or as agent; to execute and
deliver settlement agreements or other papers or documents as may be
appropriate in connection with a dismissal authorized by Section 3.01(c) of
these Bylaws; provided that the signature of any such person shall be
attested in each case by any officer of the Trust Department or by any other
person who is specifically authorized by the Chief Executive Officer, the
President or the officer in charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any officer
of the Trust Department and such other officers of the trust affiliate of the
Bank as are specifically designated and authorized by the Chief Executive
Officer, the President, or the officer in charge of the Trust Department, or any
other person or corporation as is specifically authorized by the Chief Executive
Officer, the President or the officer in charge of the Trust Department, are
hereby authorized on behalf of this Bank, to sign any and all pleadings and
papers in probate and other court proceedings, to execute any indemnity and
fidelity bonds, trust agreements, proxies or other papers or documents of like
or different character necessary, desirable or incidental to the appointment of
the Bank in any fiduciary capacity and the conduct of its business in any
fiduciary capacity; also to foreclose any mortgage, to execute and deliver
receipts for payments of principal, interest, dividends, rents, fees and
payments of every kind and description paid to the Bank; to sign receipts for
property acquired or entrusted to the Bank; also to sign stock or bond
certificates on behalf of this Bank in any fiduciary capacity and on behalf of
this Bank as transfer agent or registrar; to guarantee the genuineness of
signatures on assignments of stocks, bonds or other securities, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as Trustee. Any such person, as well as such other persons
as are specifically authorized by the Chief Executive Officer or the officer in
charge of the Trust Department, may sign
<PAGE>
checks, drafts and orders for the payment of money executed by the Trust
Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any officer
of the Trust Department, any officer of the trust affiliate of the Bank and such
other persons as may be specifically authorized by Resolution of the Trust
Management Committee or the Board of Directors, may vote shares of stock of a
corporation of record on the books of the issuing company in the name of the
Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
<PAGE>
ARTICLE V
STOCKS AND STOCK CERTIFICATES
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the President, or a Vice President (which signature may be engraved,
printed or impressed), and shall be signed manually by the Secretary, or any
other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its fact
that the stock represented thereby is transferable only upon the books of the
Bank properly endorsed and shall recite such other information as is required by
law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall be
transferable only upon the stock transfer books of the Bank and except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of any affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the President, or a Vice President. The Board of Directors, or the Chief
Executive Officer, may authorize the issuance of a new certificate therefor
without the furnishing of indemnity. Stock Transfer Books, in which all
transfers of stock shall be recorded, shall be provided.
<PAGE>
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful purpose.
In lieu of closing the transfer books, the Board may, in its discretion, fix a
record date and hour constituting a reasonable period prior to the day
designated for the holding of any meeting of the shareholders or the day
appointed for the payment of any dividend or for any other purpose at the time
as of which shareholders entitled to notice of and to vote at any such meeting
or to receive such dividend or to be treated as shareholders for such other
purpose shall be determined, and only shareholders of record at such time shall
be entitled to notice of or to vote at such meeting or to receive such dividends
or to be treated as shareholders for such other purpose.
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. SEAL. The impression made below is an impression of the seal
adopted by the Board of Directors of Bank One, National Association. The Seal
may be affixed by any officer of the Bank to any document executed by an
authorized officer on behalf of the Bank, and any officer may certify any act,
proceedings, record, instrument or authority of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive Committee,
the Bank and each of its Branches shall be open for business on such days and
during such hours as the Chief Executive Officer of the Bank shall, from time to
time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the Articles of
Association, the returns of the judges of elections, the Bylaws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors, and reports of the committees of the
Board of Directors shall be recorded in the minute book of the Bank. The minutes
of each such meeting shall be signed by the presiding officer and attested by
the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These Bylaws may be amended by vote of
a majority of the Directors.
Bylaws of Bank One, National Association effective with merger of Ohio Banks.
<PAGE>
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
The undersigned, designated to act as Trustee under the Indenture for Argosy
Gaming Company described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such authorities
to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, NA
Dated: July 20, 1999 By: /s/ David B. Knox
-----------------------
Authorized Signer
<PAGE>
Exhibit 2,3
- ---------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- ---------------------------------------------------------------------------
Washington, D.C. 20219
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et
seq., as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody
and control of all records pertaining to the chartering of all National
Banking Associations.
