SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)AUGUST 10, 1994
SHOWBOAT, INC.
(Exact name of registrant as specified in charter)
NEVADA 1-7123 88-0090766
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
No.)
2800 FREMONT STREET, LAS VEGAS, NEVADA 89104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code(702) 385-9123
NOT APPLICABLE
(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
On August 10, 1994, Showboat, Inc., a Nevada corporation
(the "Company"), completed its underwritten public offering of
13% Senior Subordinated Notes due 2009 (the "Notes") in the
principal aggregate amount of $120,000,000 (the "Note Offering").
The Notes are unsecured general obligations of the Company,
subordinated in right of payment to all senior indebtedness of
the Company. The Notes are jointly and severally guaranteed on
an unsecured, senior subordinated basis by Ocean Showboat, Inc.,
a New Jersey corporation and wholly owned subsidiary of the
Company ("OSI"), Atlantic City Showboat, Inc., a New Jersey
corporation and wholly owned subsidiary of OSI ("ACSI") and
Showboat Operating Company, a Nevada corporation and wholly owned
subsidiary of the Company ("SBOC").
Pursuant to the indenture for the Notes (the "Note
Indenture") among the Company, OSI, ACSI, SBOC and Marine Midland
Bank, as trustee, the Notes are not redeemable by the Company
prior to August 1, 2001 unless otherwise required by the gaming
laws of Nevada, New Jersey, or any other state or country in
which the Company or one of its subsidiaries conducts gaming
operations or unless otherwise permitted pursuant to the terms of
the Note Indenture. On or after August 1, 2001, the Notes are
redeemable at the option of the Company, in whole or in part, at
the redemption price provided for in the Note Indenture, together
with accrued and unpaid interest, if any, to the redemption date.
The Company is not required to make mandatory redemption or
sinking fund payments with respect to the Notes.
The Note Indenture contains certain covenants restricting or
limiting the ability of the Company and its subsidiaries to,
among other things, (i) pay dividends or make other restricted
payments, (ii) incur additional indebtedness and issue preferred
stock, (iii) create liens, (iv) create dividend and other payment
restrictions affecting any subsidiary of the Company, (v) enter
into mergers, consolidations or make sales of all or
substantially all assets, (vi) enter into transactions with
affiliates and (vii) engage in other lines of business.
The net proceeds from the Note Offering, after deducting
underwriting discounts and commissions and estimated offering
expenses, were approximately $116.5 million. The Company intends
to apply such net proceeds to (i) invest approximately $100.0
million in Sydney Harbour Casino Holdings Limited ("SHCL"), which
has been selected as the preferred applicant to build, manage and
operate the sole full-service casino in New South Wales,
Australia (the "Sydney Harbour Casino") for an approximately 27%
equity interest in SHCL and (ii) renovate the Las Vegas Showboat
in order to upgrade the facility to current building codes,
replace the existing power plant facility and add up to a 900-
space parking garage at a cost of approximately $15.0 million.
The Company has placed $100.0 million of the net proceeds
into an escrow account, which may only be used to fund the
Company's investment in SHCL. In the event that (i) SHCL or a
subsidiary of SHCL has not been selected as the sole licensee of
the Sydney Harbour Casino; or (ii) the Company or a subsidiary of
the Company has not entered into an agreement with SHCL for the
management of the gaming operations of Sydney Harbour Casino for
a term of not less than 12 years, within one year of the issuance
of the Notes, then the Company will be obligated to make an offer
to repurchase an amount of Notes and certain other indebtedness
of the Company equal to the amount in the escrow account at a
purchase price equal to 100.0% of the principal amount thereof,
together with accrued and unpaid interest thereon.
In the event that the Company determines not to pursue any
portion of the Las Vegas Showboat renovation, the Company will
use any remaining net proceeds for other expansion opportunities,
capital improvements to existing properties or general corporate
purposes.
In connection with providing certain financial services the
Company issued as of May 6, 1994, warrants to purchase 150,000
shares of common stock, $1.00 par value, of the Company, issuable
at an exercise price per share equal to the lesser of (i) $15.50,
or (ii) the exercise price of the Takedown Warrants (as defined
in the Warrant Agreement) to DLJ Bridge Finance, Inc. DLJ Bridge
Finance, Inc. is an affiliate of Donaldson, Lufkin & Jenrette
Securities Corporation, the underwriter of the Note Offering.
EXHIBIT NO. DESCRIPTION
4.01 Indenture dated August 10, 1994, for the 13%
Senior Subordinated Notes due 2009 by and among
the Company, OSI, ACSI, SBOC, and Trustee;
Guaranty in favor of the Trustee issued by OSI,
ACSI and SBOC; Form of Note Certificate for the
13% Senior Subordinated Notes due 2009
99.01 Warrant Agreement dated as of May 6, 1994, by and
between the Company and DLJ Bridge Finance, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
SHOWBOAT, INC.
(Registrant)
Dated: August 22, 1994 By: /S/ Schneider
Leann Schneider
Vice President-Finance and
Chief Financial Officer
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
<C> <C> <C>
4.01 Indenture dated August 10, 1994, for the
6
13% Senior Subordinated Notes due 2009 by and
among the Company, OSI, ACSI, SBOC, and
Trustee; Guaranty in favor of the Trustee
issued by OSI, ACSI and SBOC; Form of Note
Certificate for the 13% Senior Subordinated
Notes due 2009
99.01 Warrant Agreement dated as of May 6, 1994, by
and between the Company and DLJ Bridge
Finance, Inc.
</TABLE>
EXECUTION COPY
SHOWBOAT, INC.
13% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of August 10, 1994
MARINE MIDLAND BANK
Trustee
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE
SECTION
<C> <C>
310 (a)(1)..............................7.10
(a)(2)...............................7.10
(a)(3) ..............................N.A.
(a)(4)...............................N.A.
(a)(5).............................. 7.10
(b) .................................7.10
(c) ............................... N.A.
311 (a) .............................. 7.11
(b) ............................... 7.11
(c) ............................... N.A.
312 (a)............................... 2.05
(b).................................12.03
(c) ............................... 12.03
313 (a) .............................. 7.06
(b)(1) ..............................7.06
(b)(2) ........................ 7.06;7.07
(c) ......................... 7.06;12.02
(d)................................. 7.06
314 (a) ..........................4.03;12.02
(b) ............................. N.A.
(c)(1) ............................ 12.04
(c)(2) ............................ 12.04
(c)(3) ..............................N.A.
(d)..................................N.A.
(e) ...............................12.05
(f)..................................N.A.
315 (a).................................7.01
(b)............................7.05,12.02
(c) ................................7.01
(d)..................................7.01
(e)..................................6.11
316 (a)(last sentence) ............... 2.09
(a)(1)(A)............................6.05
(a)(1)(B) ...........................6.04
(a)(2) ..............................N.A.
(b) ................................ 6.07
(c) ............................... 2.13
317 (a)(1) .............................6.08
(a)(2)...............................6.09
(b) .................................2.04
318 (a)............................... 12.01
(b)................................. N.A.
(c).................................12.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the
Indenture.
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
<TABLE> BY REFERENCE
<C> <C> <C>
Section 1.01.Definitions.......................1
Section 1.02.Other Definitions.................13
Section 1.03.Incorporation by Reference of
Trust Indenture Act..................13
Section 1.04.Rules of Construction.............14
ARTICLE 2
THE NOTES
Section 2.01.Form and Dating...................14
Section 2.02.Execution and Authentication......15
Section 2.03.Registrar and Paying Agent........15
Section 2.04.Paying Agent to Hold Money in
Trust................................16
Section 2.05.Lists of Holders..................16
Section 2.06.Transfer and Exchange.............16
Section 2.07.Replacement Notes.................17
Section 2.08.Outstanding Notes.................17
Section 2.09.Treasury Notes....................17
Section 2.10.Temporary Notes...................18
Section 2.11.Cancellation......................18
Section 2.12.Defaulted Interest................18
Section 2.13.Record Date.......................19
Section 2.14.CUSIP Number......................19
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
Section 3.01.Notices to Trustee................19
Section 3.02.Selection of Notes to Be
Purchased or Redeemed................19
Section 3.03.Notice of Redemption..............20
Section 3.04.Effect of Notice of Redemption....21
Section 3.05.Deposit of Redemption or
Purchase Price.......................21
Section 3.06.Notes Redeemed or Purchased in
Part.................................21
Section 3.07.Optional Redemption...............21
Section 3.08.Mandatory Redemption..............22
Section 3.09.Offers to Purchase................23
ARTICLE 4
COVENANTS
Section 4.01.Payment of Notes..................24
Section 4.02.Maintenance of Office or Agency...25
Section 4.03.Reports...........................25
Section 4.04.Compliance Certificate............25
Section 4.05.Taxes.............................26
Section 4.06.Stay, Extension and Usury Laws....26
Section 4.07.Restricted Payments...............26
Section 4.08.Dividend and Other Payment
Restrictions Affecting Subsidiaries..29
Section 4.09.Incurrence of Indebtedness and
Issuance of Disqualified Stock.......30
Section 4.10.Asset Sales.......................31
Section 4.11.Transactions with Affiliates......32
Section 4.12.Liens.............................34
Section 4.13.Additional Subsidiary Guarantees..34
Section 4.14.Redesignation of Non-Recourse
Subsidiary...........................34
Section 4.15.Offer to Purchase Upon Change of
Control..............................34
Section 4.16.Corporate Existence...............35
Section 4.17.Line of Business..................35
Section 4.18.No Senior Subordinated
Indebtedness.........................35
Section 4.19.Escrow Agent......................35
ARTICLE 5
SUCCESSORS
Section 5.01.Merger, Consolidation, or Sale
of Assets............................36
Section 5.02.Successor Corporation
Substituted..........................37
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01.Events of Default.................37
Section 6.02.Acceleration......................39
Section 6.03.Other Remedies....................40
Section 6.04.Waiver of Past Defaults...........40
Section 6.05.Control by Majority...............40
Section 6.06.Limitation on Suits...............40
Section 6.07.Rights of Holders of Notes to
Receive Payment......................41
Section 6.08.Collection Suit by Trustee........41
Section 6.09.Trustee May File Proofs of Claim..41
Section 6.10.Priorities........................42
Section 6.11.Undertaking for Costs.............42
ARTICLE 7
TRUSTEE
Section 7.01.Duties of Trustee.................42
Section 7.02.Rights of Trustee.................43
Section 7.03.Individual Rights of Trustee......44
Section 7.04.Trustee's Disclaimer..............44
Section 7.05.Notice of Defaults................44
Section 7.06.Reports by Trustee to Holders.....44
Section 7.07.Compensation and Indemnity........45
Section 7.08.Replacement of Trustee............46
Section 7.09.Successor Trustee by Merger, etc..47
Section 7.10.Eligibility; Disqualification.....47
Section 7.11.Preferential Collection of
Claims Against Company...............47
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01.Option to Effect Legal
Defeasance or Covenant Defeasance....47
Section 8.02.Legal Defeasance and Discharge....47
Section 8.03.Covenant Defeasance...............48
Section 8.04.Conditions to Legal or Covenant
Defeasance...........................48
Section 8.05.Deposited Money and U.S.
Government Obligations to be Held
in Trust; Other Miscellaneous
Provisions...........................49
Section 8.06.Repayment to Company..............50
Section 8.07.Reinstatement.....................50
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01.Without Consent of Holders of
Notes................................51
Section 9.02.With Consent of Holders of Notes..51
Section 9.03.Compliance with Trust Indenture
Act..................................53
Section 9.04.Revocation and Effect of
Consents.............................53
Section 9.05.Notation on or Exchange of Notes..53
Section 9.06.Trustee to Sign Amendments, etc...53
ARTICLE 10
SUBSIDIARY GUARANTEES
Section 10.01.Subsidiary Guarantee.............53
Section 10.02.Subordination....................55
Section 10.03.Liquidation; Dissolution;
Bankruptcy...........................55
Section 10.04.Default on Senior Debt of the
Guarantor............................55
Section 10.05.Acceleration of Notes............56
Section 10.06.When Distribution Must Be Paid
Over.................................56
Section 10.07.Notice by a Guarantor............57
Section 10.08.Subrogation......................57
Section 10.09.Relative Rights..................57
Section 10.10.Subordination May Not Be
Impaired By Any Guarantor............58
Section 10.11.Distribution or Notice to
Representative.......................58
Section 10.12.Rights of Trustee and Paying
Agent................................58
Section 10.13.Authorization to Effect
Subordination........................58
Section 10.14.Limitation of Guarantor's
Liability............................59
Section 10.15.Releases Following Sale of
Assets...............................59
ARTICLE 11
SUBORDINATION
Section 11.01.Subordination....................59
Section 11.02.Liquidation; Dissolution;
Bankruptcy...........................59
Section 11.03.Default on Senior Debt...........60
Section 11.04.Acceleration of Notes............61
Section 11.05.When Distribution Must Be Paid
Over.................................61
Section 11.06.Notice by Company................61
Section 11.07.Subrogation......................62
Section 11.08.Relative Rights..................62
Section 11.09.Subordination May Not Be
Impaired By Company..................62
Section 11.10.Distribution or Notice to
Representative.......................62
Section 11.11.Rights of Trustee and Paying
Agent................................63
Section 11.12.Authorization to Effect
Subordination........................63
ARTICLE 12
MISCELLANEOUS
Section 12.01.Trust Indenture Act Controls.....63
Section 12.02.Notices..........................63
Section 12.03.Communication by Holders of
Notes with Other Holders of Notes....64
Section 12.04.Certificate and Opinion as to
Conditions Precedent.................65
Section 12.05.Statements Required in
Certificate or Opinion...............65
Section 12.06.Rules by Trustee and Agents......65
Section 12.07.No Personal Liability of
Directors, Officers, Employees and
Stockholders.........................65
Section 12.08.Governing Law....................66
Section 12.09.No Adverse Interpretation of
Other Agreements.....................66
Section 12.10.Successors.......................66
Section 12.11.Severability.....................66
Section 12.12.Counterpart Originals............66
Section 12.13.Table of Contents, Headings,
etc..................................66
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUPPLEMENTAL INDENTURE
Exhibit C FORM OF NOTATION ON SENIOR SUBORDINATED
NOTE RELATING TO NOTE GUARANTEE
Exhibit D FORM OF ESCROW AGREEMENT
INDENTURE dated as of August 10, 1994 between
Showboat, Inc. a Nevada corporation (the "Company"),
Atlantic City Showboat, Inc., a New Jersey corporation
("ACSI"), Ocean Showboat, Inc., a New Jersey
corporation ("OSI") and Showboat Operating Company, a
Nevada corporation ("SBOC") and Marine Midland Bank, a
New York corporation, 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 13% Senior
Subordinated Notes due 2009:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"AFFILIATE" of any specified Person means any
other individual, corporation, partnership, trust,
incorporated or unincorporated association, joint
venture, joint stock company, government or other
entity of any kind directly or indirectly controlling
or controlled by or under direct or indirect common
control with such specified Person. For purposes of
this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and
"under common control with"), as used with respect to
any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the
direction of the management or policies of such Person,
whether through the ownership of voting securities, by
agreement or otherwise; PROVIDED, HOWEVER, that
beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent or
co-registrar.
"ASSET SALE" means (i) the sale, lease,
conveyance, transfer or other disposition (whether in a
single transaction or a series of related transactions)
of property or assets (including by way of a sale and
leaseback) of the Company or any Restricted Subsidiary
(each referred to in this definition as a
"disposition") or (ii) the issuance or sale of Equity
Interests of any Restricted Subsidiary (whether in a
single transaction or a series of related transactions)
in each case, other than (a) a disposition of inventory
in the ordinary course of business, (b) the disposition
of all or substantially all of the assets of the
Company in a manner permitted pursuant to the
provisions described below under "Merger, Consolidation
or Sale of Assets" and "Offer to Purchase Upon Change
of Control," (c) any disposition that is a Restricted
Payment or that is a dividend or distribution permitted
under the covenant described below under "Restricted
Payments" or any Investment that is not prohibited
thereunder or any disposition of cash or Cash
Equivalents, and (d) any single disposition, or related
series of dispositions, of assets with an aggregate
fair market value of less than $3.0 million.
"ATLANTIC CITY SHOWBOAT" means (i) all of
ACSI's interest in its hotel casino and related
properties located at 801 Boardwalk, Atlantic City, New
Jersey and any Project Expansion relating thereto and
(ii) any contiguous property acquired by the Company or
any of its Subsidiaries and any Project Expansion
relating thereto.
"AUSTRALIAN GAMING APPROVAL" means the
official selection of SHCL (or a Subsidiary of SHCL) as
the sole licensee or operator of a casino gaming
operation in Sydney, Australia.
"BANKRUPTCY LAW" means Title 11, U.S. Code or
any similar federal or state law for the relief of
debtors.
"BOARD OF DIRECTORS" means the Board of
Directors of the Company, or any authorized committee
of the Board of Directors.
"BUSINESS DAY" means any day other than a
Legal Holiday.
"CAPITAL STOCK" means any and all shares,
interests, participations, rights or other equivalents
(however designated) of corporate stock, including,
without limitation, partnership interests.
"CASH EQUIVALENTS" means (i) United States
dollars, (ii) securities issued or directly and fully
guaranteed or insured by the United States government
or any agency or instrumentality thereof having
maturities of not more than six months from the date of
acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months
or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months
from the date of acquisition and overnight bank
deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500
million, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the
types described in clauses (ii) and (iii) entered into
with any financial institution meeting the
qualifications specified in clause (iii) above and
(v) commercial paper having a rating of P-2 or the
equivalent thereof by Moody's Investors Service, Inc.
or A-2 or the equivalent thereof by Standard & Poor's
Corporation and in each case maturing within six months
after the date of acquisition.
"CHANGE OF CONTROL" means the occurrence of
any of the following events: (i) the sale, lease,
transfer, conveyance or other disposition, in one or a
series of related transactions, of all or substantially
all of the assets of the Company and its Subsidiaries,
taken as a whole; (ii) the liquidation or dissolution
of the Company; (iii) the Company becomes aware of (by
way of a report or any other filing pursuant to Section
13(d) of the Exchange Act, proxy vote, written notice
or otherwise) the acquisition by any "person" or
related group (within the meaning of Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act, or any
successor provision to either of the foregoing,
including any "group" acting for the purpose of
acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(1) under the Exchange
Act), other than the Company's Existing Management, in
a single transaction or in a related series of
transactions, by way of merger, consolidation or other
business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of 30% or
more of the total voting power entitled to vote in the
election of the Board of Directors of the Company or
such other Person surviving the transaction; or (iv)
during any period of two consecutive years, individuals
who at the beginning of such period constituted the
Company's Board of Directors (together with any new
directors whose election or appointment by such board
or whose nomination for election by the shareholders of
the Company was approved by a vote of 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 Company's Board of Directors then in office.
"COMPANY" means the party named as such in
the recitals to this Indenture until a successor
replaces it pursuant to this Indenture and thereafter
means the successor.
"CONSOLIDATED CASH FLOW" means, with respect
to any Person for any period, the Consolidated Net
Income of such Person and its Restricted Subsidiaries
for such period plus (a) an amount equal to any
extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such
losses were deducted in computing Consolidated Net
Income), plus (b) provision for taxes based on income
or profits to the extent such provision for taxes was
included in computing Consolidated Net Income, plus (c)
consolidated interest expense of such Person for such
period, whether paid or accrued (including amortization
of original issue discount, non-cash interest payments,
amortization of deferred financing charges and the
interest component of capital lease obligations), to
the extent such expense was deducted in computing
Consolidated Net Income, plus (d) depreciation,
amortization (including amortization of goodwill and
other intangibles) and other non-cash charges
(excluding any such non-cash charge that requires an
accrual of or reserve for cash charges for any future
period and excluding any such non-cash charge that is
included in consolidated interest expense or
consolidated tax expense) of such Person for such
period to the extent such depreciation, amortization
and other non-cash charges were deducted in computing
Consolidated Net Income, in each case, on a
consolidated basis for such Person and its Restricted
Subsidiaries and determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, with respect
to any Person for any period, the aggregate of the Net
Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in
accordance with GAAP, PROVIDED, that (i) the Net Income
of any Person that is not a Subsidiary or that is
accounted for by the equity method of accounting or
that is a Non-Recourse Subsidiary shall be included
only to the extent of the amount of dividends or
distributions paid to the referent Person or a Wholly
Owned Subsidiary, (ii) the Net Income of any Person
that is a Subsidiary (other than a Subsidiary of which
at least 80% of the Capital Stock having ordinary
voting power for the election of directors or other
governing body of such Subsidiary is owned by the
referent Person directly or indirectly through one or
more Subsidiaries) shall be included only to the extent
of the amount of dividends or distributions paid to the
referent Person, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be
excluded, and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, with respect
to any Person, the sum of (i) the consolidated equity
of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective
amounts reported on such Person's most recent balance
sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by
such Person upon issuance of such preferred stock, less
(x) all write-ups (other than write-ups resulting from
foreign currency translations and write-ups of tangible
assets of a going concern business made within 12
months after the acquisition of such business)
subsequent to the date of the Indenture in the book
value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all
investments in unconsolidated Subsidiaries and in
Persons that are not Subsidiaries (except, in each
case, Permitted Investments), and (z) all unamortized
debt discount and expense and unamortized deferred
charges, all of the foregoing determined in accordance
with GAAP.