2. "Bank One, National Association," Columbus, Ohio, (Charter No. 7621) is a
National Banking Association formed under the laws of the United States and
is authorized thereunder to transact the business of banking and exercise
Fiduciary Powers on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and caused my seal
of office to be affixed to these presents at the Treasury Department in the
City of Washington and District of Columbia, this 12th day of April, 1999.
/s/ John D. Hawke, Jr.
[SEAL] ------------------
Comptroller of the Currency
<PAGE>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0935
Federal Deposit Insurance Corporation
OMB Number: 2064-0052
Offices of the Comptroller of the Currency
OMB Number: 1557-0061
Expires March 31, 2001
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL
- --------------------------------------------------------------------------
Please refer to page i, Table of Contents, for the required /1/
disclosure of estimated burden.
- --------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND
FOREIGN OFFICES-FFIEC 031
REPORT AT THE CLOSE OF BUSINESS MARCH 31, 1999
This report is required by law; 12 U.S.C. Section 324 (State member banks):
12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161
(National banks)
19990331
-----------
(RCRI 9999)
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions. Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than
two directors (trustees) for State nonmember banks and three directors for
State member and National Banks.
I, WILLIAM TITUS, VICE PRESIDENT
- --------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared
in conformance with the instructions issued by the appropriate Federal
regulatory authority and are true to the best of my knowledge and belief.
/s/ William S. Titus
- ----------------
Signature of Officer Authorized to Sign Report
April 30, 1999
- --------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge
and belief has been prepared in conformance with the instructions issued by
the appropriate Federal regulatory authority and is true and correct.
/s/ [ILLEGIBLE]
- ------------------
Director (Trustee)
/s/ [ILLEGIBLE]
- ------------------
Director (Trustee)
/s/ [ILLEGIBLE]
- ------------------
Director (Trustee)
- --------------------------------------------------------------------------
Submission of Reports
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with the
banking agencies' collection agent, Electronic Data Systems Corporation
(EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call
Report Services, 2150 N. Prospect Ave., Milwaukee,
WI 53202, telephone (800) 255-1571
To fulfill the signature and attestation requirement for the Reports of
Condition and income for this report date, attach this signature page (or a
photocopy or a computer-generated version of this page) to the hard-copy
record of the completed report that the bank places in its files.
- --------------------------------------------------------------------------
FDIC Certificate Number 06559
--------
(RCRI 9050)
Bank One, NA
- -------------------------------
Legal Title or Name (TEXT 9010)
Columbus
- -------------------------------
City (TEXT 9130)
OH 43271
- -------------------------------------------------------------
State Abbrev. (TEXT 9200) Zip Code: (TEXT 9220)
<PAGE>
Bank One, NA Call Date: 03/31/1999 State #: FFIEC D31
100 East Broad Street, OM1-1065 Vendor ID: D Cert #: 06559 RC-1
Columbus, OH 43271 Transit #: 04400037
Transmitted to EDS as 0013664 on 04/30/99 at 12:15:05 CST /11/
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED
SAVINGS BANKS FOR MARCH 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC-BALANCE SHEET C400
<TABLE>
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1) 0081 979,173 1.a
b. Interest-bearing balances (2) 9971 1,100 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 1,631,620 2.b
3. Federal funds sold and securities purchased under agreements to resell 1350 4,161,680 3.
4. Loans and lease financing receivables: RCFD
----
a. Loans and leases, net of unearned income
(from Schedule RC-C) 2132 19,814,210 4.a
b. LESS: Allowance for loan and lease losses 3123 375,634 4.b
c. LESS: Allocated transfer risk reserve 3126 0 4.c
RCFD
d. Loans and leases, net of unearned income, ----
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 19,438,546 4.d
5. Tracing assets (from Schedule RC-D) 3345 0 5.
6. Premises and fixed assets (including capitalized leases) 2146 329,151 6.
7. Other real estate owned (from Schedule RC-M) 2150 14,928
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 183,482 8.
9. Customers' liability to this bank on acceptances outstanding 2155 0 9.
10. Intangible assets (from Schedule RC-M) 2142 85,733 10.
11. Other assets (from Schedule RC-F) 2180 1,800,805 11.
12. Total assets (sum of items 1 through 11) 2170 28,626,218 12.
</TABLE>
- ---------------------
(1) Includes cash items in process of collection and unposted debts.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Bank One, NA Call Date: 03/31/1999 State #: FFIEC D31
100 East Broad Street, OM1-1065 Vendor ID: D Cert #: 06559 RC-2
Columbus, OH 43271 Transit #: 04400037
Transmitted to EDS as 0013664 on 04/30/99 at 12:15:05 CST /12/
SCHEDULE RC-CONTINUED
<TABLE>
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
RCON
a. In domestic offices (sum of totals of columns A and C from Schedule ----
RC-E, part I) RCON 2200 14,763,575 13.a
----
(1) Noninterest-bearing (1) 8631 4,207,238 13.a.1
(2) Interest-bearing 8636 10,556,337 13.a.2
RCON
b. In foreign offices. Edge and Agreement subsidiaries, and IBFs ----
(from Schedule RC-E, part II) RCFN 2200 1,007,469 13.b
----
(1) Noninterest-bearing 6831 0 13.b.1
(2) Interest-bearing 6636 1,007,459 RCFD 13.b.2
----
14. Federal funds purchased and securities sold under agreements to repurchase 2000 2,704,981 14.
RCON
----
15. a. Demand notes issued to the U.S. Treasury 2840 60,010 15.a
RCFD
----
b. Tracing liabilities (from Schedule RC-D) 2548 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less 2332 5,696,977 16.a
b. With a remaining maturity of more than one year through three years 4547 55,097 16.b
c. With a remaining maturity of more than three years 4548 590,237 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 2920 0 18.
19. Subordinated notes and debentures (2) 3266 779,193 19.
20. Other liabilities (from Schedule RC-G) 2336 1,054,051 20.
21. Total liabilities (sum of items 13 through 20) 2948 26,711,590 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 3838 0 23.
24. Common stock 3230 127,044 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 983,510 25.
26. a. Undivided profits and capital reserves 3532 801,410 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities 9434 2,584 26.b
c. Accumulated net gains (losses) on cash flow hedges 4336 0 26.c
27. Cumulative foreign currency translation adjustments 2284 0 27.
28. Total equity capital (sum of items 23 through 27) 3210 1,914,628 28.
29. Total liabilities and equity capital (sum of items 21 and 26) 3300 28,626,218 29.
Memorandum
1. be reported only with the March Report of Condition.
indicate in the box at the right the number of the statement
below that best describes the most comprehensive level of RCFD Number
auditing work performed for the bank by independent external ---- ---------
auditors as of any date during 1998 6724 2 M.1
</TABLE>
1=Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2=Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3=Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4=Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5=Review of the bank's financial statements by external auditors
6=Compilation of the bank's financial statements by external auditors
7=Other audit procedures (excluding tax preparation work)
8=No external audit work
- -----------------------
Includes total demand deposits and noninterest-bearing time and savings
deposits.
Includes limited-life preferred stock and related surplus.
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
ARGOSY GAMING COMPANY
OFFER TO EXCHANGE ITS
10 3/4% NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED
PURSUANT TO THE PROSPECTUS DATED , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
BANK ONE TRUST COMPANY, NA
<TABLE>
<S> <C>
BY MAIL OR OVERNIGHT DELIVERY: BY HAND DELIVERY
Bank One Trust Company, NA Bank One Trust Company, NA
Corporate Trust Services c/o First Chicago Corporate Trust Services
235 West Schrock Road 14 Wall Street
Westerville, Ohio 43081 8th Floor
Attention: Lora Marsch New York, New York 10005
</TABLE>
FACSIMILE TRANSMISSIONS
(614) 248-9987
CONFIRM BY TELEPHONE:
(800) 346-5153
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed either if (a) certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-entry
confirmation of a book-entry transfer of such Outstanding Notes into the
Exchange Agent's account at The Depository Trust Company ("DTC"), as well as
this Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date. Tenders by
book-entry transfer also may be made by delivering an Agent's Message in lieu of
this Letter of Transmittal. The term "book-entry confirmation" means a
confirmation of a book-entry transfer of Outstanding Notes into the Exchange
Agent's account at DTC. The term "Agent's Message" means a message, transmitted
by DTC to and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment from
the tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by this Letter of Transmittal and
<PAGE>
that Argosy Gaming Company, a Delaware corporation (the "Company") may enforce
this Letter of Transmittal against such participant.