"CONTROLLED ENTITY" means any of (a) SHCL,
(b) any Non-Recourse Subsidiary of the Company,
including Showboat Star Partnership and Showboat Marina
Partnership, provided that the Company or a Subsidiary
of the Company owns at least 50% of the outstanding
Capital Stock of such Non-Recourse Subsidiary, and
which is designated by the Company as a Controlled
Entity or (c) any Qualified Native American Gaming
Project, including the Qualified Native American
Project to be managed by Showboat Mohawk Investment
Limited Partnership, provided that in each case: (i)
each Subsidiary of the Company that owns, directly or
indirectly (through one or more Subsidiaries), any
Capital Stock of such Controlled Entity shall become a
Guarantor of the Notes by executing a Subsidiary
Guarantee; and (ii) such Controlled Entity is a Managed
Entity or a Subsidiary of such Controlled Entity which
is engaged in gaming activities is a Managed Entity.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall
be at the address of the Trustee specified in Section
12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CUSTODIAN" means any receiver, trustee,
assignee, liquidator or similar official under any
Bankruptcy Law.
"DEFAULT" means any event that is or with the
passage of time or the giving of notice or both would
be an Event of Default.
"DESIGNATED SENIOR DEBT" means, with respect
to any Person, (i) the First Mortgage Bonds and (ii)
any other Senior Debt of such Person permitted under
the Indenture the principal amount of which is $50.0
million or more or which is pari passu in right of
payment to the First Mortgage Bonds and is secured by
substantially the same collateral.
"DISQUALIFIED STOCK" means any Capital Stock
which, by its terms (or by the terms of any security
into which it is convertible or for which it is
exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part,
on or prior to August 1, 2009.
"DISTRIBUTION" means, for purposes of
Articles 10 and 11, a distribution consisting of cash,
securities or other property, by set-off or otherwise.
"EQUITY INTERESTS" means Capital Stock and
all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ESCROW AGREEMENT" means the Escrow Agreement
between the Company, the Trustee and National
Westminster Bank NJ, as escrow agent, substantially in
the form of Exhibit D hereto.
"EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
"EXCESS NON-RECOURSE SUBSIDIARY CASH
PROCEEDS" means 50% of all cash received by the Company
or any Restricted Subsidiary from any Non-Recourse
Subsidiary (other than cash that is or may be required
to be returned or repaid to such Non-Recourse
Subsidiary) in excess of $125 million in the aggregate.
"EXISTING HOTEL CASINOS" means the Las Vegas
Showboat and the Atlantic City Showboat.
"EXISTING INDEBTEDNESS" means Indebtedness of
the Company or its Restricted Subsidiaries (other than
under the Working Capital Credit Agreement) in
existence on the date of the Indenture, until such
amounts are repaid, including without limitation, the
First Mortgage Bonds.
"EXISTING MANAGEMENT" means J. K. Houssels,
members of his family and his estate.
"FIRST MORTGAGE BOND INDENTURE" means the
Indenture, dated as of May 18, 1993, among the Company,
the Guarantors and IBJ Schroeder Bank & Trust Company,
as amended, pursuant to which the First Mortgage Bonds
were issued.
"FIXED CHARGES" means, with respect to any
Person for any period, the sum of (a) consolidated
interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued,
to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of
original issue discount, non-cash interest payments and
the interest component of capital leases but excluding
amortization of deferred financing fees and excluding
capitalized interest) and (b) the product of (i) all
cash dividend payments (and non-cash dividend payments
in the case of a Person that is a Subsidiary) on any
series of preferred stock of such Person, times (ii) a
fraction, the numerator of which is one and the
denominator of which is one minus the then current
combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a
consolidated basis for such Person and its Restricted
Subsidiaries and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with
respect to any Person for any period, the ratio of the
Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period;
PROVIDED that (a) in the event that the Company or any
of its Restricted Subsidiaries incurs, assumes,
guarantees or redeems any Indebtedness (other than
revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but
prior to the event for which the calculation of the
Fixed Charge Coverage Ratio is made, then the Fixed
Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee
or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had
occurred at the beginning of the applicable period, (b)
in making such computation, the Fixed Charges of such
Person attributable to interest on any Indebtedness
bearing a floating interest rate shall be computed on a
pro forma basis as if the rate in effect on the date of
computation had been the applicable rate for the entire
period, (c) in making such computation, the Fixed
Charges of such Person attributable to interest on any
Indebtedness under a revolving credit facility shall be
computed on a pro forma basis based upon the average
daily balance of such Indebtedness outstanding during
the applicable period, (d) in the event that the
Company or any of its Restricted Subsidiaries
consummates a Material Acquisition or an Asset Sale
subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated,
then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such material
acquisition or Asset Sale (including the incurrence of
any Indebtedness in connection therewith), as if the
same had occurred at the beginning of the applicable
period and in the event that the Company or any of its
Restricted Subsidiaries purchases any assets or
property (including the real property on which the
Atlantic City Showboat is situated) which was
previously leased by the Company or any of its
Restricted Subsidiaries subsequent to the commencement
of the period for which the calculation of the Fixed
Charge Coverage Ratio is being calculated but prior to
the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to
such purchase as if the same had occurred at the
beginning of the applicable period.
"GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American
Institute of Certified Public Accountants and
statements and pronouncements of the Financial
Accounting Standards Board or in such other statements
by such other entity as approved by a significant
segment of the accounting profession, which are in
effect from time to time.
"GAMING AUTHORITY" means any agency,
authority, board, bureau, commission, department,
office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any
state, province or any city or other political
subdivision or otherwise and whether now or hereafter
in existence, or any officer or official thereof,
including, without limitation, the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the
City Council of the City of Las Vegas, and the New
Jersey Casino Control Commission with authority to
regulate any gaming operation (or proposed gaming
operation) owned, managed or operated by the Company or
any of its Subsidiaries.
"GAMING RELATED BUSINESS" means the gaming
business and other businesses necessary for, incident
to, connected with or arising out of the gaming
business (including developing and operating lodging
facilities, sports or entertainment facilities,
transportation services or other related activities or
enterprises and any additions or improvements thereto).
"GUARANTORS" means each of (i) SBOC, OSI and
ACSI and (ii) any other Subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions
of the Indenture, and their respective successors and
assigns until any of them shall be released from their
obligations as a Guarantor pursuant to the terms of
this Indenture.
"HEDGING OBLIGATIONS" means, with respect to
any Person, the obligations of such Person under (i)
interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii)
other agreements or arrangements designed to protect
such Person against fluctuations in interest rates.
"HOLDER" means a Person in whose name a Note
is registered.
"INDEBTEDNESS" of any Person means, without
duplication, (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the
payment of which such Person is responsible or liable;
(ii) all capitalized lease obligations of such Person;
(iii) all obligations of such Person issued or assumed
as the deferred purchase price of property, all
conditional sale obligations of such Person and all
obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising
in the ordinary course of business); (iv) all
obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with
respect to letters of credit securing obligations
(other than obligations described in clauses (i), (ii)
and (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of
credit are not drawn upon or, if and to the extent
drawn upon, 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); (v) the amount of all obligations of
such Person with respect to the redemption, repayment
or other repurchase of any Disqualified Stock (but
excluding any accrued distributions or dividends); (vi)
all obligations existing at the time under Hedging
Obligations, foreign currency hedges and similar
agreements; (vii) all obligations of the type referred
to in clauses (i) through (vi) of other Persons and all
dividends and distributions of other Persons for the
payment of which, in either case, such Person is
responsible or liable as obligor, guarantor or
otherwise; and (viii) all obligations of the type
referred to in clauses (i) through (vi) of other
Persons secured by any Lien on any property or asset of
such Person (whether or not such obligation is assumed
by such Person), the amount of such obligation being
deemed to be the lesser of the value of such property
or assets or the amount of the obligation so secured.
"INDENTURE" means this Indenture, as amended
or supplemented from time to time.
"INVESTMENT GRADE SECURITIES" means (i)
Marketable Securities, (ii) any other debt securities
or debt instruments with a rating of "BBB-" (the lowest
investment grade rating by S&P) or higher by S&P, "Baa-
3" (the lowest investment grade rating by Moody's) or
higher by Moody's or the equivalent of such rating by
any other nationally recognized securities rating
agency, and (iii) any fund investing exclusively in
investments of the types described in clauses (i) and
(ii) above.
"INVESTMENT GUARANTEE" means, with respect to
any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to
any Indebtedness of another Person, including, without
limitation, any Indebtedness directly or indirectly
guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or
indirectly liable, or any other obligation under which
any contract which, in economic effect, is
substantially equivalent to a guarantee, including,
without limitation, any Indebtedness of a partnership
in which such Person is a general partner or of a joint
venture in which such Person is a joint venturer, and
any Indebtedness in effect guaranteed by such Person
through any agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire such
Indebtedness or any security therefor, or to provide
funds for the payment or discharge of such Indebtedness
(whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other
financial condition of the obligor of such
Indebtedness, or to make payment for any products,
materials or supplies or for any transportation or
services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose
or intent of such agreement is to provide assurance
that such Indebtedness will be paid or discharged, or
that any agreements relating thereto will be complied
with, or that the holders of such Indebtedness will be
protected against loss in respect thereof.
"INVESTMENTS" means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the forms of loans,
Investment Guarantees, advances or capital
contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or
other securities and all other items that are or would
be classified as investments on a balance sheet
prepared in accordance with GAAP.
"ISSUE DATE" means August 10, 1994, the date
on which the Notes are first authenticated and issued.
"LAS VEGAS SHOWBOAT" means (i) the Company's
hotel casino and related properties at 2800 Fremont
Street, Las Vegas, Nevada and any Project Expansion
relating thereto and (ii) any contiguous property
acquired by the Company or any of its Subsidiaries and
any Project Expansion relating thereto.
"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 for the intervening period.
"LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or
other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell
or give a security interest in and any filing of or
agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"MANAGED ENTITY" mean either (i) any Person
that is not under Third-Party Management, so long as
such Person is not under Third-Party Management or (ii)
a Person that the Company or any Subsidiary has a
contract to manage the day-to-day gaming operations and
affairs, so long as such contract remains in effect.
"MANAGEMENT CONTRACT APPROVAL" means, with
respect to the Sydney Harbour Casino, a binding
agreement with SHCL that provides that the Company or a
Person at least 80% of whose equity interests are owned
by the Company or a wholly-owned Subsidiary (other than
a Non-Recourse Subsidiary) will manage the gaming
operations of the Sydney Harbour Casino for a period of
not less than 12 years.
"MARKETABLE SECURITIES" means (1) U.S.
Government Obligations; (2) any certificate of deposit,
maturing not more than 270 days after the date of
acquisition, issued by, or time deposit of, a
commercial banking institution that has combined
capital and surplus of not less than $100,000,000 or
its equivalent in foreign currency, whose debt is rated
at the time as of which any investment is made, of "A"
(or higher) according to S&P or Moody's, or if none of
S&P or Moody's shall then exist, the equivalent of such
rating by any other nationally recognized securities
rating agency; (3) commercial paper, maturing not more
than 270 days after the date of acquisition, issued by
a corporation (other than an Affiliate or Subsidiary of
the Company) with a rating, at the time as of which any
investment therein is made, of "A-1" (indicating that
the degree of timely payment is strong) (or higher)
according to S&P or "P-1" (having a superior capacity
for punctual repayment of short-term promissory
obligations) (or higher) according to Moody's, or if
neither of S&P and Moody's shall then exist, the
equivalent of such rating by any other nationally
recognized securities ratings agency; (4) any bankers
acceptances or any money market deposit accounts, in
each case, issued or offered by any commercial bank
having capital and surplus in excess of $100,000,000 or
its equivalent in foreign currency, whose debt is rated
at the time as of which any investment there is made of
"A" (an upper medium grade bond obligation) (or higher)
according to S&P or Moody's, or if none of S&P or
Moody's shall then exist, the equivalent of such rating
by any other nationally recognized securities rating
agency and (5) any fund investing exclusively in
investments of the types described in clauses (1)
through (4) above, and if such fund has at least
$500,000,000 under management, including investments in
repurchase obligations of the foregoing investments.
"MATERIAL ACQUISITION" means any acquisition
of a business, including the acquisition of operating
commercial real estate, that has a fair market value in
excess of $3.0 million and which the Company intends to
continue to operate.
"NET INCOME" means, with respect to any
Person, the net income (loss) of such Person,
determined in accordance with GAAP, excluding, however,
(i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss),
realized in connection with any Asset Sale (including,
without limitation, dispositions pursuant to sale and
leaseback transactions), (ii) any extraordinary gain
(but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss), and
(iii) any loss on the retirement of the 11 3/8 %
Mortgage-Backed Bonds Due 2002 of Ocean Showboat
Finance Corporation (including write off of associated
deferred financing charges).
"NET PROCEEDS" means the aggregate cash
proceeds received by the Company or any of its
Restricted Subsidiaries in respect of any Asset Sale
(including insurance proceeds), net of the direct costs
relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking
fees, and sales commissions) and any relocation
expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account
any available tax credits or deductions and any tax
sharing arrangements), amounts required to be applied
to the repayment of Indebtedness secured by a Lien on
the asset or assets which are the subject of such Asset
Sale and any reserve for adjustment in respect of the
sale price of such asset or assets.
"NON-RECOURSE DEBT" means Indebtedness or
that portion of Indebtedness (a) as to which none of
the Company, the Guarantors and any of their respective
Restricted Subsidiaries: (i) provides credit support
(including any undertaking, agreement or instrument
which would constitute Indebtedness); (ii) is directly
or indirectly liable; and (iii) constitutes the lender;
and (b) no default with respect to which (including any
rights which the holders thereof may have to take
enforcement action against a Non-Recourse Subsidiary)
would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company, the
Guarantors or any of their respective 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.
"NON-RECOURSE SUBSIDIARY" means any Non-
Recourse Subsidiary under the First Mortgage Bonds on
the Issue Date and (i) a Subsidiary or (ii) any entity
in which the Company or any of its Subsidiaries has an
equity investment and pursuant to a contract or
otherwise has the right to direct the day-to-day
operation of such entity that, in the case of (i) or
(ii), (a) at the time of its designation as a Non-
Recourse Subsidiary has not acquired any assets (other
than as specifically permitted by the "Restricted
Payments" covenant), at any previous time, directly or
indirectly from the Company, any of the Guarantors, or
any of their respective Subsidiaries, (b) does not own,
operate or manage any portion or any Existing Hotel
Casino on the Issue Date, and (c) has no Indebtedness
other than Non-Recourse Indebtedness, PROVIDED that at
the time of such designation, after giving pro forma
effect to such designation as if it occurred at the
beginning of the applicable four-quarter period, the
Company's Fixed Charge Coverage Ratio is not less than
70% of the Company's Fixed Charge Coverage Ratio
immediately prior to such designation.
"NOTES" means the 13% Senior Subordinated
Notes due 2009, as amended or supplemented from time to
time pursuant to the terms of this Indenture, that are
issued under this Indenture (whether issued on or after
the date of the Indenture).
"OBLIGATIONS" means any principal, premium,
interest (including post-petition interest), penalties,
fees, indemnifications, reimbursements, damages and
other monetary liabilities payable under the
documentation governing any Indebtedness.
"OFFICER" means, with respect to any Person,
the Chairman of the Board, the Chief Executive Officer,
the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary, Assistant
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.
"PARI PASSU INDEBTEDNESS" means senior
subordinated Indebtedness of the Company or its
Restricted Subsidiaries permitted by the covenant
entitled "Incurrence of Indebtedness and Issuance of
Disqualified Stock," other than the Notes which is pari
passu in right of payment with the Notes or the
Subsidiary Guarantees.
"PERMITTED INVESTMENTS" means (a) any
Investments in the Company, in a Wholly Owned
Restricted Subsidiary of the Company or in a Guarantor;
(b) any Investments in Marketable Securities; and (c)
Investments by the Company or any Subsidiary of the
Company in any Person, if as a result of such
Investment (i) such Person becomes a Wholly Owned
Restricted Subsidiary of the Company or a Guarantor or
(ii) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, the Company or
a Wholly Owned Subsidiary of the Company or a
Guarantor.
"PERMITTED LIENS" means (a) Liens in favor of
the Company; (b) Liens on property of a Person existing
at the time such Person is merged into or consolidated
with the Company or any Subsidiary of the Company;
PROVIDED, that such Liens were in existence prior to
the contemplation of such merger or consolidation and
less than one year prior to such Person becoming merged
into or consolidated with the Company or any of its
Subsidiaries; (c) Liens on property existing at the
time of acquisition thereof by the Company or any
Subsidiary of the Company; PROVIDED, that such Liens
were in existence prior to the contemplation of such
acquisition and less than one year prior to such
acquisition; (d) Liens to secure the performance of
statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (e) Liens
for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; PROVIDED,
that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have
been made therefor; (f) ground leases in respect of the
real property on which facilities owned or leased by
the Company or any of its Subsidiaries are located; (g)
Liens arising from UCC financing statements regarding
property leased by the Company or any of its
Subsidiaries; (h) easements, rights-of-way,
navigational servitudes, restrictions, minor defects or
irregularities in title and other similar charges or
encumbrances which do not interfere in any material
respect with the ordinary conduct of business of the
Company and its Subsidiaries; (i) Liens securing
purchase money obligations incurred or assumed in
connection with the purchase of real or Personal
property to be used in the business of the Company or
any of its Restricted Subsidiaries within 180 days of
such incurrence or assumption and (j) Liens on the real
property underlying the Atlantic City Showboat securing
the Resorts Bonds PROVIDED that the obligations under
the Resorts Bonds can be assumed under the "Incurrence
of Indebtedness and Issuance of Disqualified Stock"
covenant at the time that real property is acquired by
the Company or any of its Subsidiaries.
"PERSON" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any
other entity.
"PROJECT EXPANSION" means any addition,
improvement, extension or capital repair to the Las
Vegas Showboat or the Atlantic City Showboat or any
contiguous or adjacent property, including the
purchases of real estate or improvements thereon; but
excluding separable furniture.
"QUALIFIED NATIVE AMERICAN GAMING PROJECT"
means any Gaming Related Business in the United States
owned by a tribe or band of Native Americans in which
the Company or a Subsidiary holds a management contract
to manage or operate the day-to-day casino or gaming
operations.
"REFINANCING DISQUALIFIED STOCK" means
Disqualified Stock issued in exchange for, or the
proceeds of which are used, to extend, refinance,
renew, replace, defease or refund Disqualified Stock
permitted to be issued pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09 hereof or
Disqualified Stock referred to in clause (c) of the
second paragraph of Section 4.09 hereof.
"REFINANCING INDEBTEDNESS" means Indebtedness
issued in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace, defease or
refund Indebtedness permitted to be incurred pursuant
to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of Section 4.09 hereof or
Indebtedness referred to in clause (vi) of the second
paragraph of Section 4.09 hereof.
"REGULAR QUARTERLY DIVIDEND" means the
quarterly dividend determined by the Board of Directors
of the Company in its reasonable judgment to be its
regular and normal quarterly dividend and paid by the
Company in accordance with the Company's prior business
practices in an amount per share not to exceed $0.10
per fiscal year (or the equivalent thereof after giving
effect to any stock splits, stock dividends or
recapitalizations of the Common Stock after June 17,
1994).