Holders (as defined below) of Outstanding Notes whose certificates (the
"Certificates") for such Outstanding Notes are not immediately available or who
cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus)
or who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Outstanding Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES
--------------------------------------------------------------------------------------------------
IF BLANK, PLEASE PRINT NAME AND ADDRESS OUTSTANDING NOTES
OF REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRINCIPAL
AGGREGATE AMOUNT
PRINCIPAL OF OUTSTANDING
AMOUNT OF NOTES TENDERED
CERTIFICATE OUTSTANDING (IF LESS THAN
NUMBER(S)* NOTES ALL)**
- ----------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL:
- ----------------------------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Outstanding Notes may be tendered in whole or in part in multiples of $1,000. All Outstanding
Notes held shall be deemed tendered unless a lesser number is specified in this column. See
Instruction 4.
- --------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED OUTSTANDING NOTES IS BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
DTC Account Number _________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING NOTES IS BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 1):
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution ___________________________________________
DTC Account Number ______________________________________________________
Transaction Code Number _________________________________________________
<PAGE>
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING
NOTES IS TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: __________________________________________________________________________
Address: _______________________________________________________________________
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Argosy Gaming Company, a Delaware
corporation (the "Company"), the above described principal amount of the
Company's 10 3/4% Notes due 2009 (the "Outstanding Notes") in exchange for an
equivalent amount of the Company's 10 3/4% Notes due 2009 (the "Exchange Notes"
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1999 (as the same may be amended or supplemented
from time to time, the "Prospectus"), receipt of which is hereby acknowledged,
and in this Letter of Transmittal (which, together with the Prospectus,
constitute the "Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Notes as is being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Notes, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) subject only to the
right of withdrawal described in the Prospectus, to (i) deliver Certificates for
Outstanding Notes to the Company together with 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 Exchange Notes to be
issued in exchange for such Outstanding Notes, (ii) present Certificates for
such Outstanding Notes for transfer, and to transfer the Outstanding Notes on
the books of the Company, and (iii) receive for the account of the Company all
benefits and otherwise exercise all rights of beneficial ownership of such
Outstanding Notes, all in accordance with the terms and conditions of the
Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the
Outstanding Notes tendered hereby and that, when the same is accepted for
exchange, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Outstanding Notes tendered hereby is not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be necessary
or desirable to complete the exchange, assignment and transfer of the
Outstanding Notes tendered hereby, and the undersigned will comply with its
obligations under the Registration Rights Agreement. The undersigned has read
and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Outstanding
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Outstanding Notes.
The Certificate number(s) and the Outstanding Notes that the undersigned wishes
to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Notes is not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding
Notes than are tendered or accepted for exchange, Certificates for such
nonexchanged or nontendered Outstanding Notes will be returned (or, in the case
of Outstanding Notes tendered by book-entry transfer, such Outstanding Notes
will be credited to an account maintained at DTC), without expense to the
tendering Holder, promptly following the expiration or termination of the
Exchange Offer.
The undersigned understands that tenders of Outstanding Notes pursuant to
any one of the procedures described in "The Exchange Offer--Procedures for
Tendering Outstanding Notes" in the Prospectus and in the instructions attached
hereto will, upon the Company's acceptance for exchange of such tendered
Outstanding Notes, constitute a binding agreement between the undersigned and
the Company upon the terms and subject to the conditions of the Exchange Offer.
The undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, that such Exchange Notes be credited to the
account indicated above maintained at DTC. If applicable, substitute
Certificates representing Outstanding Notes not exchanged or not accepted for
exchange will be issued to the undersigned or, in the case of a book-entry
transfer of Outstanding Notes, will be credited to the account indicated above
maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please deliver Exchange Notes to the undersigned at the address
shown below the undersigned's signature.