"REPRESENTATIVE" means, for purposes of
Articles 10 and 11, the indenture trustee or other
trustee, agent or representative for any Senior
Indebtedness or, with respect to any Guarantor, for any
Senior Indebtedness of such Guarantor.
"RESORTS BONDS" means, the First Mortgage
Non-Recourse Pass-Through Notes due June 30, 2000 of
Resorts.
"RESPONSIBLE OFFICER" when used with respect
to the Trustee, means any officer within the Corporate
Trust Administration of the Trustee (or any successor
group of the Trustee) or any other officer of the
Trustee customarily performing functions similar to
those performed by any of the above designated officers
and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity
with the particular subject.
"RESTRICTED INVESTMENT" means an Investment
other than a Permitted Investment.
"RESTRICTED SUBSIDIARY" means any Subsidiary
of the Company that is not a Non-Recourse Subsidiary.
"SEC" means the Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of
1933, as amended.
"SHCL" means Sydney Harbour Casino Holdings
Limited, a New South Wales corporation.
"SENIOR DEBT" means (a) with respect to the
Company, (i) the Obligations of the Company with
respect to the Working Capital Credit Agreement and
First Mortgage Bonds and (ii) any other Indebtedness
permitted to be incurred by the Company under the terms
of the Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that
it is pari passu with or subordinated in right of
payment to the Notes, and (b) with respect to any
Guarantor, (i) the Obligations of such Guarantor with
respect to the Working Capital Credit Agreement and
First Mortgage Bonds, (ii) any Guarantee by such
Guarantor of any Senior Debt of the Company and (iii)
any other Indebtedness permitted to be incurred by such
Guarantor under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred
expressly provides that it is pari passu with or
subordinated in right of payment to the Subsidiary
Guarantee of such Guarantor. Notwithstanding anything
to the contrary in the foregoing, Senior Debt shall not
include (v) any obligation of the Company or any
Guarantor to, in respect of or imposed by any
environmental, landfill, waste management or other
regulatory or governmental agency, statute, law or
court order, (w) any liability for federal, state,
local or other taxes owed or owing by the Company or
any Guarantor, (x) any Indebtedness of the Company or
any Guarantor to any of the Company's Subsidiaries or
other Affiliates, (y) any trade payables or (z) any
Indebtedness that is incurred in violation of the
Indenture on or after the date of the Indenture.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary
that would be a "significant subsidiary" as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on
the date hereof.
"SUBSIDIARY" means, with respect to any
Person, (i) any corporation, association or other
business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency)
to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a
combination thereof and (ii) any Non-Recourse
Subsidiary.
"SUBSIDIARY GUARANTEE" means each guarantee
of the Notes by a Guarantor pursuant to Article 10
hereof.
"SYDNEY HARBOUR CASINO" means all of SHCL's
interest in its proposed casino and related properties
located in Sydney, Australia.
"TAX SHARING AGREEMENT" means the Tax Sharing
Agreement, substantially in the form attached as an
exhibit to the Indenture, as amended, supplemented or
modified from time to time as permitted by the
Indenture.
"TIA" means the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the
date on which this Indenture is qualified under the
TIA, except as provided in Section 9.03 hereof.
"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.
"THIRD-PARTY MANAGEMENT" with respect to any
Person means that the day-to-day affairs or business
operations of such Person are managed by a third party
that is not the Company or any of its Subsidiaries.
"U.S. GOVERNMENT OBLIGATIONS" means
securities that are (a) direct obligations of the
United States of America for the timely payment of
which its full faith and credit is pledged or (b)
obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United
States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in
either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S.
Government Obligation or a specific payment of
principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of
the holder of such depository receipt; PROVIDED that
(except as required by law) such custodian is not
authorized to make any deduction from the amount
payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government
Obligation evidenced by such depository receipt.
"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;
PROVIDED, HOWEVER, that with respect to any revolving
Indebtedness, the foregoing calculation of Weighted
Average Life to Maturity shall be determined based upon
the total available commitments and the required
reductions of commitments in lieu of the outstanding
principal amount and the required payments of
principal, respectively.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any
Person means a Restricted Subsidiary of such Person all
of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by
one or more Wholly Owned Restricted Subsidiaries of
such Person.
"WHOLLY OWNED SUBSIDIARY" of any Person means
a Subsidiary of such Person all of the outstanding
Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the
time be owned by such Person or by one or more Wholly
Owned Subsidiaries of such Person and one or more
Wholly Owned Subsidiaries of such Person.
"WORKING CAPITAL CREDIT AGREEMENT" means that
certain Credit Agreement, dated as of September 30,
1992, by and among ACSI and National Westminster Bank,
including any related notes, guarantees, collateral
documents, instruments and agreements executed in
connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced
from time to time.
<TABLE>
<CAPTION>
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
<C> <C>
"Affiliate Transaction" 4.11
"Benefitted Party" 10.01
"Commencement Date" 3.09
"Covenant Defeasance" 8.03
"Custodian" 4.13
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Guarantor" 10.01
"Guarantor Payment Blockage Notice" 10.04
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Blockage Notice" 11.03
"Payment Default" 6.01
"Purchase Date" 3.09
"Purchase Offer" 3.09
"Registrar" 2.03
"Restricted Payments" 4.07
</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, other than those
provisions of the TIA that may be excluded herein,
which provision shall be excluded to the extent
specifically excluded in this Indenture.
The following TIA terms used in this Indenture have
the following meanings:
"INDENTURE SECURITIES" means the Notes and the
Subsidiary Guarantees, if any;
"INDENTURE SECURITY HOLDER" means a Holder of a
Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE"
means the Trustee;
"OBLIGOR" on the Notes means the Company, the
Guarantors and any successor obligor upon the Notes or
any Subsidiary Guarantee, as the case may be.
All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another
statute or defined by a rule or regulation promulgated
by the SEC under the TIA have the meanings so assigned
to them.
SECTION 1.04.RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1)a term has the meaning assigned to it;
(2)an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3)"or" is not exclusive;
(4)words in the singular include the plural, and
words in the plural include the singular;
(5)provisions apply to successive events and
transactions; and
(6)references to sections of or rules under the
Securities Act or the Exchange 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.
The Notes and the Trustee's certificate of
authentication shall be substantially in the form of
Exhibit A hereto, the terms of which are incorporated
in and made a part of this Indenture. The notation on
each Note relating to any Subsidiary Guarantee shall be
substantially in the form set forth on Exhibit C, which
is part of this Indenture. The Notes may have
notations, legends or endorsements approved as to form
by the Company and required by law, stock exchange
rule, agreements to which the Company or any Guarantor
is subject, or usage. Each Note shall be dated the
date of its authentication. The Notes shall be
issuable only in denominations of $1,000 and integral
multiples thereof.
SECTION 2.02.EXECUTION AND AUTHENTICATION.
Two Officers of the Company 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. An Officer of each Guarantor
shall sign any Subsidiary Guarantee for such Guarantor
by manual or facsimile signature.
If an Officer of the Company or any Guarantor whose
signature is on a Note or a Subsidiary Guarantee, as
the case may be, no longer holds that office at the
time the Note is authenticated, the Note or the
Subsidiary Guarantee, as the case may be, shall
nevertheless be valid.
A Note shall not be valid until authenticated by
the manual signature of the Trustee. The signature of
the Trustee shall be conclusive evidence that the Note
has been authenticated under this Indenture. The form
of Trustee's certificate of authentication to be borne
by the Notes shall be substantially as set forth in
Exhibit A hereto.
The Trustee shall, upon a written order of the
Company signed by two Officers of the Company,
authenticate Notes for original issue up to an
aggregate principal amount stated in paragraph 4 of the
Notes. The aggregate principal amount of Notes
outstanding at any time shall not exceed the amount set
forth in paragraph 4 of the Notes, except as provided
in Section 2.07 hereof.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes.
Unless limited by the terms of such appointment, 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 the
Company or any Guarantor or an Affiliate of the Company
or any Guarantor.
SECTION 2.03.REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency
where Notes may be presented for registration of trans-
fer or for exchange (including any co-registrar, the
"REGISTRAR") and (ii) an office or agency where Notes
may be presented for payment ("PAYING AGENT"). The
Registrar shall keep a register of the Notes and of
their transfer and exchange. The Company may appoint
one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any
additional paying agent. The Company may change any
Paying Agent, Registrar or co-registrar without prior
notice to any Holder of a Note. The Company shall
notify the Trustee and the Trustee shall notify the
Holders of the name and address of any Agent not a
party to this Indenture. The Company or any Guarantor
may act as Paying Agent, Registrar or co-registrar.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture,
which shall be subject to any obligations imposed by
the provisions of the TIA. The agreement shall
implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee of
the name and address of any such Agent. If the Company
fails to maintain a Registrar or Paying Agent, or fails
to give the foregoing notice, the Trustee shall act as
such, and shall be entitled to appropriate compensation
and indemnity in accordance with Section 7.07 hereof.
The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of
notices and demands in connection with the 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 shall hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, premium, if any,
and interest on the Notes, and shall notify the Trustee
of any Default by the Company or any Guarantor 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 Guarantor, if any) shall have no further liability
for the money delivered to the Trustee. If the Company
or any Guarantor 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
proceeding relating to the Company or any Guarantor,
the Trustee shall serve as Paying Agent for the Notes
and the Company shall forward to the Trustee all money
for the benefit of the Holders.
SECTION 2.05.LISTS OF HOLDERS.
The Trustee shall preserve in as current a form as
is reasonably practicable the most recent list
available to it of the names and addresses of Holders
and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company and/or
any Guarantor 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 Holders, including the aggregate principal
amount of the Notes held by each thereof, and the
Company and each Guarantor, if any, shall otherwise
comply with TIA Section 312(a).
SECTION 2.06.TRANSFER AND EXCHANGE.
When Notes are presented to the Registrar with a
request to register the transfer or to exchange them
for an equal principal amount of Notes of other
denominations, the Registrar shall register the trans-
fer or make the exchange if its requirements for such
transactions are met; PROVIDED, HOWEVER, that any Note
presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to
the Registrar duly executed by the Holder thereof or by
his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company
shall issue and the Trustee shall authenticate Notes at
the Registrar's request, subject to such rules as the
Trustee may reasonably require.
Neither the Company nor the Registrar shall be
required to (i) issue, register the transfer of or
exchange Notes during a period beginning at the opening
of business on a Business Day 15 days before the day of
any selection of Notes for redemption or purchase under
Sections 3.02 or 3.09 hereof or (ii) register the
transfer of or exchange any Note so selected for
redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part.
No service charge shall be made to any Holder of a
Note for any registration of transfer or exchange
(except as otherwise expressly permitted herein), 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 such
transfer tax or similar governmental charge payable
upon exchanges pursuant to Sections 2.10, 3.06 or 9.05
hereof, which shall be paid by the Company).
Prior to due presentment to the Trustee for
registration of the transfer of any Note, the Trustee,
any Agent, the Company and any Guarantor 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, premium, if any, and
interest on such Note and for all other purposes
whatsoever, whether or not such Note is overdue, and
none of the Trustee, any Agent, the Company or any
Guarantor shall be affected by notice to the contrary.
SECTION 2.07.REPLACEMENT NOTES.
If any mutilated Note is surrendered to the
Trustee, or the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss
or theft of any Note, the Company shall issue and the
Trustee, upon the written order of the Company signed
by two Officers of the Company, shall authenticate a
replacement Note (accompanied by a notation of the
Subsidiary Guarantee duly endorsed by the Guarantors,
if applicable) if the Trustee's requirements for
replacements of Notes are met. If required by the
Trustee, the Company or the Guarantors an indemnity
bond must be supplied by the Holder that is sufficient
in the judgment of the Trustee, the Company and the
Guarantors to protect the Company, the Guarantors, the
Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Note is
replaced. Each of the Company, the Guarantors and the
Trustee may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation
of the Company and the Guarantors and shall be entitled
to all of the benefits of this Indenture equally and
ratably with all other Notes duly issued hereunder.
SECTION 2.08.OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those
described in this Section 2.08 as not outstanding.
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.
Subject to Section 2.09 hereof, a Note does not
cease to be outstanding because the Company, a
Subsidiary of the Company or an Affiliate of the
Company holds the Note.
SECTION 2.09.TREASURY NOTES.
In determining whether the Holders of the required
principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the
Company, any Guarantor, any of their respective
Subsidiaries or any Affiliate of the Company or any
Guarantor shall be considered as though not
outstanding, except that for purposes of determining
whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which
a Responsible Officer knows to be so owned shall be so
considered. Notwithstanding the foregoing, Notes that
are to be acquired by the Company, any Guarantor, any
Subsidiary of the Company or any Affiliate of the
Company pursuant to an exchange offer, tender offer or
other agreement shall not be deemed to be owned by the
Company, such Guarantor, such Subsidiary of the Company
or such Affiliate of the Company until legal title to
such Notes passes to the Company, such Guarantor, such
Subsidiary of the Company or such Affiliate of the
Company as the case may be.
With respect to any Notes beneficially owned by the
Company or any of its Wholly Owned Subsidiaries (other
than any Non-Recourse Subsidiary), any accrued interest
due and payable on such Notes shall be deemed to have
been paid by the Company to itself or to its Wholly
Owned Subsidiary (other than any Non-Recourse
Subsidiary) on the date on which such interest payment
is due and the Company may deduct from the interest
payment payable to the other Holders all accrued
interest payments on such Notes; PROVIDED that (i) such
Notes are registered in the name of the Company or such
Wholly Owned Subsidiary at the close of business on the
applicable record date and (ii) at least ten Business
Days prior to the date on which such interest payment
is to be made, the Company delivers to the Trustee an
Officers' Certificate certifying that such Notes were
registered in the name of the Company or such Wholly
Owned Subsidiary at the close of business on the
applicable record date.
SECTION 2.10.TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate
temporary Notes (accompanied by a notation of the
Subsidiary Guarantee duly endorsed by the Guarantors,
if applicable). Temporary Notes shall be substantially
in the form of definitive Notes but may have variations
that the Company and the Trustee consider appropriate
for temporary Notes. Without unreasonable delay, the
Company shall prepare and the Trustee, upon receipt of
the written order of the Company signed by two Officers
of the Company, shall authenticate definitive Notes
(accompanied by a notation of the Subsidiary Guarantee
duly endorsed by the Guarantors, if applicable) in
exchange for temporary Notes. Until such exchange,
temporary Notes shall be entitled to the same rights,
benefits and privileges as definitive Notes.
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 surren-
dered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention
requirement of the Exchange Act), unless the Company
directs cancelled Notes to be returned to it. The
Company may not issue new Notes to replace Notes that
it has redeemed or paid or that have been delivered to
the Trustee for cancellation. All cancelled Notes held
by the Trustee shall be destroyed and certification of
their destruction delivered to the Company, unless by a
written order, signed by two Officers of the Company,
the Company shall direct that cancelled Notes be
returned to it.
SECTION 2.12.DEFAULTED INTEREST.
If the Company or any Guarantor defaults in a
payment of interest on the Notes, the Company or such
Guarantor (to the extent of their obligations under the
Subsidiary Guarantees) 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, which date shall be at the earliest practicable
date but in all events at least five Business Days
prior to the payment date, in each case at the rate
provided in the Notes and in Section 4.01 hereof. The
Company shall fix or cause to be fixed each such
special record date and payment date, and shall,
promptly thereafter, notify the Trustee of any such
date. At least 15 days before the special record date,
the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to Holders a notice
that states the special record date, the related
payment date and the amount of such interest to be
paid.
SECTION 2.13.RECORD DATE.
The record date for purposes of determining the
identity of Holders entitled to vote or consent to any
action by vote or consent authorized or permitted under
this Indenture shall be determined as provided for in
TIA Section 316(c).
SECTION 2.14.CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP"
number and, if it does so, the Trustee shall use the
CUSIP number in notices of redemption or exchange as a
convenience to Holders; PROVIDED that any such notice
may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in
the notice or on the Notes and that reliance may be
placed only on the other identification numbers printed
on the Notes. The Company will promptly notify the
Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND OFFERS TO PURCHASE
SECTION 3.01.NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to
the optional redemption provisions of Section 3.07
hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the
section 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.
If the Company is required to make an offer to
purchase Notes pursuant to the provisions of
Sections 4.10, 4.15 or 4.19 it shall furnish to the
Trustee, at least 30 days before the scheduled purchase
date, an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the offer
to purchase shall occur, (ii) the offer's terms, (iii)
the purchase price, (iv) the principal amount of the
Notes that may be purchased, and (v) further setting
forth a statement to the effect that (a) the Company or
one of its Subsidiaries has made an Asset Sale and
there are Excess Proceeds aggregating more than $10.0
million and the amount of such Excess Proceeds, (b) a
Change of Control has occurred or (c) that Australian
Gaming Approval and Management Contract Approval had
not been obtained by the first anniversary of the Issue
Date.
SECTION 3.02.SELECTION OF NOTES TO BE PURCHASED OR
REDEEMED.
If less than all of the Notes are to be purchased
in an Asset Sale Offer or redeemed at any time, the
Trustee shall select the Notes to be purchased or
redeemed among the applicable Holders 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 by such method as the Trustee
considers fair and appropriate. In the event of
partial redemption in the manner provided above, 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. In the event that less than all
of the Notes properly tendered in an Asset Sale Offer
are to be purchased, the particular Notes to be
purchased shall be selected promptly upon the
expiration of such Asset Sale Offer.
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 purchase or
redemption, the principal amount thereof to be
purchased or 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 purchased or redeemed, the entire
outstanding amount of Notes held by such Holder, even
if not a multiple of $1,000, shall be purchased or
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.
In the event the Company is required to make an
Asset Sale Offer pursuant to Sections 3.09 and 4.10
hereof and the amount of Excess Proceeds to be applied
to such purchase would result in the purchase of a
principal amount of Notes which is not evenly divisible
by $1,000, the Trustee shall promptly refund to the
Company the portion of such Excess Proceeds that is not
necessary to purchase the immediately lesser principal
amount of Notes that is so divisible.
SECTION 3.03.NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a
purchase or redemption date, 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 redemp-
tion price;
(f)that, unless the Company defaults in making such
redemption payment, interest on Notes called for
redemption ceases to accrue on and after the
redemption date;
(g)the paragraph of the Notes and/or Section of
this Indenture pursuant to which the Notes called for
redemption are being redeemed; and
(h)that no representation is made as to the
correctness or accuracy of the CUSIP number, if any,
listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give
the notice of redemption in the Company's name and at
its expense; PROVIDED, HOWEVER, that the Company shall
have delivered to the Trustee, at least 45 days prior
to the redemption date, an 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 OR PURCHASE PRICE.
On or prior to any redemption date or purchase date
with respect to an offer to purchase the Notes required
hereunder, the Company shall deposit with the Trustee
or with the Paying Agent money sufficient to pay the
redemption or purchase price of and accrued interest on
all Notes to be redeemed or purchased 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 or purchase
price of, and accrued interest on, all Notes to be
redeemed or purchased.
If the Company complies with the provisions of the
preceding paragraph, on and after the redemption or
purchase date, interest shall cease to accrue on the
Notes or the portions of Notes called for redemption,
whether or not such Notes are presented for payment or
on the Notes or the portions of Notes tendered on any
offer to purchase. If a Note is redeemed or purchased
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 a redemption or purchase date
is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest shall accrue
for the period from such redemption date to such
succeeding Business Day. If any Note called for
redemption or tendered for purchase shall not be so
paid upon surrender for redemption or such tender
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 OR PURCHASED IN PART.
Upon surrender of a Note that is redeemed or
purchased 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 (accompanied by a notation of the
Subsidiary Guarantee duly endorsed by the Guarantors,
if applicable) equal in principal amount to the
unredeemed or unpurchased 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
August 1, 2001. 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 thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month
period beginning on August 1 of the years indicated
below:
<TABLE>
<C> <C>
PERCENTAGE YEAR
........................................2001
103.900%
........................................2002
102.600%
........................................2003
101.300%
........................................2004 and
thereafter................................... 100.000%
</TABLE>
(b)Notwithstanding any other provision hereof, if
any Gaming Authority requires that a Holder or
beneficial owner of Notes must be licensed, qualified
or found suitable under any applicable gaming law and
such Holder or beneficial owner fails to apply for a
license, qualification or a finding of suitability
within 30 days after being requested to do so by the
Gaming Authority (or such lesser period that may be
required by such Gaming Authority), or if such Holder
or such beneficial owner is not so licensed, qualified
or found suitable, the Company shall have the right, at
its option (i) to require such Holder or beneficial
owner to dispose of such Holder's or beneficial owner's
Notes within 30 days of receipt of such notice of such
finding by the applicable Gaming Authority or such
earlier date as may be ordered by such Gaming Authority
or (ii) to call for the redemption of the Notes of such
Holder or beneficial owner at the lesser of the
principal amount thereof or the price at which such
Holder or beneficial owner acquired the Notes, together
with, in either case, accrued interest to the earlier
of the date of redemption or such earlier date as may
be required by such Gaming Authority or the date of the
finding of unsuitability by such Gaming Authority,
which may be less than 30 days following the notice of
redemption, if so ordered by such Gaming Authority.
Notwithstanding the foregoing, upon receipt of notice
from a Gaming Authority that any Holder is disqualified
or unsuitable, it shall be unlawful for any such
disqualified or unsuitable Holder: (i) to receive any
dividends or interest upon the Notes; (ii) to exercise,
directly or through any trustee or nominee, any right
conferred by the Notes; or (iii) to receive any
remuneration in any form from the Company or its
Subsidiaries for services rendered or otherwise. The
Company shall notify the Trustee in writing of any such
redemption as soon as practicable and the redemption
price of each Note to be redeemed. The Trustee shall
not be deemed to have knowledge of the existence of any
disqualified Holder unless and until it receives
written notice thereof from the Company. The Holder of
Notes or beneficial owner applying for a license,
qualification or a finding of suitability shall pay all
costs of the licensure or investigation for such
qualification or finding of suitability. The Company
shall not be required to pay or reimburse any Holder of
the Notes or beneficial owner who is required to apply
for such license, qualification or finding of
suitability for the costs of the licensure or
investigation for such qualification or finding of
suitability. Such expense shall be the obligation of
such Holder or beneficial owner.
(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.MANDATORY REDEMPTION.
The Company shall not be required to make mandatory
redemption or sinking fund payments with respect to the
Notes prior to the maturity of the Notes (whether at
final maturity or upon acceleration thereof).
SECTION 3.09.OFFERS TO PURCHASE.
(a)In the event that, pursuant to Sections 4.10,
4.15 or 4.19 hereof, the Company shall be required to
commence an offer to all Holders to purchase some or
all of the Notes (each, a "PURCHASE OFFER"), it shall
follow the procedures specified in this Section 3.09.
(b)The Purchase Offer shall commence on the date
(the "COMMENCEMENT DATE") specified in Sections 4.10,
4.15 or 4.19 hereof, as the case may be, remain open
for a period specified by the Company, which shall be
in accordance with Sections 4.10, 4.15 or 4.19 hereof,
as the case may be, except to the extent that a longer
period is required by applicable law (the "OFFER
PERIOD"). No later than five Business Days after the
termination of the Offer Period (the "PURCHASE DATE"),
the Company shall purchase the principal amount of
Notes required to be purchased pursuant to Sections
4.10, 4.15 or 4.19 hereof (the "OFFER AMOUNT") or, if
less than the Offer Amount has been tendered, all Notes
tendered in response to such Purchase Offer. Payment
for any Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest
record date and on or before the related interest
payment date, any accrued and unpaid interest, if any,
shall be paid to the Person in whose name a Note is
registered at the close of business on such record
date, and no additional interest shall be payable to
Holders who tender Notes pursuant to such Purchase
Offer.
Upon the commencement of a Purchase Offer, the
Company shall send, by first class mail, a notice to
each of the Holders, with a copy to the Trustee. The
notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes
pursuant to such Purchase Offer. The Purchase Offer
shall be made to all Holders. The notice, which shall
govern the terms of the Purchase Offer, shall state:
(i)that the Purchase Offer is being made
pursuant to Sections 4.10, 4.15 or 4.19 hereof, as the
case may be, the Offer Period, and the expiration date
of the Offer Period;
(ii)the Offer Amount, the purchase price and the
Purchase Date;
(iii)that any Note not tendered and accepted for
payment shall continue to accrue interest;
(iv)that, unless the Company defaults in making
such payment, any Note accepted for payment pursuant
to the Purchase Offer shall cease to accrue interest
after the Purchase Date;
(v)that Holders electing to have a Note
purchased pursuant to any Purchase Offer shall be
required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the
address specified in the notice prior to the close of
the Offer Period;
(vi)that Holders shall be entitled to withdraw
their election if the Company, the depositary or the
Paying Agent, as the case may be, receives, not later
than the close of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such
Note purchased;
(vii) that, if the aggregate principal amount of
Notes surrendered by Holders exceeds the Offer Amount,
the Notes shall be selected for purchase pursuant to
the terms of Section 3.02 hereof, and that Holders
whose Notes were purchased only in part shall be
issued new Notes (accompanied by a notation of the
Subsidiary Guarantee duly endorsed by the Guarantors,
if applicable) equal in principal amount to the
unpurchased portion of the Notes surrendered; and
(viii) (x) if such Purchase Offer was pursuant
to Section 4.15, the circumstances and material facts
regarding such Change of Control, including but not
limited to, information with respect to pro forma and
historical financial information after giving effect
to such Change of Control, and information regarding
the Person or Persons acquiring control, (y) if such
Purchase Offer was pursuant to Section 4.10, the
circumstances and material facts regarding the Asset
Sale or Asset Sales giving rise to such Purchase
Offer, including but not limited to, information with
respect to pro forma and historical financial
information if material operations of the Company or
any Restricted Subsidiary were divested in such Asset
Sale or Asset Sales and (z) if such Purchase Offer was
pursuant to the terms of Section 4.19, the
circumstances and material facts regarding the failure
to obtain Australian Gaming Approval or Management
Contract Approval and the then current plans, if any,
of SHCL with respect to the Sydney Harbour Casino.
On or before the Purchase Date, the Company shall,
to the extent lawful, accept for payment, pursuant to
the terms of Section 3.02 hereof, the Offer Amount of
Notes or portions thereof tendered pursuant to the
Purchase Offer, or if less than the Offer Amount has
been tendered, all Notes tendered, and shall deliver to
the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by
the Company in accordance with the terms of this
Section 3.09. The Company, the depositary or the
Paying Agent, as the case may be, shall promptly (but
in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Notes
tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new
Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new
Note (accompanied by a notation of the Subsidiary
Guarantee duly endorsed by the Guarantors, if
applicable) to such Holder, in a principal amount equal
to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of such
Purchase Offer on the Purchase Date.
Other than as specifically provided in this Sec-
tion 3.09, any purchase pursuant to this Section 3.09
shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof to the extent
applicable.
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. Other than pursuant to Section 3.05, principal,
premium, if any, and interest shall be considered paid
on the date due if the Paying Agent, if other than the
Company or a Guarantor, holds as of Noon New York City
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. Such Paying Agent shall return to
the Company no later than two days following the date
of payment, any money (including accrued interest) that
exceeds such amount of principal, premium, if any, and
interest paid on the Notes.
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 or the Guarantors 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.REPORTS.
Whether or not required by the rules and
regulations of the SEC, so long as any Notes are
outstanding, the Company shall (i) furnish to the
Trustee and to all Holders 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) file a copy of all such
information with the SEC for public availability
(unless the SEC will not accept such a filing) and file
such information with the Trustee and make such
information available to investors and securities
analysts who request it in writing. The Company shall
at all times comply with TIA Section 314(a).
SECTION 4.04.COMPLIANCE CERTIFICATE.
(a)The Company shall deliver to the Trustee, within
120 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 and each obligor on the
Notes and this Indenture has kept, observed, performed
and fulfilled its obligations under this Indenture
(including with respect to any Restricted Payments made
during such year, the basis upon which the calculations
required by Section 4.07 were computed, which
calculations may be based on the Company's latest
available financial statements), and further stating,
as to each such Officer signing such certificate, that
to the best of his or her knowledge the Company and
each such obligor, 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 or such
Guarantor, as the case may be, 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 or any
obligor, as the case may be, 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 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 the provisions contained in
Sections 4.01, 4.05, 4.07, 4.09, 4.10, 4.17, 4.18 or
5.01 hereof or (to the extent such provisions relate to
accounting matters), 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, within five
Business Days 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
Restricted 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.
SECTION 4.06.STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors covenants
(to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that
may affect the covenants or the performance of this
Indenture; and each of the Company and the Guarantors
(to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer
and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.07.RESTRICTED PAYMENTS.
(a)The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any
distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests other than
dividends or distributions payable in Equity Interests
(other than Disqualified Stock of the Company or such
Restricted Subsidiary or dividends or distributions by
a Restricted Subsidiary of the Company PROVIDED, that
to the extent that a portion of such dividend or
distribution is paid to a Holder other than the Company
or a Restricted Subsidiary, such portion of such
dividend or distribution is not greater than such
Holder's pro rata aggregate common equity interest in
such Restricted Subsidiary;
(ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company
or any Subsidiary or other Affiliate of the Company
(other than any such Equity Interests owned by the
Company or any Restricted Subsidiary of the Company);
(iii) voluntarily purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness
that is PARI PASSU with or subordinated to the Notes;
or
(iv) make any Restricted Investment (all such
payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to
as "RESTRICTED PAYMENTS"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof;
(2) with respect to a Restricted Payment other
than a Regular Quarterly Dividend or a Restricted
Investment in a Subsidiary engaged in a Gaming
Related Business, the Company would, at the time of
such Restricted Payment and after giving pro forma
effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-
quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in
the covenant entitled "Incurrence of Indebtedness
and Issuance of Disqualified Stock"; and
(3) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by
the Company and its Restricted Subsidiaries after
the date of this Indenture (including Restricted
Payments permitted by clauses (i) and (ii) of the
next succeeding paragraph but excluding any
Restricted Payments permitted by clauses (iii)-(ix)
of the next succeeding paragraph), is less than the
sum of (x) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting
period) from April 1, 1993 to the end of the
Company's most recently ended fiscal quarter for
which internal financial statements are available
at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus (y) 100% of
the aggregate net cash proceeds received by the
Company from the issuance or sale of Equity
Interests of the Company (other than Equity
Interests sold to a Restricted Subsidiary of the
Company and other than Disqualified Stock) from and
including the date of the First Mortgage Bond
Indenture (including any such Equity Interests
issued concurrently with the issuance of the
Notes), plus (z) Excess Non-Recourse Subsidiary
Cash Proceeds received after the date of the First
Mortgage Bond Indenture.
(b)The foregoing provisions of this Section 4.07 shall
not prohibit:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at said date
of declaration such payment would have complied with
the provisions of this Indenture;
(ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of other Equity
Interests of the Company (other than any Disqualified
Stock);
(iii) Investments by the Company or any Restricted
Subsidiary in an amount not to exceed $75 million in
the aggregate (measured as of the date such
Investments were made) in any Non-Recourse
Subsidiaries engaged in a Gaming Related Business;
PROVIDED that any loan to, or Investment Guarantee in
favor of, a Non-Recourse Subsidiary that is not a
Restricted Subsidiary shall mature prior to the
earlier of (x) the termination of the management
contract pursuant to which the Company or any of its
Restricted Subsidiaries manages such Non-Recourse
Subsidiary and (y) the Company or any of its
Restricted Subsidiaries otherwise ceasing to have
control over the direction of the day-to-day
operations of such Non-Recourse Subsidiary;
(iv) Investments by the Company or any Restricted
Subsidiary in any Non-Recourse Subsidiary engaged in a
Gaming Related Business in an amount (measured as of
the date such Investments were made) not to exceed in
the aggregate 100% of all cash received by the Company
or any Restricted Subsidiary from any Non-Recourse
Subsidiary (other than cash which is or may be
required to be repaid or returned to such Non-Recourse
Subsidiary) up to $75.0 million in the aggregate and
thereafter 50% of all cash received by the Company or
any Restricted Subsidiary from any Non-Recourse
Subsidiary (other than cash which is or may be
required to be repaid or returned to such Non-Recourse
Subsidiary); PROVIDED that the aggregate amount of
Investments pursuant to this clause does not exceed
$125.0 million in the aggregate;
(v) the purchase, redemption, defeasance, or other
acquisition or retirement for value of any PARI PASSU
Indebtedness with the substantially concurrent
purchase, redemption, defeasance, or other acquisition
or retirement for value of the Notes (on a pro rata
basis in relation to the outstanding aggregate
principal amount of such Indebtedness and the
aggregate principal amount of the outstanding Notes or
which was on a basis offered pro rata to the Holders
of the Notes);
(vi) any voluntary purchase, redemption, defeasance
or other acquisition or retirement for value of any
PARI PASSU Indebtedness with the proceeds of the
substantially concurrent issuance of Refinancing
Indebtedness relating to such PARI PASSU Indebtedness
in accordance with Section 4.09 hereof;
(vii) dividends or distributions from a Non-
Recourse Subsidiary or dividends or distributions from
a Controlled Entity;
(viii) any purchase, redemption, defeasance or
other acquisition or retirement for value of any PARI
PASSU Indebtedness (other than pursuant to clause (v)
or (vi) above) up to $30.0 million in aggregate
principal amount; and
(ix) Investments by the Company or any Guarantor in
Controlled Entities, so long as such Persons remain
Controlled Entities, PROVIDED that (A) any Investment
in SHCL exceeding $110.0 million shall be a Restricted
Payment pursuant to the proceeding paragraph, (B)
neither the Company nor any Guarantor shall invest any
portion of the Las Vegas Showboat or the Atlantic City
Showboat in, or contribute any such assets to, a
Controlled Entity and (C) the Company would have at
the time of such Investment and after giving effect
thereto as if such Investment had been made at the
beginning of the applicable four-quarter period, a
Fixed Charge Coverage Ratio of at least 1.5 to 1 if
such Investment is made prior to December 31, 1996 and
at least 1.75 to 1 if such Investment is made
thereafter; PROVIDED that, with respect to clauses
(iii)-(ix) above, immediately after giving effect to
the transaction contemplated therein, no Default or
Event of Default would occur as a consequence thereof.
(c)Any Investment in a Restricted Subsidiary that
becomes a Non-Recourse Subsidiary or any Investment in
a Wholly Owned Subsidiary that becomes a Non-Wholly
Owned Restricted Subsidiary that is not a Guarantor
shall become a Restricted Payment made on such date in
the amount of the greater of (x) the book value of the
Investment in such Subsidiary on such date and (y) the
fair market value of the Investment in such Subsidiary
on such date as determined (A) in good faith by the
Board of Directors of the Company if such fair market
value is determined to be less than $10.0 million and
(B) by an investment banking firm of national standing
with high yield underwriting expertise if such fair
market value is determined to be in excess of
$10.0 million.
(d)Any Guarantee that is an Investment in a Non-
Recourse Subsidiary shall cease to be deemed an
Investment (and shall be deemed to have not been made)
to the extent that the Guarantee is released without
payment on the obligations guaranteed by the Company or
any Restricted Subsidiary.
(e)If any Controlled Entity ceases to be a Controlled
Entity, then all Investments owned by the Company or
any Restricted Subsidiary in such Controlled Entity
shall be deemed to be a Restricted Investment made on
such date, unless such former Controlled Entity
purchases or redeems all such Investments for a price
at least equal to the greater of the book value of such
Investments on the date such entity ceases to be a
Controlled Entity or the original amount of such
Investments.
SECTION 4.08.DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability
of any Restricted Subsidiary, other than a Guarantor,
to:
(i) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries
(x) on its Capital Stock or (y) with respect to any
other interest or participation in, or measured by,
its profits;
(ii) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries;
(iii) make loans or advances to the Company or any
of its Restricted Subsidiaries; or
(iv) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing
under or by reasons of:
(1) Existing Indebtedness as in effect on the
Issue Date;
(2) the Working Capital Credit Agreement as in
effect as of the Issue Date;
(3) this Indenture and the Notes;
(4) applicable law;
(5) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company
or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such
Indebtedness was incurred in connection with such
acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the
property or assets of the Person, so acquired,
PROVIDED that the Consolidated Cash Flow of such
Person is not taken into account in determining
whether such acquisition was permitted by the terms
of this Indenture;
(6) by reason of customary non-assignment
provisions in leases entered into in the ordinary
course of business and consistent with past
practices;
(7) with respect to clause (iii) above, purchase
money obligations for property acquired in the
ordinary course of business; or
(8) permitted Refinancing Indebtedness, PROVIDED
that the restrictions contained in the agreements
governing such Refinancing Indebtedness are
substantially not more restrictive taken as a whole
than those contained in the agreements governing
the Indebtedness being refinanced.
SECTION 4.09.INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK.
(a)The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable with respect to or
become responsible for (collectively, "INCUR"), any
Indebtedness and the Company shall not issue any
Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock;
PROVIDED, HOWEVER, that the Company or any Restricted
Subsidiary may incur Indebtedness if:
(i) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal
quarters for which internal financial statements are
available immediately preceding the date on which such
additional Indebtedness is incurred is greater than
2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom)
as if the additional Indebtedness had been incurred at
the beginning of such four-quarter period; and
(ii) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof.
(b)The foregoing limitations in this Section 4.09
shall not apply to:
(i) the incurrence by the Company or any Restricted
Subsidiary of up to $25.0 million in aggregate
principal amount of Indebtedness outstanding at any
one time, the proceeds of which are used to acquire or
lease tangible assets;
(ii) the incurrence by the Company or any
Restricted Subsidiary of Indebtedness pursuant to the
Working Capital Credit Agreement for working capital
purposes in an aggregate principal amount not to
exceed $25.0 million outstanding at any one time;
PROVIDED that there shall be no such Indebtedness
outstanding for a period of 14 consecutive days in
each calendar year (other than in respect of standby
letters of credit);
(iii) the incurrence by the Company and its
Restricted Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness
represented by the Notes (including any Notes issued
after the date of this Indenture) and the incurrence
by the Guarantors of the Subsidiary Guarantees;
(v) Indebtedness incurred in connection with
Hedging Obligations with respect to Indebtedness
otherwise permitted under this paragraph;
(vi) the incurrence by the Company of Indebtedness
issued in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace or refund
Indebtedness referred to in the first paragraph of
this covenant or in clauses (i) through (v) above and
clause (viii) below (the "Refinancing Indebtedness");
PROVIDED, HOWEVER, that:
(1) the principal amount of such Refinancing
Indebtedness shall not exceed the principal
amount of Indebtedness so extended, refinanced,
renewed, replaced, substituted or refunded (plus
the amount of reasonable expenses incurred in
connection therewith);
(2) the Refinancing Indebtedness shall have a
Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to
Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded;
(3) the Refinancing Indebtedness shall be
subordinated in right of payment to the Notes on
terms at least as favorable to the holders of
Notes as those contained in the documentation
governing the Indebtedness being extended,
refinanced, renewed, replaced or refunded; and
(4) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof;
(vii) Indebtedness between the Company and any
Restricted Subsidiary; and
(viii) the incurrence by the Company or any
Restricted Subsidiary of Indebtedness that is not
otherwise permitted under this covenant not to exceed
an aggregate principal amount of $10.0 million
outstanding at any one time under this clause (viii).
(c)The Company shall not permit any of its Non-
Recourse Subsidiaries to incur any Indebtedness or
issue any shares of Disqualified Stock, other than Non-
Recourse Indebtedness; PROVIDED, HOWEVER, that if any
such Non-Recourse Subsidiary ceases to remain a Non-
Recourse Subsidiary, such event shall be deemed to
constitute the incurrence of the Indebtedness in such
Subsidiary by a Restricted Subsidiary.
SECTION 4.10.ASSET SALES.