<PAGE>
By tendering Outstanding Notes and executing this Letter of Transmittal or
effecting delivery of an Agent's Message in lieu thereof, the undersigned hereby
represents and agrees that (i) the undersigned is not an "affiliate" of the
Company, (ii) any Exchange Notes to be received by the undersigned is being
acquired in the ordinary course of its business, (iii) the undersigned has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of Exchange Notes to be received in
the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Notes. The Company
may require the undersigned, as a condition to the undersigned's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" within
the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the
undersigned holds the Outstanding Notes to be exchanged in the Exchange Offer.
If the undersigned is a broker-dealer that will receive Exchange Notes for its
own account in exchange for Outstanding Notes, it represents that the
Outstanding Notes to be exchanged for Exchange Notes was acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a Prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a Prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer (as defined below) in
connection with resales of Exchange Notes received in exchange for Outstanding
Notes, where such Outstanding Notes was acquired by such Participating
Broker-Dealer for its own account as a result of market-making activities or
other trading activities, for a period ending 180 days after the effective date
of the registration statement relating to the Exchange Notes (the "Effective
Date") (subject to extension under certain limited circumstances described in
the Prospectus) or, if earlier, when all such Exchange Notes has been disposed
of by such Participating Broker-Dealer. In that regard, each broker-dealer who
acquired Outstanding Notes for its own account as a result of market-making or
other trading activities (a "Participating Broker-Dealer"), by tendering such
Outstanding Notes and executing this Letter of Transmittal or effecting delivery
of an Agent's Message in lieu thereof, agrees that, upon receipt of notice from
the Company of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in the Prospectus
untrue in any material respect or which causes the Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference therein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-Dealer
will suspend the sale of Exchange Notes pursuant to the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to the Participating Broker-Dealer or the Company has given notice that the sale
of the Exchange Notes may be resumed, as the case may be. If the Company gives
such notice to suspend the sale of the Exchange Notes, it shall extend the
180-day period referred to above during which Participating Broker-Dealers are
entitled to use the Prospectus in connection with the resale of Exchange Notes
by the number of days during the period from and including the date of the
giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the supplemented or amended
Prospectus necessary to permit resales of the Exchange Notes or to and including
the date on which the Company has given notice that the sale of Exchange Notes
may be resumed, as the case may be.
As a result, a Participating Broker-Dealer who intends to use the Prospectus
in connection with resales of Exchange Notes received in exchange for
Outstanding Notes pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the Expiration Date, that it is
a Participating Broker-Dealer. Such notice may be given in the space provided
above or may be delivered to the Exchange Agent at the address set forth in the
Prospectus under "The Exchange Offer--Exchange Agent."
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Notes tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
The undersigned, by completing the box entitled "Description of Outstanding
Notes" above and signing this letter, will be deemed to have tendered the
Outstanding Notes as set forth in such box.
- --------------------------------------------------------------------------------
IMPORTANT
HOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN)
<PAGE>
SIGNATURE(S) OF HOLDERS(S)
Date: ____________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Certificate(s) for the Outstanding Notes hereby tendered or on a security
position listing or by person(s) authorized to become registered holder(s)
by certificates and documents transmitted herewith. If signature is by
trustee, executor, administrator, guardian, attorney-in-fact, officer of
corporation or other person acting in a fiduciary or representative
capacity, please provide the following information and see Instruction 2
below.)
Name(s): ___________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _____________________________________________________
Address: ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
(SEE SUBSTITUTE FORM W-9 HEREIN)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTION 2 BELOW)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _____________________________________________________________________
Name: ______________________________________________________________________
Address: ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Date:_____________________
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SIGNATURE GUARANTEE REQUIRED--SEE INSTRUCTION 2)
TO BE COMPLETED ONLY if Exchange Notes or Outstanding Notes not tendered is
to be issued in the name of someone other than the registered Holder of the
Outstanding Notes whose name(s) appear(s) above.
/ / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
_________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SIGNATURE GUARANTEE REQUIRED--SEE INSTRUCTION 2)
TO BE COMPLETED ONLY if Exchange Notes or Outstanding Notes not tendered is
to be sent to someone other than the registered Holder of the Outstanding
Notes whose name(s) appear(s) above, or such registered Holder at an address
other than that shown above.
/ / Outstanding Notes not tendered to:
/ / Exchange Notes to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message is not delivered. Certificates, or timely confirmation of a
book-entry transfer of such Outstanding Notes into the Exchange Agent's account
at DTC, as well as this Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Tenders by book-entry transfer may also be made by delivering an Agent's
Message in lieu thereof. Outstanding Notes may be tendered in whole or in part
in integral multiples of $1,000.
Holders who wish to tender their Outstanding Notes and (i) whose Outstanding
Notes is not immediately available or (ii) who cannot deliver their Outstanding
Notes, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedures for delivery by book-entry transfer on a timely basis, may tender
their Outstanding Notes by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedures for Tendering Outstanding Notes" in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution (as defined below); (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date; and (iii) the Certificates (or a book-entry confirmation)
representing all tendered Outstanding Notes, in proper form for transfer,
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer--Procedures for Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery. For Outstanding Notes to be properly tendered pursuant to the
guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Institution" means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
i. this Letter of Transmittal is signed by the registered Holder (which
term, for purposes of this document, shall include any participant in
DTC whose name appears on a security position listing as the owner of
the Outstanding Notes (the "Holder")) of Outstanding Notes tendered
herewith, unless such Holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above, or
ii. such Outstanding Notes is tendered for the account of a firm that is
an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Outstanding Notes" is inadequate, the Certificate number(s)
and/or the principal amount of Outstanding Notes and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
<PAGE>
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Outstanding Notes
will be accepted only in integral multiples of $1,000. If less than all the
Outstanding Notes evidenced by any Certificate submitted is to be tendered, fill
in the principal amount of Outstanding Notes which is to be tendered in the box
entitled "Principal Amount of Outstanding Notes Tendered." In such case, new
Certificate(s) for the remainder of the Outstanding Notes that was evidenced by
your old Certificate(s) will only be sent to the Holder of the Outstanding
Notes, promptly after the Expiration Date. All Outstanding Notes represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth above or in the Prospectus on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Outstanding Notes to be withdrawn, the
aggregate principal amount of Outstanding Notes to be withdrawn, and (if
Certificates for Outstanding Notes have been tendered) the name of the
registered Holder of the Outstanding Notes as set forth on the Certificate for
the Outstanding Notes, if different from that of the person who tendered such
Outstanding Notes. If Certificates for the Outstanding Notes have been delivered
or otherwise identified to the Exchange Agent, then prior to the physical
release of such Certificates for the Outstanding Notes, the tendering Holder
must submit the serial numbers shown on the particular Certificates for the
Outstanding Notes to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution, except in the case of Outstanding
Notes tendered for the account of an Eligible Institution. If Outstanding Notes
has been tendered pursuant to the procedures for book-entry transfer set forth
in the Prospectus under "The Exchange Offer--Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawal of Outstanding Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Outstanding Notes may not be rescinded. Outstanding Notes properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Outstanding Notes which has been tendered but
which is withdrawn will be returned to the Holder thereof without cost to such
Holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered Holder(s) of the
Outstanding Notes tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
If any Outstanding Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates 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, must
submit proper evidence satisfactory to the Company, in its sole discretion, of
each such person's authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Outstanding Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) is required unless Exchange Notes is to
be issued in the name of a person other than the registered Holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Outstanding Notes listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the registered owner(s) appear(s) on the Certificates, and also must
be accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee for the Outstanding Notes may require in
accordance with the restrictions on transfer applicable to the Outstanding
Notes. Signatures on such Certificates or bond powers must be guaranteed by an
Eligible Institution.