(a)The Company shall not, and shall not permit any of
its Restricted Subsidiaries to, cause, make or suffer
to exist any Asset Sale unless:
(i) no Default exists or is continuing immediately
prior to and after giving effect to such Asset Sale;
(ii) the Company (or such Restricted Subsidiary, as
the case may be) receives consideration at the time of
each such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of
Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or equity
securities sold or otherwise disposed of; and
(iii) at least 90% of the consideration therefor
received by the Company or such Restricted Subsidiary
is in the form of cash; PROVIDED, HOWEVER, that the
amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent
balance sheet or in the notes thereto) of the Company
or any Restricted Subsidiary (other than liabilities
that are by their terms subordinated to the Notes or
any Guarantee thereof) that are assumed by the
transferee of any such assets and (y) any notes or
other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are
immediately converted by the Company or such
Restricted Subsidiary into cash, shall be deemed to be
cash (to the extent of the cash received) for purposes
of this provision.
(b)Within 360 days after any Asset Sale, the Company
(or the Subsidiary, as the case may be) may apply the
Net Proceeds from such Asset Sale, at its option,
either: (i) to permanently reduce Senior Debt of the
Company or (ii) to reinvest or cause to be reinvested
the Net Proceeds from such Asset Sale in another asset
or business in a Gaming Related Business. Pending the
final application of any such Net Proceeds, the Company
may temporarily reduce Senior Debt of the Company,
including under the Working Capital Credit Agreement,
or otherwise invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net
Proceeds from any Asset Sale that are not applied as
provided in clauses (i) and (ii) of this paragraph
constitute "EXCESS PROCEEDS." When the aggregate
amount of Excess Proceeds exceeds $10.0 million, the
Company shall make an offer (an "ASSET SALE OFFER") to
(a) all Holders of Notes to purchase the maximum
principal amount of Notes that may be purchased out of
the Excess Proceeds or (b) at the Company's option,
make an Asset Sale Offer to redeem outstanding Notes
and PARI PASSU Indebtedness, on a pro rata basis in
relation to the outstanding aggregate principal amount
of such Indebtedness and the aggregate principal amount
of the Notes then outstanding, in each case at an offer
price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for the
closing of such offer, in accordance with the
procedures set forth in this Indenture. To the extent
that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer to purchase is less than the Excess
Proceeds, the Company may use such deficiency for
general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee will select
the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of
Excess Proceeds will be reset at zero.
SECTION 4.11.TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter
into or maintain any contract, agreement,
understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing,
an "AFFILIATE TRANSACTION"), unless:
(i) such Affiliate Transaction is on terms that are
no less favorable to the Company or the relevant
Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person;
(ii) with respect to any Affiliate Transaction with
a Non-Recourse Subsidiary, which, either individually
or when combined with all other Affiliate Transactions
with Non-Recourse Subsidiaries during the past year,
involves aggregate payments in excess of $1.0 million,
a majority of the Board of Directors approves each
such transaction;
(iii) with respect to any Affiliate Transaction
(other than with any Non-Recourse Subsidiary)
involving aggregate payments in excess of $1.0
million, or with respect to any Affiliate Transaction
with all Non-Recourse Subsidiaries, which, either
individually or when combined with all other Affiliate
Transactions with Non-Recourse Subsidiaries during the
past year, involves aggregate payments in excess of
$3.0 million, the Company delivers to the Trustee a
resolution of the Board of Directors set forth in an
Officers' Certificate certifying that any such
Affiliate Transaction complies with clause (i) above
and such Affiliate Transaction is approved by a
majority of the Board of Directors; and
(iv) with respect to any Affiliate Transaction
involving aggregate payments in excess of $10.0
million, the Company delivers to the Trustee an
opinion as to the fairness to the Company or such
Restricted Subsidiary from a financial point of view
issued by an investment banking firm of national
standing with expertise in high yield debt offerings
or in the case of a transaction involving the sale or
transfer of assets subject to valuation, such as real
estate, an appraisal by a nationally recognized
appraisal firm; PROVIDED, HOWEVER, that the following
shall not be deemed Affiliate Transactions:
(1) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in
the ordinary course of business and consistent with
the past practice of the Company or such Restricted
Subsidiary;
(2) transactions between or among the Company
and/or its Restricted Subsidiaries;
(3) payments made pursuant to the Tax Sharing
Agreement;
(4) Restricted Payments, dividends,
distributions or Investments permitted by the
provisions of Section 4.07 hereof;
(5) payments to an Affiliate of ACSI in respect
of the leasing of land from such Affiliate;
PROVIDED that the terms of clause (i) above are
complied with;
(6) payments by the Company pursuant to the
indemnification agreement with its directors and
officers in such director's or officer's
capacity as a director or officer of the Company
or a Restricted Subsidiary;
(7) the engagement of Kummer Kaempfer Bonner &
Renshaw (or any successor firm) for legal services
in connection with the business of the Company or
its Subsidiaries; PROVIDED that the payment for
such services does not exceed $1.0 million in any
fiscal year;
(8) loans to employees of the Company or any
Restricted Subsidiary, other than relocation loans,
in an amount not to exceed $500,000 in aggregate
principal amount outstanding at any one time;
(9) loans to employees of the Company or any
Restricted Subsidiary in connection with the
relocation of such employee in an amount not to
exceed $2.0 million in aggregate principal amount
outstanding at any one time;
(10) transactions pursuant to any management
agreement or trademark license agreement between
the Company and any of its Restricted Subsidiaries;
(11) the engagement of International Insurance
Services, Ltd. for insurance adjustment services in
the ordinary course of business of the Company or
its Subsidiaries, PROVIDED that the payments for
such services do not exceed $1.0 million in any
fiscal year; and
(12) the lease of a gift shop in the Atlantic
City Showboat to Ocean 11, a sole proprietorship,
PROVIDED that the payments for such lease do not
exceed $1.0 million in any fiscal year.
SECTION 4.12.LIENS.
Neither the Company nor any of its Restricted
Subsidiaries shall directly or indirectly create,
incur, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to
receive income therefrom, except: (i) Liens securing
Obligations under Senior Debt permitted to be incurred
under this Indenture or (ii) Permitted Liens.
SECTION 4.13.ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Restricted
Subsidiaries shall transfer or cause to be transferred,
in one or a series of related transactions, any assets,
businesses, divisions, real property or equipment
having a book value in excess of $5.0 million to any
Restricted Subsidiary that is not a Guarantor (other
than any such transfer that is a Restricted Payment
permitted by this Indenture), then such transferee or
acquired Subsidiary shall execute a Subsidiary
Guarantee and deliver an opinion of counsel, in
accordance with the terms of this Indenture. The
Subsidiary Guarantee shall be released if the Company
or its Restricted Subsidiaries cease to own any Equity
Interests in such Restricted Subsidiary or if such
Restricted Subsidiary becomes a Non-Recourse Subsidiary
in accordance with the terms of this Indenture.
SECTION 4.14.REDESIGNATION OF NON-RECOURSE SUBSIDIARY.
The Board of Directors of the Company may
redesignate any Non-Recourse Subsidiary as a Restricted
Subsidiary, PROVIDED that at the time of such
designation after giving pro forma effect to such
designation as if it occurred at the beginning of the
applicable four-quarter period, the Company could incur
$1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in Section 4.09
hereof and no Default or Event of Default then exists
and is continuing.
SECTION 4.15.OFFER TO PURCHASE UPON CHANGE OF CONTROL.
(a)Upon the occurrence of a Change of Control, the
Company shall make a Purchase Offer to each Holder to
repurchase all or any part of such Holder's Notes at an
offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase. Such
Purchase Offer shall be made in accordance with the
procedures set forth in Article 3 hereof. The Company
shall commence such Purchase Offer within 30 Business
Days following any Change of Control by mailing the
notice set forth in Section 3.09 to the Holders. The
Offer Period shall be not less than 30 Business Days
nor more than 40 Business Days from the date such
notice is mailed, unless a longer period is required by
law. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the
extent such laws and regulations are applicable in
connection with such Purchase Offer.
(b)Prior to making the Change of Control Payment,
but in any event within 90 days following a Change of
Control, the Company shall either repay all outstanding
Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt
to permit the repurchase of Notes required by this
Section 4.15. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as
practicable after the payment date for such Purchase
Offer.
SECTION 4.16.CORPORATE EXISTENCE.
Subject to Article 5 and Article 10 hereof, as the
case may be, the Company and each of the Guarantors
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 their Subsidiaries, in
accordance with the respective organizational documents
(as the same may be amended from time to time) of the
Company, any such Guarantor or any such Subsidiary, as
the case may be, and (ii) the rights (charter and
statutory), licenses and franchises of the Company, the
Guarantors and their respective Subsidiaries; PROVIDED,
HOWEVER, that the Company and the Guarantors shall not
be required to preserve any such right, license or
franchise, or the corporate, partnership or other
existence of any of their respective Subsidiaries, if
an officer of the Company shall determine that the
preservation thereof is no longer desirable in the
conduct of the business of the Company, the Guarantors
and their Subsidiaries, taken as a whole.
SECTION 4.17.LINE OF BUSINESS.
The Company shall not, and shall not permit any
Subsidiary to, engage in any business other than (i)
those necessary for, incident to, connected with or
arising out of the gaming business (including
developing and operating hotel casinos, sports or
entertainment facilities, transportation services or
other related activities or enterprises and any
additions or improvements thereto) and (ii) such other
businesses as the Company or its Restricted
Subsidiaries are engaged in on the Issue Date. The
Company or its Subsidiaries may not enter into any
gaming jurisdictions in which the Company or its
Subsidiaries are not presently licensed if all of the
Holders of Notes will be required to be licensed,
PROVIDED that this sentence shall not prohibit the
Company or any of its Subsidiaries from entering any
jurisdiction that does not require the licensing or
qualification of all of the Holders of the Notes, but
reserves the discretionary right to license or qualify
any Holder of Notes.
SECTION 4.18.NO SENIOR SUBORDINATED INDEBTEDNESS.
Notwithstanding the provisions of Section 4.09
hereof, (i) the Company shall not incur, create, issue,
assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in
right of payment to the Notes and (ii) no Guarantor
shall incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to Senior
Debt of such Guarantor and senior in any respect in
right of payment to such Guarantor's Subsidiary
Guarantee.
SECTION 4.19.ESCROW AGENT
The Company shall place $100 million of net
proceeds from the offering of the Notes into an escrow
account pursuant to the terms of the Escrow Agreement.
The escrow agent for such escrow account may apply the
amount in the escrow account only to fund the Company's
investment in SHCL as provided for in the Escrow
Agreement. In the event that Australian Gaming
Approval or Management Contract Approval (as defined
herein) has not occurred on or prior to the first
anniversary of the Issue Date, the Company shall apply
the amount in the escrow account to an offer to all
Holders of Notes to purchase the maximum principal
amount of Notes that may be purchased with such amount
at a purchase price equal to 100% of the principal
amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase in accordance
with the procedures set forth in Article 3 hereof. If
the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount in the escrow
account, the Trustee will select the Notes to be
purchased on a pro rata basis. If the amount in the
escrow account exceeds the amount necessary to purchase
all Notes surrendered in such offer, the Company will
be obligated to apply such excess amount to an offer to
purchase the First Mortgage Bonds. Any funds remaining
in the escrow account after the Company has fully
funded its investment in SHCL or after the required
offers to purchase shall be released to the Company and
may be used for general corporate purposes.
ARTICLE 5
SUCCESSORS
SECTION 5.01.MERGER, CONSOLIDATION, OR SALE OF ASSETS.
(a) The Company shall not consolidate or merge with
or into (whether or not the Company is the surviving
Person), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its
properties or assets in one or more related
transactions, to another Person unless (i) the Company
is the surviving Person formed by or surviving any such
consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is
a corporation organized or existing under the laws of
the United States, any state thereof or the District of
Columbia; (ii) the Person formed by or surviving any
such consolidation or merger (if other than the
Company) or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the
Company pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, under the Notes
and this Indenture; (iii) immediately after such
transaction no Default or Event of Default exists; (iv)
the Company or any Person formed by or surviving any
such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other
disposition shall have been made (A) shall have
Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting
adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) shall, at
the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09 hereof; (v) such
transactions would not require any Holder of Notes to
obtain a gaming license or be qualified under the laws
of any applicable gaming jurisdiction, PROVIDED that
such Holder would not have been required to obtain a
gaming license or be qualified under the laws of any
applicable gaming jurisdiction in the absence of such
transactions; and (vi) such transactions would not
result in the loss of any qualification or any material
license of the Company or its Subsidiaries necessary
for any Gaming Related Business then operated by the
Company or its Subsidiaries.
(b)(i) A Guarantor shall not consolidate with or
merge with or into the Company unless the surviving
corporation (if other than the Company) shall expressly
assume by supplemental indenture complying with the
requirements of this Indenture, the due and punctual
payment of the principal of, premium, if any, and
interest on all of the Notes, and the due and punctual
performance and observance of all the covenants and
conditions of this Indenture to be performed by the
Company and (ii) a Guarantor may consolidate with or
merge with or into any other Guarantor.
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 or the Company and its Subsidiaries on a
consolidated basis in accordance with Section 5.01
hereof, the successor Person 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" or the
"Guarantor," as the case may be, shall refer instead to
the successor corporation and not to the Company or the
Guarantor, as the case may be), and may exercise every
right and power of the Company or the Guarantors, as
the case may be, under this Indenture with the same
effect as if such successor Person had been named as
the Company or Guarantor, as the case may be, herein;
PROVIDED, HOWEVER, that the predecessor Company and the
predecessor Subsidiaries that are Guarantors shall not
be relieved from the obligation to pay the principal of
and interest on the Notes except in the case of a sale
of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01.EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company or the Guarantors default in the
payment when due of interest on the Notes (whether
or not prohibited by the subordination provisions
of Article 10 or Article 11 hereof, as the case may
be) and such default continues for a period of 30
days;
(b) the Company or the Guarantors default in the
payment when due of principal of or premium, if
any, on the Notes (whether or not prohibited by the
subordination provisions of Article 10 or Article
11 hereof, as the case may be) when the same
becomes due and payable at maturity, upon
redemption (including in connection with an offer
to purchase) or otherwise;
(c) the Company or the Guarantors fail to comply
with any of the provisions of Sections 4.07, 4.09,
4.10, 4.11, 4.12 or 4.15 hereof for 30 days after
notice to the Company by the Trustee or to the
Company and the Trustee from Holders of at least
25% in principal amount of the Notes then
outstanding;
(d) the Company or the Guarantors fail to
observe or perform any other covenant,
representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to
the Company by the Trustee or to the Company and
the Trustee from Holders of at least 25% in
principal amount of the Notes then outstanding;
(e) a default occurs under any mortgage,
indenture or instrument under which there may be
issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by
the Company or any Guarantor or any of their
respective Restricted Subsidiaries (or the payment
of which is guaranteed by the Company or any
Guarantor or any of their respective Restricted
Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the Issue
Date, which default (i) is caused by a failure to
pay when due principal or interest on such
Indebtedness within the grace period provided in
such Indebtedness (which failure continues beyond
any applicable grace period) (a "PAYMENT DEFAULT")
or (ii) results in the acceleration of such
Indebtedness prior to its express maturity and, in
each case, the principal amount of any such
Indebtedness, together with the principal amount of
any other such Indebtedness under which there has
been a Payment Default or the maturity of which has
been so accelerated aggregates $10.0 million or
more;
(f) a final judgment or final judgments for the
payment of money are entered by a court or courts
of competent jurisdiction against the Company or
any Guarantor or any of their respective Restricted
Subsidiaries and such judgments are not paid,
discharged or stayed for a period of 60 days,
PROVIDED that the aggregate of all such
undischarged judgments exceeds $5.0 million;
(g) except as permitted by this Indenture, any
Subsidiary Guarantee with respect to the Notes
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 its successors or assigns), or any
Person acting on behalf of such Guarantor (or its
successors or assigns), shall deny or disaffirm its
obligations or shall fail to comply with any
obligations under its Subsidiary Guarantee;
(h) the Company, any of its Restricted
Subsidiaries or any Guarantor which individually or
as a group constitutes a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy
Law:
(1)commences a voluntary case,
(2)consents to the entry of an order for
relief against it in an involuntary case,
(3) consents to the appointment of a
Custodian of it or for all or substantially all
of its property,
(4)makes a general assignment for the benefit
of its creditors, or
(5) generally is not paying its debts as
they become due; or
(i) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(1)is for relief against the Company, any of
its Restricted Subsidiaries or any Guarantor
which individually or as a group constitutes a
Significant Subsidiary in an involuntary case;
(2)appoints a Custodian of the Company, any
of its Restricted Subsidiaries or any Guarantor
which individually or as a group constitutes a
Significant Subsidiary or for all or
substantially all of the property of the
Company, any of its Restricted Subsidiaries or
any Guarantor which individually or as a group
constitutes a Significant Subsidiary; or
(3) orders the liquidation of the Company,
any of its Restricted Subsidiaries or any
Guarantor which individually or as a group
constitutes a Significant Subsidiary ;
and the order or decree remains unstayed and in
effect for 60 consecutive days.
SECTION 6.02.ACCELERATION.
If any Event of Default (other than an Event of
Default specified in clause (h) or (i) of Section 6.01
hereof with respect to the Company, any of its
Restricted Subsidiaries or any Guarantor which
individually or as a group constitutes Significant
Subsidiary ) occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the
then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the
foregoing, in case an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof occurs with
respect to the Company, any of its Restricted
Subsidiaries or any Guarantor which individually or as
a group constitutes a Significant Subsidiary, all
outstanding Notes will become due and payable without
further action or notice. Under certain circumstances,
the Holders of a majority in principal amount of the
outstanding Notes may rescind any acceleration with
respect to the Notes and its consequences. Holders may
not enforce this Indenture or the Notes except as
provided herein. Subject to certain limitations,
Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default
or Event of Default (except a Default or Event of
Default relating to the payment of principal or
interest) if it determines that withholding notice is
in their interest.
If an Event of Default occurs by reason of any
willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon
acceleration of the Notes, an equivalent premium shall
also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or
in the Notes to the contrary notwithstanding. If an
Event of Default occurs prior to August 1, 2001 by
reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of
the Notes prior to August 1, 2001 then, upon
acceleration of the Notes, an additional premium shall
also become and be immediately due and payable in an
amount, for each of the years beginning on August 1 of
the years set forth below, as set forth below
(expressed as a percentage of the principal amount that
would otherwise be due but for the provisions of this
sentence):
<TABLE>
<CAPTION>
PERCENTAGE YEAR
<C> <C>
.....................................1994
113.000%.............................1995
111.700%.............................1996
110.400%.............................1997
109.100%.............................1998
107.800%.............................1999
106.500%.............................2000
105.200%
</TABLE>
SECTION 6.03.OTHER REMEDIES.
If an Event of Default occurs and is continuing,
the Trustee may pursue any available remedy to collect
the payment of principal, premium, if any, and interest
on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it
does not possess any of the Notes or does not produce
any of them in the proceeding. A delay or omission by
the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver
of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
Section 6.04.Waiver of Past Defaults.
Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding by
notice to the Trustee may on behalf of the Holders of
all of the Notes waive 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, if any, or interest on,
the Notes (including in connection with an offer to
purchase) (PROVIDED, HOWEVER, that the Holders of a
majority in aggregate principal amount of the then
outstanding Notes may rescind an acceleration and its
consequences, including any related payment default
that resulted from such acceleration). Upon any such
waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05.CONTROL BY MAJORITY.
Holders of a majority in principal amount of the
then outstanding Notes may direct the time, method and
place of conducting any proceeding for exercising any
remedy available to the Trustee or exercising any trust
or power conferred on it. However, the Trustee may
refuse to follow any direction that conflicts with law
or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in Personal
liability.
SECTION 6.06.LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect
to this Indenture or the Notes only if:
(a)the Holder of a Note gives to the Trustee
written notice of a continuing Event of Default or the
Trustee receives such notice from the Company;
(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; PROVIDED, HOWEVER, that such
provision does not effect the right of a Holder of a
Note to sue for enforcement of any overdue payment
thereon.
A Holder of a Note may not use this Indenture to
prejudice the rights of another Holder of a Note or to
obtain a preference or priority over another Holder of
a Note.
SECTION 6.07.RIGHTS OF HOLDERS OF NOTES TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this
Indenture, the right of any Holder of a Note to receive
payment of principal, premium, if any, and interest on
the Note, on or after the respective due dates
expressed in the Note (including in connection with a
Purchase Offer), 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.