<PAGE>
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes is to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes is to be sent to someone other than the signer
of this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer-- Conditions to the
Exchange Offer" or any conditions or irregularities in any tender of Outstanding
Notes of any particular Holder whether or not similar conditions or
irregularities are waived in the case of other Holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Outstanding Notes will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. The
Company, any affiliates or assigns of the Company, the Exchange Agent, or any
other person shall not be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under the U.S. Federal
income tax law, a Holder whose tendered Outstanding Notes are accepted for
exchange is required to provide the Exchange Agent with such Holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the Holder or other payee to a $50 penalty. In
addition, payments to such Holders or other payees with respect to Outstanding
Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 2 is checked, the Holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the Holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60-day period
will be remitted to the Holder and no further amounts shall be retained or
withheld from payments made to the Holder thereafter. If, however, the Holder
has not provided the Exchange Agent with its TIN within such 60-day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Notes or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Notes. If the Outstanding Notes are
registered in more than one name or is not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to the backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.
<PAGE>
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
11. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering Holders of Outstanding Notes, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of Outstanding Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of
Outstanding Notes nor shall any of them incur any liability for failure to give
any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Outstanding Notes have been lost, destroyed or stolen, the Holder
should promptly notify the Exchange Agent. The Holder will then be instructed as
to the steps that must be taken in order to replace the Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen Certificate(s) have been
followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Outstanding Notes
for exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes is to be delivered to, or is to be issued
in the name of, any person other than the registered Holder of the Outstanding
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Outstanding Notes in connection with the Exchange Offer, then the
amount of any such transfer tax (whether imposed on the registered Holder or any
other persons) will be payable by the tendering Holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering Holder.
PAYER'S NAME: BANK ONE TRUST COMPANY, NA
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN:
FORM W-9 TIN IN THE BOX AT RIGHT AND SOCIAL SECURITY NUMBER OR
Department of the Treasury CERTIFY BY SIGNING AND DATING EMPLOYER
Internal Revenue Service BELOW. IDENTIFICATION NUMBER
--------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER PART 2--TIN APPLIED FOR / /
IDENTIFICATION NUMBER ("TIN")
--------------------------------------------------------------
CERTIFICATION: Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because: (a) I have not been notified by
the Internal Revenue Service (the IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (b) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the
IRS that you are subject to backup withholding because of underreporting of interest or
dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding, you received another notification from the IRS that you were no
longer subject to backup withholding, do not cross out item (2). (Also see instructions in the
enclosed GUIDELINES.)
--------------------------------------------------------------
Signature Date
--------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU IN CONNECTION WITH THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON
APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of the exchange, thirty-one (31%) percent of all reportable payments
made to me thereafter will be withheld until I provide a number.
Signature ____________________________ Date ___________________________
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
ARGOSY GAMING COMPANY
OFFER TO EXCHANGE ITS
10 3/4% NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
PURSUANT TO THE PROSPECTUS DATED , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's 10 3/4% Notes due 2009 (the "Outstanding Notes")
are not immediately available, (ii) Outstanding Notes, the Letter of Transmittal
and all other required documents cannot be delivered to Bank One Trust Company,
NA (the "Exchange Agent") on or prior to the Expiration Date or (iii) the
procedures for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand, overnight
courier or mail, or transmitted by facsimile transmission, to the Exchange
Agent. See "The Exchange Offer--Procedures for Tendering Outstanding Notes" in
the Prospectus. In addition, in order to utilize the guaranteed delivery
procedure to tender Outstanding Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal relating to the Outstanding
Notes (or facsimile thereof) must also be received by the Exchange Agent on or
prior to the Expiration Date. Capitalized terms not defined herein have the
meanings assigned to them in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
BANK ONE TRUST COMPANY, NA
<TABLE>
<S> <C>
BY MAIL OR OVERNIGHT DELIVERY: BY HAND DELIVERY
Bank One Trust Company, NA Bank One Trust Company, NA
Corporate Trust Services c/o First Chicago Corporate Trust Services
235 West Schrock Road 14 Wall Street
Westerville, Ohio 43081 8th Floor
Attention: Lora Marsch New York, New York 10005
</TABLE>
FACSIMILE TRANSMISSIONS:
(614) 248-9987
CONFIRM BY TELEPHONE:
(800) 346-5153
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Argosy Gaming Company, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated ,1999 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Outstanding Notes set
forth below pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering
Outstanding Notes."