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 allowed in any
judicial proceedings relative to the Company (or any
other obligor upon the Notes, including the Guarantors-
), its creditors or its property and shall be entitled
and empowered to collect, receive and distribute any
money or other property payable or deliverable on any
such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make
such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders
may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the
rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10.PRIORITIES.
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following
order:
FIRST: to the Trustee, its agents and attorneys
for amounts due under Section 7.07 hereof;
SECOND: to the holders of Senior Debt of the
Company or the Guarantors, as the case may be, to the
extent required by Article 10 or Article 11 hereof, as
applicable;
THIRD: 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
FOURTH: to the Company or to such party as a court
of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date
for any payment to Holders of Notes pursuant to this
Section 6.10.
SECTION 6.11.UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the
Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court
in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits
and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit
by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding
Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01.DUTIES OF TRUSTEE.
(a)If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise,
as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b)Except during the continuance of an Event of
Default:
(i)the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and
the Trustee need perform only those duties that are
specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii)in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee
shall examine the certificates and opinions to
determine whether or not they conform to the
requirements of this Indenture.
(c)The Trustee may not be relieved from liabilities
for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(i)this paragraph (c) 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.
(g)The Trustee shall not be responsible for having
knowledge of any defaults, except for monetary
defaults, unless specifically notified in writing by
the Holders.
(h)The Trustee acknowledges that the Company and
the Guarantors are subject to regulation by the New
Jersey Casino Control Commission and the Trustee shall
cooperate with requests from the New Jersey Casino
Control Commission and New Jersey Division of Gaming
Enforcement for information and documents relating to
the Notes.
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 other-
wise deal with the Company, the Guarantors or any
Affiliate of the Company or the Guarantors with the
same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also
subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04.TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes
no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from
the Notes or any money paid to the Company or upon the
Company's direction under any provision of this
Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible
for any statement or recital herein or any statement in
the Notes or any other document in connection with the
sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
SECTION 7.05.NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is
continuing and if it is known to the Trustee, the
Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the
notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the
notice is in the interests of the Holders.
SECTION 7.06.REPORTS BY TRUSTEE TO HOLDERS.
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 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 and the Guarantors shall pay to the
Trustee from time to time reasonable compensation for
its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an
express trust. The Company and the Guarantors shall
reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses
incurred or made by it in addition to the compensation
for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify the
Trustee and its directors, officers and employees
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 and the
Guarantors (including this Section 7.07), and defending
itself against any claim (whether asserted by the
Company, any Guarantor 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, willful
misconduct, bad faith or breach of its duties under
this Indenture. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity.
Unless the position of the Company or the Guarantors is
prejudiced by such failure, failure by the Trustee to
so notify the Company shall not relieve the Company and
the Guarantors, of their obligations hereunder. The
Company and the Guarantors shall defend the claim and
the Trustee shall cooperate in the defense. The
Trustee may have separate counsel if the Trustee shall
have been reasonably advised by such counsel that there
may be one or more legal defenses available to it that
are different from or additional to those available to
the Company and in the reasonable judgment of such
counsel it is advisable for the Trustee to employ
separate counsel, and the Company and the Guarantors
shall pay the reasonable fees and expenses of such
counsel. The Company and the Guarantors need not pay
for any settlement made without their consent, which
consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors
under this Section 7.07 shall survive the satisfaction
and discharge of this Indenture.
To secure the Company's and the Guarantors', if
any, payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that
held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders
services after an Event of Default specified in
Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees
and expenses of its agents and counsel) are intended to
constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA
Section 313(b)(2) to the extent applicable.
SECTION 7.08.REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and
appointment of a successor Trustee shall become
effective only upon the successor Trustee's acceptance
of appointment as provided in this Section.
The Trustee may resign in writing at any time and
be discharged from the trust hereby created by so
notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the
Trustee and the Company in writing. The Company may
remove the Trustee if:
(a)the Trustee fails to comply with Section 7.10
hereof;
(b)the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;
(c)a Custodian or public officer takes charge of
the Trustee or its property; or
(d)the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason,
the Company shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount
of the then outstanding Notes may appoint a successor
Trustee to replace the successor Trustee appointed by
the Company.
If a successor Trustee does not take office within
60 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company, any
Guarantor, or the Holders of Notes of at least 10% in
principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder
of a Note who has been a Holder of a Note for at least
six months, fails to comply with Section 7.10, such
Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written accept-
ance 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 and the Guarantors',
if any, 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; PROVIDED such corporation shall
be otherwise eligible and qualified under this Article.
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 delivered to the Trustee, at any
time, elect to have either Section 8.02 or 8.03 hereof
be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article
Eight.
SECTION 8.02.LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.02,
each of the Company and the Guarantors 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 and Subsidiary Guarantees 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, premium, if
any, and interest on such Notes when such payments are
due, (b) the Company's and Guarantors' obligations with
respect to such Notes under Article 2 (except those
obligations set forth in Sections 2.08, 2.09 and 2.12
hereof) and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee
hereunder and the Company's and the Guarantors'
obligations in connection therewith and (d) this
Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03.COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03,
each of the Company and the Guarantors 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 4.05, 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
4.17, 4.18, and 4.19 and Articles 5, 10 and 11 hereof
and the operation of the provisions contained in
Subsections (e) and (f) of Article 6 with respect to
the outstanding Notes and Subsidiary Guarantees on and
after the date the conditions set forth below are
satisfied (hereinafter, "COVENANT DEFEASANCE"), and the
Notes shall thereafter be deemed not "outstanding" for
the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of
any thereof) in connection with such covenants, but
shall continue to be deemed "outstanding" for all other
purposes hereunder (it being understood that such Notes
shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means
that, with respect to the outstanding Notes, the
Company may omit to comply with and shall have no
liability in respect of any term, condition or
limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other
provision herein or in any other document and such
omission to comply shall not constitute a Default or an
Event of Default under Section 6.01 hereof, but, except
as specified above, the remainder of this Indenture,
such Notes and the Subsidiary Guarantees, if any, 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(h) 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:
(a) the Company must irrevocably deposit with
the Trustee, in trust, for the benefit of the
Holders, cash in United States dollars, U.S.
Governmental Obligations, or a combination thereof,
in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of
independent public accountants as evidenced by a
certificate delivered to the Trustee, 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, of such principal or installment
of principal of, premium, if any, or interest on
the outstanding Notes;
(b) in the case of an election under Section
8.02 hereof, the Company shall have delivered to
the Trustee an Opinion of Counsel 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 Issue Date, 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 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 or insofar as Sections 6.01(h) or 6.01(i)
hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit
(or greater period of time in which any such
deposit of trust funds may remain subject to
Bankruptcy Law insofar as those apply to the
deposit by the Company) or the Company provides an
Opinion of Counsel to the effect that as of the
effective date of such Opinion of Counsel, the
deposited trust funds are not subject to any claim
by any other creditor of the Company under any
Bankruptcy Law as a preferential payment;
(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 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 the Guarantors, or with the
intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or
the Guarantors;
(g) 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;
and
(h) the Company shall have delivered to the
Trustee an opinion of counsel to the effect that
the Holders of Notes shall have a perfected
security interest under applicable law in the U.S.
Government Obligations so deposited.
SECTION 8.05.DEPOSITED MONEY AND U.S. GOVERNMENT
OBLIGATIONS TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-
callable U.S. Government Obligations (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 and the Guarantors shall pay and
indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the cash or non-
callable U.S. Government Obligations deposited pursuant
to Section 8.04 hereof or the principal and interest
received in respect thereof other than any such tax,
fee or other charge which by law is for the account of
the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to
the Company from time to time upon the request of the
Company any money or non-callable U.S. Government
Obligations 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, if any, on any Note and remaining unclaimed
for two years after such principal, and premium, if
any, or interest, if any, have become due and payable
shall be paid to the Company on its request or (if then
held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company
for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof,
shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to
make any such repayment, may at the expense of the
Company cause to be published once, in 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 U.S.
Government Obligations 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 and
the Guarantors', if any, obligations under this
Indenture, the Notes and the Subsidiary Guarantees
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 and the
Guarantors make any payment of principal of, premium,
if any, or interest, if any, on any Note following the
reinstatement of its obligations, the Company and the
Guarantors shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01.WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the
Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a)to cure any ambiguity, defect or inconsistency;
(b)to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(c)to provide for the assumption of the Company's
or any Guarantor's obligations to the Holders in the
case of a merger or consolidation pursuant to Article
5 or Article 10 hereof, as the case may be;
(d)to make any change that would provide any
additional rights or benefits to the Holders
(including providing for Subsidiary Guarantees
pursuant to Section 4.13 hereof) or that does not
adversely affect the legal rights hereunder of any
such Holder; or
(e)to comply with requirements of the SEC in order
to effect or maintain the qualification of this
Indenture under the TIA.
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 9.06 hereof, the Trustee
shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and
stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own
rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.02.WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the
Company, the Guarantors and the Trustee may amend or
supplement this Indenture or the Notes with the consent
of the Holders of at least a majority in principal
amount of the Notes (including any Notes issued after
the date of this Indenture) then outstanding (including
consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections
6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in
the payment of the principal of, premium, if any, or
interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture or
the Notes may be waived with the consent of the Holders
of a majority in principal amount of the then
outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for
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 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 9.06
hereof, the Trustee shall join with the Company and the
Guarantors in the execution of such amended or
supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own
rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the
Holders of Notes under this Section 9.02 to approve the
particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this
Section becomes effective, the Company shall mail to
the Holders of Notes affected thereby a notice briefly
describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair
or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections
6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes then
outstanding may waive compliance in a particular
instance by the Company or any Guarantor with any
provision of this Indenture, the Note or the Subsidiary
Guarantees, if any. However, without the consent of
each Holder affected, an amendment or waiver may not
(with respect to any Notes held at the time of such
consent by a non-consenting Holder):
(a) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or
waiver;
(b) reduce the principal of or change the fixed
maturity of any Note or alter or waive any of the
provisions with respect to the redemption of the
Notes (other than the provisions of Sections 4.10
or 4.15);
(c) reduce the rate of or change the time for
payment of interest, including default interest, on
any Note;
(d) waive a Default or Event of Default in the
payment of principal of or premium, if any, or
interest 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 and a waiver of the
payment default that resulted from such
acceleration);
(e) make any Note payable in money other than
that stated in the Notes;
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or
the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on
the Notes;
(g) waive a redemption payment with respect to
any Note (other than a payment required under
Sections 4.10 or 4.15);
(h) make any change to the subordination
provisions of Section 10.02 or Article 11 hereof
that adversely affects Holders;
(i) make any change in Section 6.04 or 6.07
hereof or in the foregoing amendment and waiver
provisions.
The right of any Holder to participate in any
consent required or sought pursuant to any provision of
this Indenture (and the obligations of the Company to
obtain any such consent otherwise required from such
Holder) may be subject to the requirements that such
Holder shall have been the Holder of record of any
Notes with respect to which such consent is required to
be sought as of a date identified by the Trustee in a
notice furnished to Holders in accordance with the
terms of this Indenture.
SECTION 9.03.COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or
the Notes shall be set forth in an 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 authenticate
new Notes (accompanied by a notation of the Subsidiary
Guarantee duly endorsed by the Guarantors) 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 and the Guarantors may not sign
an amendment or supplemental Indenture until the Board
of Directors of the Company approves it. In executing
any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section
7.01) shall be fully protected in relying upon, 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
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEE.
Each Guarantor hereby jointly and severally
unconditionally guarantees (each such guarantee being a
"SUBSIDIARY GUARANTEE") to each Holder of a Note
authenticated and delivered by the Trustee irrespective
of the validity or enforceability of this Indenture,
the Notes or the Obligations of the Company under this
Indenture or the Notes, that: (i) the principal of and
interest on the Notes will be paid in full when due,
whether at the maturity or interest payment or
mandatory redemption date, by acceleration, call for
redemption or otherwise, and interest on the overdue
principal of and interest, if any, is lawful on the
Notes and all other obligations of the Company to the
Holders or the Trustee under this Indenture or the
Notes will be promptly paid in full or performed, all
in accordance with the terms of this Indenture and the
Notes; and (ii) in case of any extension of time of
payment or renewal of any Notes or any of such other
obligations, they will be paid in full when due or
performed in accordance with the terms of the extension
or renewal, whether at maturity, by acceleration or
otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Guarantor will be
obligated to pay the same whether or not such failure
to pay has become an Event of Default which could cause
acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.
Each Guarantor hereby agrees that its Obligations
with regard to this Subsidiary Guarantee shall be joint
and several, unconditional, irrespective of the
validity or enforceability of the Notes or the
obligations of the Company under this Indenture, the
absence of any action to enforce the same, the recovery
of any judgment against the Company or any other
obligor with respect to this Indenture, the Notes or
the obligations of the Company under this Indenture or
the Notes, any action to enforce the same or any other
circumstances (other than complete performance) which
might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor
further, to the extent permitted by law, waives and
relinquishes all claims, rights and remedies accorded
by applicable law to guarantors and agrees not to
assert or take advantage of any such claims, rights or
remedies, including but not limited to: (a) any right
to require the Trustee, the Holders or the Company
(each, a "BENEFITTED PARTY") to proceed against the
Company or any other Person or to proceed against or
exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any Benefitted
Party's power before proceeding against such Guarantor;
(b) the defense of the statute of limitations in any
action hereunder or in any action for the collection of
any Indebtedness or the performance of any obligation
hereby guaranteed; (c) any defense that may arise by
reason of the incapacity, lack of authority, death or
disability of any other Person or the failure of a
Benefitted Party to file or enforce a claim against the
estate (in administration, bankruptcy or any other
proceeding) of any other Person; (d) demand, protest
and notice of any kind including but not limited to
notice of the existence, creation or incurring of any
new or additional Indebtedness or Obligation or of any
action or non-action on the part of such Guarantor, the
Company, any Benefitted Party, any creditor of such
Guarantor, the Company or on the part of any other
Person whomsoever in connection with any Indebtedness
or obligations hereby guaranteed; (e) any defense based
upon an election of remedies by a Benefitted Party,
including but not limited to an election to proceed
against such Guarantor for reimbursement; (f) any
defense based upon any statute or rule of law which
provides that the obligation of a surety must be
neither larger in amount nor in other respects more
burdensome than that of the principal; (g) any defense
arising because of a Benefitted Party's election, in
any proceeding instituted under the Federal Bankruptcy
Code, of the application of Section 1111(b)(2) of the
Federal Bankruptcy Code; or (h) any defense based on
any borrowing or grant of a security interest under
Section 364 of the Federal Bankruptcy Code. Each
Guarantor hereby covenants that its Subsidiary
Guarantee will not be discharged except by complete
performance of the obligations contained in its
Subsidiary Guarantee and this Indenture.
If any Holder or the Trustee is required by any
court or otherwise to return to either the Company or
any Guarantor, or any Custodian acting in relation to
either the Company or such Guarantor, any amount paid
by the Company or such Guarantor to the Trustee or such
Holder, the applicable Subsidiary Guarantee, to the
extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor agrees that it
will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all
obligations guaranteed hereby.
Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the
Obligations guaranteed hereby may be accelerated as
provided in Section 6.02 hereof for the purposes of
this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such
acceleration as to the Company or any other obligor on
the Notes of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of
those obligations as provided in Section 6.02 hereof,
those Obligations (whether or not due and payable) will
forthwith become due and payable by such Guarantor for
the purpose of this Subsidiary Guarantee.
SECTION 10.02. SUBORDINATION.
Each Guarantor, the Trustee, and each Holder by
accepting a Note agrees, that the Obligations of such
Guarantor hereunder shall be subordinated in right of
payment to the prior irrevocable and indefeasible
payment in full of all Obligations of every type
whatsoever, contingent or otherwise due in respect of
all Senior Debt of such Guarantor and of the Company
(whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed).
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Guarantor
in a liquidation or dissolution of such Guarantor or in
a bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to such Guarantor or its
property, in an assignment for the benefit of creditors
or any marshalling of such Guarantor's assets and
liabilities:
(1) Holders of Senior Debt of such Guarantor shall
be entitled to receive payment in full of all
Obligations due in respect of such Senior Debt of such
Guarantor (including interest after the commencement
of any such proceeding at the rate specified in the
applicable Senior Debt of such Guarantor) before the
Trustee or any Holder shall be entitled to receive any
payment from the Guarantor under or pursuant to this
Subsidiary Guarantee with respect to the Notes; and
(2) until all Obligations with respect to Senior
Debt of such Guarantor (as provided in subsection (1)
above) are paid in full, any distribution to which the
Trustee or any Holder would be entitled but for this
Article shall be made to holders of Senior Debt of
such Guarantor (except that Holders may receive
securities that are subordinated in right and priority
of payment to at least the same extent as the
Subsidiary Guarantee to (a) Senior Debt of such
Guarantor and (b) any securities issued in exchange
for Senior Debt of such Guarantor).
SECTION 10.04. DEFAULT ON SENIOR DEBT OF THE
GUARANTOR.
No Guarantor shall make any payment or distribution
to the Trustee or any Holder upon or in respect of its
Subsidiary Guarantee or the Notes, or any obligation
with respect thereto, and no Guarantor shall acquire or
purchase from the Trustee or any Holder any Notes for
cash or property (other than securities that are
subordinated in right and priority of payment to at
least the same extent as its Subsidiary Guarantee to
(a) Senior Debt of such Guarantor and (b) any
securities issued in exchange for Senior Debt of such
Guarantor) until all principal and other obligations
with respect to the Senior Debt of such Guarantor have
been paid in full if:
(i) a default in the payment when due, whether upon
acceleration or otherwise, of any principal, premium,
if any, or interest on Designated Senior Debt of such
Guarantor occurs and is continuing beyond any
applicable grace period; or
(ii) any other default on Designated Senior Debt of
such Guarantor occurs and is continuing and the
Trustee receives a notice of the default from such
Guarantor, or the holders of any such Designated
Senior Debt of such Guarantor, stating that such
Guarantor or holders are invoking a payment blockage
under this Section 10.04(ii) (a "GUARANTOR PAYMENT
BLOCKAGE NOTICE"). If the Trustee receives any such
notice, a subsequent notice received within 365 days
thereafter shall not be effective for purposes of this
Section.
Each Guarantor may and shall resume payments on and
distributions in respect of its Subsidiary Guarantee
and all obligations with respect thereto, and may
acquire obligations for value when:
(1) in the case of a payment default as described
in (i) above, upon the date on which such default is
cured or waived, and
(2) in the case of a nonpayment default as
described in (ii) above, on the earlier of the date on
which such nonpayment default is cured or waived or
179 days after the date on which a Guarantor Payment
Blockage Notice is received unless the maturity of
such Designated Senior Debt of such Guarantor has been
accelerated, and this Article otherwise permits the
payment at the time of such payment.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of
an Event of Default, each Guarantor shall promptly
notify the Representative of the holders of Senior Debt
of such Guarantor of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder
receives from a Guarantor any payment of any
Obligations with respect to the Notes or any other
obligation guaranteed hereby at a time when the Trustee
or such Holder has actual knowledge that such payment
is prohibited by Section 10.03 or Section 10.04 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 Debt of such Guarantor (to the
extent necessary to pay in full all such Senior Debt,
whether or not due) as their interests may appear, or
their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt of
such Guarantor may have been issued, as their
respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt
of such Guarantor 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
Debt of such Guarantor.
If a distribution is made to the Trustee or any
Holder that because of this Article 10 should not have
been made to it at a time when the Trustee or such
Holder has actual knowledge that such distribution
should not have been made to it, the Trustee or such
Holder who receives the distribution shall hold it in
trust for the benefit of, and, upon written request,
pay it over to, the holders of Senior Debt of such
Guarantor as their interests may appear, or their
Representative under the indenture or other agreement
(if any) pursuant to which Senior Debt of such
Guarantor may have been issued, as their respective
interests may appear, for application to the payment of
all Obligations with respect to Senior Debt of such
Guarantor 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 Debt of
such Guarantor.
With respect to the holders of Senior Debt of any
Guarantor, 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 Debt of any such Guarantor 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 Debt of such Guarantor, 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 Debt of such Guarantor
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 10.07. NOTICE BY A GUARANTOR.