Aggregate Principal Amount: _________ Name(s) of Registered Holder(s): ________
Amount Tendered: $________________*
Certificate No(s) (if available): ______________________________________________
________________________________________________________________________________
$_______________________________________________________________________________
(TOTAL PRINCIPAL AMOUNT REPRESENTED BY OUTSTANDING NOTES CERTIFICATE(S))
If Outstanding Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number: ____________________________________________________________
Date: __________________________________________________________________________
* Must be in integral multiples of $1,000.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
X
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY DATE
</TABLE>
Area Code and Telephone Number: ________________________________________________
Must be signed by the holder(s) of the Outstanding Notes as their name(s)
appear(s) on certificates for Outstanding Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below
and, unless waived by the Company, provide proper evidence satisfactory to the
Company of such person's authority to so act.
<PAGE>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s): _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Capacity: ______________________________________________________________________
Address(es): ___________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
instruction," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (each of
the foregoing being referred to as an "Eligible Institution"), hereby guarantees
to deliver to the Exchange Agent, at one of its addresses set forth above,
either the Outstanding Notes tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Outstanding Notes to the
Exchange Agent's account at The Depository Trust Company ("DTC"), pursuant to
the procedures for book-entry transfer set forth in the Prospectus, in either
case together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within three
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Outstanding Notes tendered hereby to
the Exchange Agent within the time period set forth above and that failure to do
so could result in a financial loss to the undersigned.
<TABLE>
<S> <C>
Name of Firm Title
Address Area Code and Telephone Number
Zip Code Date
Authorized Signature (Please Type or Print)
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM.
CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
ARGOSY GAMING COMPANY
INSTRUCTION TO REGISTERED HOLDER AND/OR DEPOSITORY
TRUST COMPANY PARTICIPANT FROM BENEFICIAL OWNER
FOR
OFFER TO EXCHANGE ITS
10 3/4% NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
10 3/4% NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To Registered Holder and/or Depository Trust Company Participant:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Argosy Gaming Company, a Delaware
corporation (the "Company"), and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), that together constitute the Company's offer (the
"Exchange Offer") to exchange its 10 3/4% Notes due 2009 (the "Exchange Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for all of its outstanding 10 3/4% Notes due 2009 (the
"Outstanding Notes"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or Depository Trust
Company Participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Outstanding Notes held by you for the account
of the undersigned.
The aggregate face amount of the Outstanding Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
$__________________________________________________ of the 10 3/4% Notes due
2009
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / To TENDER the following Outstanding Notes held by you for the amount
of the undersigned (INSERT PRINCIPAL AMOUNT OF OUTSTANDING NOTES TO BE
TENDERED (IF LESS THAN ALL)):
$_______________________
/ / NOT to TENDER any Outstanding Notes held by you for the account of
the undersigned.
If the undersigned instructs you to tender the Outstanding Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
undersigned is not an "affiliate" of the Company, (ii) any Exchange Notes to be
received by the undersigned is being acquired in the ordinary course of its
business, (iii) the undersigned has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of Exchange Notes to be received in the Exchange Offer, and (iv) if the
undersigned is not a broker-dealer, the undersigned is not engaged in,
<PAGE>
and does not intend to engage in, a distribution (within the meaning of the
Securities Act) of such Exchange Notes. The Company may require the undersigned,
as a condition to the undersigned's eligibility to participate in the Exchange
Offer, to furnish to the Company (or an agent thereof) in writing information as
to the number of "beneficial owners" within the meaning of Rule 13d-3 under the
Exchange Act on behalf of whom the undersigned holds the Outstanding Notes to be
exchanged in the Exchange Offer. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Outstanding Notes, it
represents that the Outstanding Notes to be exchanged for Exchange Notes was
acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
- --------------------------------------------------------------------------------
SIGN HERE
____________________________________________________________________________
NAME OF BENEFICIAL OWNER(S)
____________________________________________________________________________
____________________________________________________________________________
SIGNATURE
____________________________________________________________________________
____________________________________________________________________________
NAME(S) (PLEASE PRINT)
____________________________________________________________________________
____________________________________________________________________________
(ADDRESS)
____________________________________________________________________________
(TELEPHONE NUMBER)
____________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
____________________________________________________________________________
DATE
- --------------------------------------------------------------------------------