Each Guarantor shall promptly notify the Trustee
and the Paying Agent of any facts known to such
Guarantor that would cause a payment of any Obligations
with respect to the Notes or its Subsidiary Guarantee
to violate this Article, but failure to give such
notice shall not affect the subordination of its
Subsidiary Guarantee or of the Notes to the Senior Debt
of such Guarantor as provided in this Article.
SECTION 10.08. SUBROGATION.
With respect to any Guarantor, after all Senior
Debt of such Guarantor is paid in full (whether or not
due) and until the Notes are paid in full, Holders
shall, without duplication, be subrogated to the rights
of holders of Senior Debt of such Guarantor to receive
distributions applicable to Senior Debt of such
Guarantor to the extent that distributions otherwise
payable to the Holders have been applied to the payment
of Senior Debt of such Guarantor. A distribution made
under this Article to holders of Senior Debt of such
Guarantor that otherwise would have been made to
Holders is not, as between such Guarantor and Holders,
a payment by such Guarantor on the Senior Debt of such
Guarantor.
SECTION 10.09. RELATIVE RIGHTS.
This Article defines the relative rights of Holders
and holders of Senior Debt of such Guarantor. Nothing
in this Indenture shall:
(1)impair, as between such Guarantor and the
Holders, the obligation of such Guarantor, which is
absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2)affect the relative rights of Holders and
creditors of such Guarantor other than their rights
in relation to holders of Senior Debt of such
Guarantor; or
(3)prevent the Trustee or any Holder from
exercising its available remedies upon a Default or
Event of Default, subject to the rights of holders of
Senior Debt of such Guarantor set forth herein to
receive distributions and payments otherwise payable
to Holders.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY
ANY GUARANTOR.
With respect to any Guarantor, no right of any
holder of Senior Debt of such Guarantor to enforce the
subordination of the Subsidiary Guarantee shall be
impaired by any act or failure to act by such Guarantor
or any Holder or by failure of such Guarantor or any
Holder to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO
REPRESENTATIVE.
With respect to any Guarantor, whenever a
distribution is to be made or a notice given to holders
of Senior Debt of such Guarantor, the distribution may
be made and the notice given to their Representative.
Upon any payment or distribution of assets referred
to in this Article 10, the Trustee and the Holders
shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction or upon any
certificate of such Representative or of the
liquidating trustee or agent or other Person making any
distribution for the purpose of ascertaining the
Persons entitled to participate in such distribution,
the holders of the Senior Debt of such Guarantor, 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.
SECTION 10.12. 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 five Business Days
prior to the date of such payment written notice of
facts that would cause the payment of any Obligations
with respect to the Subsidiary Guarantee to violate
this Article. Only a Guarantor, the Company, the
holder of any Senior Debt of such Guarantor, or the
Representative of holders of Senior Debt of such
Guarantor 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.
With respect to any Guarantor, the Trustee in its
individual or any other capacity may hold Senior Debt
of such Guarantor with the same rights it would have if
it were not Trustee.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance
thereof authorizes and directs the Trustee on the
Holder's behalf to take such action as may be necessary
or appropriate to effectuate the subordination as
provided in this Article 10, and appoints the Trustee
the Holder's attorney-in-fact for any and all such
purposes. If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any
proceeding relative to any Guarantor referred to in
Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the holders
(or their Representative) of Senior Debt of each
Guarantor are hereby authorized to file an appropriate
claim for and on behalf of the Holders.
SECTION 10.14. LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor and by its acceptance hereof, each
beneficiary hereof, hereby confirm that it is its
intention that the Subsidiary Guarantee by such
Guarantor not constitute a fraudulent transfer or
conveyance for purposes of the 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
Guarantees. To effectuate the foregoing intention,
each such Person hereby irrevocably agrees that the
obligation of such Guarantor under its Subsidiary
Guarantee under this Article 10 shall be limited to the
maximum amount as will, after giving effect to such
maximum amount and all other (contingent or otherwise)
liabilities of such Guarantor that are relevant under
such laws, and after giving effect to any collections
from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect
of the obligations of such other Guarantor under this
Article 10, result in the obligations of such Guarantor
in respect of such maximum amount not constituting a
fraudulent conveyance. Each beneficiary under the
Subsidiary Guarantees, by accepting the benefits
hereof, confirms its intention that, in the event of a
bankruptcy, reorganization or other similar proceeding
of the Company or any Guarantor in which concurrent
claims are made upon such Guarantor hereunder, to the
extent such claims will not be fully satisfied, each
such claimant with a valid claim against the Company
shall be entitled to a ratable share of all payments by
such Guarantor in respect of such concurrent claims.
SECTION 10.15. RELEASES FOLLOWING SALE OF ASSETS.
Upon (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor, by
way of merger, consolidation or otherwise, (ii) a sale
or other disposition of all of the capital stock of any
Guarantor or (iii) a Restricted Subsidiary becoming an
Unrestricted Subsidiary pursuant to the provisions of
this Indenture, then such Guarantor (in the event of a
sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock
of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition
of all or substantially all of the assets of such
Guarantor) shall be released and relieved of its
obligations under its Subsidiary Guarantee; PROVIDED
that the Net Proceeds of such sale or other disposition
are applied in accordance with Section 4.10 hereof.
ARTICLE 11
SUBORDINATION
SECTION 11.01. SUBORDINATION.
The Company agrees, and each Holder by accepting a
Note agrees, that the Indebtedness evidenced by the
Notes shall be subordinated in right of payment to the
prior irrevocable and indefeasible payment in full of
all Obligations of every type whatsoever, contingent or
otherwise due in respect of Senior Debt of the Company
(whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed).
SECTION 11.02. 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, an assignment for the benefit of creditors or
any marshalling of the Company's assets and
liabilities:
(1) holders of Senior Debt of the Company shall be
entitled to receive payment in full of all Obligations
due in respect of such Senior Debt of the Company
(including interest after the commencement of any such
proceeding at the rate specified in the applicable
Senior Debt of the Company) before the Holders shall
be entitled to receive any payment with respect to the
Notes; and
(2) until all Obligations with respect to Senior
Debt of the Company (as provided in subsection (1)
above) are paid in full, any distribution to which
Holders would be entitled but for this Article shall
be made to holders of Senior Debt of the Company
(except that Holders may receive securities that are
subordinated in right and priority of payment to at
least the same extent as the Notes to (a) Senior Debt
of the Company and (b) any securities issued in
exchange for any such Senior Debt of the Company).
SECTION 11.03. DEFAULT ON SENIOR DEBT.
The Company may not make any payment or
distribution to the Trustee or any Holder upon or in
respect of the Notes, or any Obligation with respect
thereto, and may not acquire or purchase from the
Trustee or any Holder any Notes for cash or property
(other than securities that are subordinated in right
and priority of payment to at least the same extent as
the Notes to (a) Senior Debt of the Company and (b) any
securities issued in exchange for Senior Debt of the
Company) until all principal and other Obligations with
respect to the Senior Debt of the Company have been
paid in full if:
(i) a default in the payment when due, whether upon
acceleration or otherwise, of any principal, premium,
if any, or interest on Designated Senior Debt of the
Company occurs and is continuing beyond any applicable
grace period; or
(ii) any other default on Designated Senior Debt of
the Company occurs and is continuing and the Trustee
receives a notice of the default from the Company, or
the holders of any such Designated Senior Debt of the
Company, stating that it is or such holders are
invoking a payment blockage under this
Section 11.03(ii) (a "PAYMENT BLOCKAGE NOTICE"). If
the Trustee receives any such notice, a subsequent
notice received within 365 days thereafter shall not
be effective for purposes of this Section.
The Company may and shall resume payments on and
distributions in respect of the Notes, and all
Obligations with respect thereto, and may acquire them
when:
(1) in the case of a payment default as described
in (i) above, upon the date on which such default is
cured or waived, and
(2) in the case of a nonpayment default as
described in (ii) above, on 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, unless the
maturity of any such Designated Senior Debt of the
Company has been accelerated, and this Article
otherwise permits the payment at the time of such
payment.
SECTION 11.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of
an Event of Default, the Company shall promptly notify
the Representative of the holders of Senior Debt of the
Company of the acceleration.
SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder
receives any payment of any Obligations with respect to
the Notes at a time when the Trustee or such Holder has
actual knowledge that such payment is prohibited by
Section 11.02 or Section 11.03 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 Debt of the Company (to the extent necessary to
pay in full all such Senior Debt, whether or not due)
as their interests may appear, or their Representative
under the indenture or other agreement (if any)
pursuant to which Senior Debt of the Company may have
been issued, as their respective interests may appear,
for application to the payment of all Obligations with
respect to Senior Debt of the Company 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 Debt of the Company.
If a distribution is made to the Trustee or any
Holder that because of this Article 11 should not have
been made to it at a time when the Trustee or such
Holder has actual knowledge that such distribution
should not have been made to it, the Trustee or such
Holder who receives the distribution shall hold it in
trust for the benefit of, and, upon written request,
pay it over to, the holders of Senior Debt of the
Company as their interests may appear, or their
Representative under the indenture or other agreement
(if any) pursuant to which Senior Debt of the Company
may have been issued, as their respective interests may
appear, for application to the payment of all
Obligations with respect to Senior Debt of the Company
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 Debt of
the Company.
With respect to the holders of Senior Debt of the
Company, the Trustee undertakes to perform only such
obligations on the part of the Trustee as are
specifically set forth in this Article 11, and no
implied covenants or obligations with respect to the
holders of Senior Debt of the Company 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 Debt of the Company, 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 Debt of the Company shall be
entitled by virtue of this Article 11, except if such
payment is made as a result of the willful misconduct
or gross negligence of the Trustee.
SECTION 11.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and
the Paying Agent of any facts known to the Company that
would cause a payment of any Obligations with respect
to the Notes to violate this Article, but failure to
give such notice shall not affect the subordination of
the Notes to the Senior Debt of the Company as provided
in this Article.
SECTION 11.07. SUBROGATION.
After all Senior Debt of the Company is paid in
full (whether or not due) and until the Notes are paid
in full, Holders shall, without duplication, be
subrogated to the rights of holders of Senior Debt of
the Company to receive distributions applicable to
Senior Debt of the Company to the extent that
distributions otherwise payable to the Holders have
been applied to the payment of Senior Debt of the
Company. A distribution made under this Article to
holders of Senior Debt of the Company that otherwise
would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on Senior
Debt of the Company.
SECTION 11.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders
and holders of Senior Debt of the Company. Nothing in
this Indenture shall:
(1)impair, as between the Company and the Holders,
the obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on
the Notes in accordance with their terms;
(2)affect the relative rights of Holders and
creditors of the Company other than their rights in
relation to holders of Senior Debt of the Company; or
(3)prevent the Trustee or any Holder from
exercising its available remedies upon a Default or
Event of Default, subject to the rights of holders of
Senior Debt of the Company set forth herein to
receive distributions and payments otherwise payable
to Holders.
If the Company fails because of this Article to pay
principal of or interest on a Note on the due date, the
failure is still a Default or Event of Default.
SECTION 11.09. SUBORDINATION MAY NOT BE IMPAIRED BY
COMPANY.
No right of any holder of Senior Debt of the
Company to enforce the subordination of the
Indebtedness with respect to the Notes shall be
impaired by any act or failure to act by the Company or
any Holder or by failure of the Company or any Holder
to comply with this Indenture.
SECTION 11.10. DISTRIBUTION OR NOTICE TO
REPRESENTATIVE.
Whenever a distribution is to be made or a notice
given to holders of Senior Debt of the Company, the
distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets referred
to in this Article 11, the Trustee and the Holders
shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction or upon any
certificate of such Representative or of the
liquidating trustee or agent or other Person making any
distribution for the purpose of ascertaining the
Persons entitled to participate in such distribution,
the holders of the Senior Debt 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 11.
SECTION 11.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 11
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 five Business Days
prior to the date of such payment written notice of
facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article.
Only the Company, the holder of any Senior Debt of the
Company, or the Representative of holders of Senior
Debt of the Company may give the notice. Nothing in
this Article 11 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 Debt of the Company with the same
rights it would have if it were not Trustee.
SECTION 11.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance
thereof authorizes and directs the Trustee on the
Holder's behalf to take such action as may be necessary
or appropriate to effectuate the subordination as
provided in this Article 11, and appoints the Trustee
the Holder's attorney-in-fact for any and all such
purposes. If the Trustee does not file a proper proof
of claim or proof of debt in the form required in any
proceeding referred to in Section 6.09 hereof at least
30 days before the expiration of the time to file such
claim, the holders (or their Representative) of Senior
Debt of the Company are hereby authorized to file an
appropriate claim for and on behalf of the Holders.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, quali-
fies or conflicts with the duties imposed by TIA
Section318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, the
Guarantors or the Trustee to the others is duly given
if in writing and delivered in Person or mailed by
first class mail (registered or certified, return
receipt requested), telex, telecopier or overnight air
courier guaranteeing next day delivery, to the others'
address:
If to the Company or any Guarantor:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Telecopier No.: (702) 385-9678
Attention: Chief Financial Officer
With a copy to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Pkwy
Las Vegas, Nevada 89109
Telecopier No.: (702) 796-7181
Attention: John N. Brewer
If to the Trustee:
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Department
The Company, the Guarantors 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 or any Guarantor mails a notice or
communication to Holders, it shall mail a copy to the
Trustee and each Agent at the same time.
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 Guarantors, 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 or
the Guarantors to the Trustee to take any action under
this Indenture, the Company or the Guarantors 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, pro-
vided 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 certi-
ficate 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; PROVIDED, HOWEVER, that with respect to
matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of Public
Officials.
SECTION 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 Guarantor, or
any successor Person as such, shall have any liability for any
obligations of the Company or any 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 and the Subsidiary
Guarantees, if any, waives and releases all such liability. The
waiver and release are part of the consideration for issuance of
the Notes.
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 SUBSIDIARY
GUARANTEES, IF ANY.
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 Subsidi-
aries 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 and the Guarantors in this
Indenture and the Notes and the Subsidiary Guarantees, as the case
may be, shall bind their respective successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, in the Notes or in
the Subsidiary Guarantees, if any, 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]
SIGNATURES
Dated as of August 10, 1994
SHOWBOAT, INC.
By: /s/ J. Kell Houssels, III
Name: J. Kell Houssels, III
Title: President and Chief Executive
Officer
Attest:
/s/ John N. Brewer (SEAL)
Dated as of August 10, 1994
MARINE MIDLAND BANK, TRUSTEE
By: /s/ Carmela Ehret
Name: Carmela Ehret
Title: Vice President
Attest:
/s/ Eillen M. Hughes (SEAL)
Guarantors:
Dated as of August 10, 1994
OCEAN SHOWBOAT, INC.
By: /s/ Frank A. Modica
Name: Frank A. Modica
Title: President and Chief
Executive Officer
Attest:
/s/John N. Brewer(SEAL)
Dated as of August 10, 1994
ATLANTIC CITY SHOWBOAT, INC.
By: /s/ Mark J. Miller
Name: Mark J. Miller
Title: President and Chief
Executive Officer
Attest:
/s/ John N. Brewer(SEAL)
Dated as of August 10, 1994
SHOWBOAT OPERATING COMPANY
By: /s/ Frank A. Modica
Name: Frank A. Modica
Title: President and Chief
Executive Officer
Attest:
/s/ John N. Brewer(SEAL)
Exhibit A
(Face of Note)
13% Senior Subordinated Note due 2009
No. $__________
SHOWBOAT, INC., or any successor thereto,
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 1, 2009.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, Showboat, Inc. has caused this Note to be
signed manually or by facsimile by its duly authorized
officers and a facsimile of its corporate seal to be affixed
hereto or imprinted hereon.
Dated: _______________ __, _____
Trustee's Certificate of Authentication
This is one of the 13% Senior Subordinated
Notes due August 1, 2009
referred to in the
within-mentioned Indenture:
Marine Midland Bank, Showboat, Inc.
as Trustee
Chairman of the Board
Authorized Signature
Secretary
A-1
(Back of Security)
SHOWBOAT, INC.
13% SENIOR SUBORDINATED NOTE
DUE AUGUST 1, 2009
Capitalized terms used herein have the meanings assigned to
them in the Indenture (as defined below) unless otherwise
indicated.
1. INTEREST. Showboat, Inc., a Nevada corporation (or any
successor thereto as provided in the Indenture, the "Company"),
promises to pay interest on the principal amount of this Note at
the rate and in the manner specified below.
The Company shall pay interest on the principal amount of
this Note at the rate per annum of 13%. The Company will pay
interest semi-annually on February 1 and August 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 will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from
the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of
the Notes. To the extent lawful, the Company shall pay interest
on overdue principal (including post-petition interest in any
proceeding under any Bankruptcy Law) at the rate of 1% per annum
in excess of the then applicable interest rate on the Notes; it
shall pay interest, (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
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
record date next preceding the Interest Payment Date, even if
such Notes are cancelled after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender
this Note to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of
public and private debts. The Company, however, may pay
principal, premium, if any, and interest by check payable in such
money. It may mail an interest check to a Holder's registered
address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will
act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-registrar without notice to any
Holder. The Company or any Guarantor may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an
Indenture dated as of August 10, 1994 (as it may be amended from
time to time, the "Indenture") between the Company, the
Guarantors and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) as in effect on the date of the
Indenture. The Notes are subject to all such terms, certain of
which are summarized herein, and Holders are referred to the
Indenture and such act for a statement of such terms. The terms
of the Indenture shall govern any inconsistencies between the
Indenture and the Notes. The Notes are unsecured general obliga-
tions of the Company limited to $150,000,000 in aggregate
principal amount, of which $120,000,000 in principal amount of
Notes will be issued on the Issue Date, and up to an additional
$30,000,000 in principal amount of Notes may be issued from time
to time by the Company. Regardless of the time of issuance, the
Notes will constitute a single series or class of securities for
all purposes under the Indenture, including in connection with
any vote or consent.
5. OPTIONAL REDEMPTION. Except as set forth below, the
Company shall not have the option to redeem the Notes pursuant to
Section 3.07 of the Indenture prior to August 1, 2001.
Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, at the redemption prices (expressed
as percentages of the principal amount) set forth below, plus
accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the 12 month period beginning on August
1 of the years indicated below:
<TABLE>
<C> <C>
YEAR PERCENTAGE
2001 103.900%
2002 102.600%
2003 101.300%
2004 and thereafter 100.000%
</TABLE>
6. MANDATORY REDEMPTION. The Company shall not be
required to make mandatory redemption or sinking fund payments
with respect to the Notes.
7. REDEMPTION OR REPURCHASE AT OPTION OF HOLDER.
Under certain circumstances, as provided in the Indenture, the
Company may be required to make an offer to purchase all or a
portion of the Notes. Holders of Notes that are subject to an
offer to purchase will receive an offer to purchase from the
Company prior to any related purchase date, and may elect to have
such Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall
be mailed at least 30 days but not more than 60 days before the
redemption date to each Holder of Notes to be redeemed at its
address of record. Notes 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 of them called for
redemption.
9. SUBORDINATION. The Notes are subordinated to
Senior Debt (as defined in the Indenture) (whether outstanding on
the date of the Indenture or thereafter created, incurred,
assumed or guaranteed) and all Obligations (as defined in the
Indenture) with respect thereto. To the extent provided in the
Indenture, Senior Debt must be paid before the Notes may be paid.
The Company agrees, and each Holder by accepting a Note agrees,
to the subordination and authorizes the Trustee to give it
effect.
10. TRANSFER REQUIRED BY THE GAMING AUTHORITIES.
Notwithstanding the foregoing, each Holder, by accepting a Note,
agrees that it any Gaming Authority requires that the Holder or
beneficial owner of a Note must be licensed, qualified, or found
suitable under the Gaming Control Act or other applicable laws,
and such Holder or beneficial owner fails to apply for a license,
qualification, or finding of suitable within 30 days after being
requested to do so by the Gaming Authority, or if such Holder or
beneficial owner is not so license, qualified or found suitable,
the Company shall have the right, at its option, (i) to require
such Holder or beneficial owner to dispose of such Holder's or
beneficial owner's Notes within 30 days of receipt of such notice
of such finding by the applicable Gaming Authority, or such
earlier date as may be ordered by such Gaming Authority, or (ii)
to call for the redemption of the Notes of such Holder or
beneficial owner at the lesser of the principal amount thereof,
or the price at which such Holder beneficial owner acquired the
Notes, together with, in either case accrued interest to the
earlier of the date of redemption of the date of the finding of
unsuitability or disqualification by such Gaming Authority, which
may be less than 30 days following the notice of redemption, if
so ordered by such Gaming Authority, Commencing on the date such
Gaming Authority serves notice upon the Company that any Holder
or beneficial owner is unsuitable or disqualified, it shall be
unlawful for any such unsuitable or disqualified Holder or
beneficial owner: (i) to receive any dividends or interest upon
this Note; (ii) to exercise, directly or through any trustee or
nominee, any right conferred by this Note; or (iii) to receive
any remuneration in any form from the Company for services
rendered or otherwise. The Company shall notify the Trustee in
writing of any such redemption or finding or unsuitability or
disqualification as soon as practicable, and the Trustee shall
rely on such notice until it receives instructions from the
Company to the contrary. The Holder or beneficial owner applying
for a license, qualification or a finding of suitability must pay
all costs of the licensure or investigation for such finding of
suitability or qualification.
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 to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not exchange
or register the transfer of any Note or portion of a Note se-
lected for redemption. Also, it need not exchange or register
the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed, during the period between a
record date and the corresponding Interest Payment Date.
12. PERSONS DEEMED OWNERS. Prior to due presentment
to the Trustee for registration of the transfer of this Note, the
Trustee, any Agent, the Company and the Guarantors may deem and
treat the Person in whose name this Note is registered as its
absolute owner for the purpose of receiving payment of principal
of and interest on this Note and for all other purposes
whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent, the Company nor any Guarantor shall be
affected by notice to the contrary. The registered holder of a
Note shall be treated as its owner for all purposes.
13. UNCLAIMED MONEY. If the money for the payment of
principal or interest remains unclaimed for two years, the
Trustee and the Paying Agent shall pay the money back to the
Company at its written request. After that, Holders of the Notes
entitled to the money must look to the Company for payment unless
an abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to
such money shall cease.
14. AMENDMENTS AND WAIVERS. Subject to certain
exceptions, the Indenture or the Notes may be amended with the
consent of the Holders of at least a majority in principal amount
of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes), and
any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender
offer or exchange offer for the Notes) however, without the
consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held at the time of such consent by a
non-consenting Holder):
(a) reduce the principal amount of the Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed
maturity of any Note or alter or waive any of the provisions
with respect to the redemption of the Notes;
(c) reduce the rate of or change the time for payment
of interest, including default interest, on any
Note;
(d) waive a Default or Event of Default in the payment
of principal of or premium, if any, or interest 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 and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that
stated in the Notes;
(f) make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or
premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any
Note;
(h) make any change to the subordination provisions of
Section 10.02 or Article 11 of the Indenture that adversely
affects Holders;
(i) make any change in Section 6.07 of the Indenture
or in the foregoing amendment and waiver provisions.
The right of any Holder to participate in any consent
required or sought pursuant to any provision of the Indenture
(and the obligations of the Company to obtain any such consent
otherwise required from such Holder) may be subject to the
requirements that such Holder shall have been the Holder of
record of any Notes with respect to which such consent is
required to be sought as of a date identified by the Trustee in a
notice furnished to Holders in accordance with the terms of the
Indenture. Without the consent of any Holder, the Indenture or
the Notes may be amended to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to
or in place of certificated Notes, to provide for assumption of
the Company's obligations to Holders in the case of a merger or
consolidation or to make any change that would provide any
additional rights or benefits to the Holders (including providing
for Subsidiary Guarantees pursuant to Section 4.13 of the
Indenture) or that does not adversely affect the rights of any
Holder under the Indenture or to comply with the requirements of
the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
15. DEFAULTS AND REMEDIES. Events of Default include
(as more fully described, and subject to, the terms and
conditions of the Indenture): default for 30 days in the payment
when due of interest on the Notes (whether or not prohibited by
the subordination provisions of the Indenture) by the Company or
the Guarantors; default in payment when due of principal of or
premium, if any, on the Notes (whether or not prohibited by the
subordination provisions of the Indenture) by the Company or the
Guarantors; failure by the Company or the Guarantors for 30 days
after notice to comply with Sections 4.07, 4.09, 4.10, 4.11, 4.12
or 4.15 of the Indenture; failure by the Company or the
Guarantors for 60 days after notice to comply with any of its
other agreements in the Indenture or the Notes; default under any
mortgage, indenture or instrument under which there may be issued
or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any Guarantor or any of
their respective Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any Guarantor or any of their
respective Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the Issue Date, which
default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness (a
"Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there
has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more; failure by the
Company or any Guarantor or any of their respective Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days; 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 or shall fail to comply with any obligations under
its Subsidiary Guarantee; and certain events of bankruptcy or
insolvency with respect to the Company, any Guarantor or any of
their respective Restricted Subsidiaries. If any Event of
Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately,
except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the
Company or any of its Restricted Subsidiaries or any Guarantor
which individually or as a group constitutes a Significant
Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the
payment of principal or interest) if it determines that
withholding notice is in their interest. The Company must furnish
an annual compliance certificate to the Trustee.
16. RESTRICTIVE COVENANTS. The Indenture imposes
certain limitations on the ability of the Company and its
Subsidiaries to, among other things, incur additional
Indebtedness, make payments in respect of Capital Stock, merge or
consolidate with or into any Person or sell, lease, transfer,
convey or otherwise dispose of all or substantially all of its
properties or assets, and engage in certain transactions with
Affiliates. The limitations are subject to a number of important
qualifications and exceptions.
17. GUARANTEES. Payment of principal and interest
(including interest on overdue principal and overdue interest, if
lawful) on the Notes is unconditionally guaranteed by the
Guarantors pursuant to Article 10 of the Indenture.
18. TRUSTEE DEALINGS WITH COMPANY. The Trustee under
the Indenture, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the
Company, any Guarantor or their respective Affiliates, and may
otherwise deal with the Company, any Guarantor or their
respective Affiliates, as if it were not Trustee.
19. NO RECOURSE AGAINST OTHERS. No past, present or
future director, officer, employee, incorporator or stockholder,
as such, of the Company, any Guarantor, as such, shall have any
liability for any obligations of the Company or any Guarantor
under the Notes, the Subsidiary Guarantees 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
and the Subsidiary Guarantees, if any, waives and releases all
such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
20. AUTHENTICATION. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
21. 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).
22. 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 has directed the Trustee to 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.
23. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE, THE
NOTES AND THE SUBSIDIARY GUARANTEES, IF ANY.
The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request may
be made to:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Telecopier No.: (702) 385-9678
Attention: Chief Financial Officer
A-2
Assignment Form
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
_________________________________________________________________
(Insert assignee's social security or tax identification no.)
_______________________________________________________________
___________________________________________________________________
__________________________________________________________________
____________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably
appoint______________________________________________________
agent to transfer this Note on the books of the Company. The
agent may substitute another to act for him.
Date: ______________________
Your
Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee:
A-3
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check
the box below:
| | Section 4.10 | | Section 4.15
If you want to elect to have only part of the Note
purchased by the Company pursuant to Section 4.10 or Section 4.15
of the Indenture, state the amount you elect to have purchased:
$___________
Date:___________________ Your Signature:_____________________
(Sign exactly as your name appears on
the Note)
Tax Identification No.:________
Signature Guarantee.
EXHIBIT B
Form of Supplemental Indenture to Be Delivered by Guarantors
Supplemental Indenture (this "SUPPLEMENTAL INDENTURE"),
dated as of ________________, between __________________ (the
"GUARANTOR"), a subsidiary of Showboat, Inc. (or its successor),
a Nevada corporation (the "COMPANY"), and Marine Midland Bank, a
New York corporation, as trustee under the indenture referred to
below (the "Trustee").
W I T N E S S E T H
WHEREAS, Showboat, Inc., a Nevada corporation has
heretofore executed and delivered to the Trustee an indenture
(the "INDENTURE"), dated as of August 10, 1994, providing for the
issuance of an aggregate principal amount of $150,000,000 of 13%
Senior Subordinated Notes due 2009 (the "NOTES");
WHEREAS, Section 4.13 of the Indenture provides that under
certain circumstances the Company is required to cause the
Guarantor to execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guarantor shall unconditionally
guarantee all of the Company's obligations under the Notes
pursuant to a Subsidiary Guarantee on the terms and conditions
set forth herein; 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 Guarantor and the Trustee mutually
covenant and agree for the equal and ratable benefit of the
Holders 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 Guarantor hereby agrees that
its obligations to the Holder and the Trustee pursuant to this
Subsidiary Guarantee shall be as expressly set forth in Article
10 of the Indenture and in such other provisions of the Indenture
as are applicable to Guarantors, and reference is made to the
Indenture for the precise terms of this Supplemental Indenture.
The terms of Article 10 of the Indenture and such other
provisions of the Indenture as are applicable to Guarantors are
incorporated herein by reference.
3. Execution and Delivery of Subsidiary Guarantees.
(a)To evidence its Subsidiary Guarantee set forth in this
Supplemental Indenture, the Guarantor hereby agrees that a
notation of such Subsidiary Guarantee substantially in the
form of Exhibit C to the Indenture shall be endorsed by an
Officer of such Guarantor on each Note authenticated and
delivered by the Trustee after the date hereof.
(b)Notwithstanding the foregoing, the Guarantor hereby
agrees that its Subsidiary Guarantee set forth herein shall
remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Subsidiary Guarantee.
(c)If an Officer whose signature is on this Supplemental
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.
(d)The delivery of any Note by the Trustee, after the
authentication thereof under the Indenture, shall constitute
due delivery of the Subsidiary Guarantee set forth in this
Supplemental Indenture on behalf of the Guarantor.
4. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator, stockholder of the
Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor 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.
5. New York Law to Govern. The internal law of the State of
New York shall govern and be used to construe this Supplemental
Indenture and the Subsidiary Guarantee.
6. 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.
7. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
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: ____________ ___, ____[Guarantor]
By: ___________________________
Name:
Title:
Dated: ____________ ___, ____ Marine Midland Bank,
as Trustee
By: ___________________________
Name:
Title:
A-4
EXHIBIT C
[FORM OF NOTATION ON SENIOR SUBORDINATED NOTE
RELATING TO SUBSIDIARY GUARANTEE]
Each of the Guarantors listed below (hereinafter referred
to as the "Guarantors", which term includes any successor or
assign under the indenture (the "Indenture")), jointly and
severally unconditionally guarantees that (i) the principal of
and interest on the 13% Senior Subordinated Notes due August 1,
2009 (the "Notes") will be paid in full when due, whether at the
maturity or interest payment or mandatory redemption date, by
acceleration, call for redemption or otherwise, and interest on
the overdue principal of and interest, if any, on the Notes and
all other obligations of the Company to the Holders or the
Trustee under the indenture or the Notes will be promptly paid in
full when due or performed, all in accordance with the terms of
the Indenture and the Notes and (ii) in case of any extension of
time of payment or renewal of any Notes or any of 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 maturity, by acceleration or otherwise.
The obligations of each Guarantor to the Holder and to the
Trustee pursuant to this Guaranty and the Indenture are as
expressly set forth in Article 10 of the Indenture and in such
other provisions of the Indenture as are applicable to
Guarantors, and reference is hereby made to such Indenture for
the precise terms of this Guaranty.
This is a continuing guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its
successors and assigns until full and final payment of all of the
Company's obligations under the Notes and the Indenture and shall
inure to the benefit of the successors and assigns of the Trustee
and the Holders and, in the event of any transfer or assignment
of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to
and be vested in such transferee or assignee, all subject to the
terms and conditions hereof. This is a guarantee of payment and
not a guarantee of collection.
This Guaranty shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon
which this Guaranty is noted shall have been executed by the
Trustee under the Indenture by the manual signature of one of its
authorized officers.
THE TERMS OF ARTICLE 10 OF THE INDENTURE AND OTHER
PROVISIONS OF THE INDENTURE AS ARE APPLICABLE TO THE GUARANTORS
ARE INCORPORATED HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given
in the Indenture unless otherwise indicated.
EXHIBIT D
FORM OF ESCROW AGREEMENT
This ESCROW AGREEMENT (the "AGREEMENT"), dated as of
August 10, 1994, by and among National Westminster Bank of New
Jersey (the "ESCROW AGENT"), Marine Midland Bank, as trustee for
the benefit of the Holders of the Notes under the Indenture (the
"Trustee") and Showboat, Inc., a Nevada corporation (the
"COMPANY").
RECITALS
(a)Pursuant to that certain Indenture dated as of August 10,
1994, by and between the Company and the Trustee (the
"INDENTURE"), the Company has issued $120,000,000 aggregate
principal amount of its 13% Senior Subordinated Notes due 2009
(the "NOTES").
(b)The Indenture requires the Company to deposit $100 million
of the net proceeds from the offering of the Notes in the Escrow
Account in order for the Company to meet its investment
obligations with respect to Sydney Harbour Casino Holdings
Limited ("SHCL").
(c)The parties have entered into this Agreement to set forth
the conditions upon which, and the manner in which, funds will be
disbursed from the Escrow Account to permit, among other things,
the Company to fund its investment obligations with respect to
SHCL.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein but not
otherwise defined shall have the meaning given to them in the
Indenture. In addition to any other defined terms used herein,
the following terms shall constitute defined terms for purposes
of this Agreement and shall have the meanings set forth below:
"ACCEPTABLE REPLACEMENT ESCROW AGENT" means a corporation
organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to
exercise corporate trustee power, subject to supervision or
examination by federal or state authority and having combined
capital and surplus of at least $100 million as set forth in its
most recent published annual report of condition.
"ELIGIBLE INSTITUTION" means a commercial banking institution
(which may include Escrow Agent and its affiliates) that has
combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or
higher) according to Standard & Poor's Corporation ("S&P) or
Moody's Investors Service, Inc. ("Moody's) at the time as of
which any investment or rollover therein is made.
"ESCROW ACCOUNT" means the escrow account established pursuant
to Section 2(b) hereof.
"GOVERNMENT SECURITIES" means direct obligations of, or
obligations guaranteed by, the United States of America for the
payment of which guarantee or obligations the full faith and
credit of the United States is pledged.
"MARKETABLE SECURITIES" means (i) Government Securities,
(ii) any certificate of deposit maturing not more than 270 days
after the date of acquisition issued by, or time deposit of, an
Eligible Institution, (iii) commercial paper maturing not more
than 270 days after the date of acquisition issued by a
corporation (other than an affiliate of the Company) with a
rating, at the time as of which any investment therein is made,
of "A-1" (or higher) according to S&P or "P-1" (or higher)
according to Moody's, (iv) any banker's acceptances or money
market deposit accounts issued or offered by an Eligible
Institution, and (v) any fund investing exclusively in
investments of the types described in clauses (i) through (iv)
above.
"OFFERING" means the public offering of the Notes.
"PROSPECTUS" means the prospectus in the form first used to
confirm sales of the Notes.
2. ESCROW ACCOUNT; ESCROW AGENT
(a)APPOINTMENT OF ESCROW AGENT. The Company hereby appoints
Escrow Agent, and Escrow Agent hereby accepts appointment, as
escrow agent under the terms and conditions of this Agreement.
(b)ESTABLISHMENT OF ESCROW ACCOUNT. Concurrently with the
execution and delivery hereof, Escrow Agent shall establish the
Escrow Account at its office at 2 Montgomery Street, Jersey City,
NJ 07302. Immediately upon receipt, the Company shall deliver
$100 million of the proceeds of the offering of the Notes to
Escrow Agent for deposit into the Escrow Account. Escrow Agent
shall issue a receipt, or an initial account statement as
described in Section 2(g), evidencing and acknowledging Escrow
Agent's receipt of the Deposit. Subject to the other terms and
conditions of this Agreement, the Deposit shall be held for the
benefit of the Company in the Escrow Account until disbursed in
accordance with the terms hereof.
(c)ESCROW AGENT COMPENSATION. Escrow Agent and any Acceptable
Replacement Escrow Agent shall be compensated pursuant to a
separate agreement between the Company and Escrow Agent or such
Acceptable Replacement Escrow Agent. Such compensation shall not
be chargeable against the Escrow Account.
(d)INVESTMENT OF THE DEPOSIT. The Deposit shall be invested
and reinvested upon the following terms and conditions:
(i) ACCEPTABLE INVESTMENTS. The Deposit shall be
invested and reinvested in Marketable Securities in accordance
with the Company's written instructions to Escrow Agent. Escrow
Agent shall invest the Deposit in Marketable Securities
designated by the Company from time to time. All such Marketable
Securities shall be assigned to Escrow Agent, for the benefit of
the Company.
(ii) INTEREST. All interest earned on the Deposit
invested in such Marketable Securities shall be paid to the
Company.
(e) LIMITATION ON ESCROW AGENT'S RESPONSIBILITIES
(i) Escrow Agent's duties and responsibilities shall
be limited to those expressly set froth in this Agreement and are
purely ministerial in nature. Escrow Agent shall not be subject
to, or obligated to recognize, any other agreement to which the
Company, the Trustee, or either of them may be a party.
References in this Agreement to any such agreement are for
identification and definitional purposes only.
(ii) Escrow Agent shall have no obligation with respect
to the Escrow Account other than to follow faithfully
instructions contained in this Agreement or deliver to Escrow
Agent in accordance with this Agreement. Escrow Agent may rely
and act upon any written notice, instruction, direction, request,
waiver, consent, receipt, or other paper or document (the
"Instructions") which it believes in good faith to be genuine and
what it purports to be. Escrow Agent shall not be subject to any
liability with respect to the form, execution, or validity of any
such Instruction. The Escrow Agent shall not be liable for
verifying the accuracy of any certifications made by the Company
in connection with this Agreement.
(iii) Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in
good faith, or for any mistake of fact or law, or for doing
anything which, in good faith, it may do or refrain from doing in
connection with the Escrow Account, except in each case in the
event of Escrow Agent's gross negligence or wilful misconduct.
(f) SUBSTITUTION OF ESCROW AGENT
(i) The Company shall have the right to cause Escrow
Agent to be relieved of its duties hereunder and to select a
substitute escrow agent to serve hereunder (provided such
substitute escrow agent is an Acceptable Replacement Escrow
Agent), upon the expiration of 30 days following delivery of
written notice of substitution to Escrow Agent and the Trustee.
Upon selection of such substitute escrow agent, such substitute
escrow agent and the parties hereto other than the substituted
escrow agent shall enter into an agreement substantially
identical to this Agreement and, thereafter, Escrow Agent shall
be relieved of its duties and obligations to perform hereunder,
except that Escrow Agent shall transfer to the substitute escrow
agent upon request therefor all funds and marketable Securities
maintained by Escrow Agent hereunder and copies of all books,
records, plans and other documents in Escrow Agent's possession
relating to such funds or Marketable Securities or this
Agreement.
(ii) Escrow Agent, or any substitute escrow agent, may
at any time resign and be discharged of its duties and
obligations under this Agreement by giving at least 30 days'
notice to the Company and the Trustee. The Company shall appoint
an Acceptable Replacement Escrow Agent as substitute escrow agent
within such thirty day period.
(iii) If the Company fails to appoint a substitute
escrow agent as required under paragraph (ii) above, Escrow Agent
shall deliver all assets held in the Escrow Account to an
Acceptable Replacement Escrow Agent of either its choosing or as
appointed by a court upon application therefor.
(iv) Escrow Agent shall be discharged from any further
duties under this Agreement upon its transfer of the assets held
in the Escrow Account to an Acceptable Replacement Escrow Agent.
(g) ESCROW ACCOUNT STATEMENT. Upon receipt of the initial
escrow funds and upon the request of the Company from time to
time thereafter (but not less frequently than monthly), Escrow
Agent shall deliver to the Company a statement setting forth with
reasonable particularity the balance of funds then in the Escrow
Account (including all investments) and the manner in which such
funds are invested. The parties hereto irrevocably instruct
Escrow Agent that on the first date upon which the balance in the
Escrow Account (including the holdings of all Marketable
Securities) is reduced to zero, Escrow Agent shall deliver to the
Trustee a notice that the balance in the Escrow Account has been
reduced to zero.
(h) OTHER POWERS OF ESCROW AGENT
(i) Escrow Agent may register any investments held by
the Escrow Account in its nominee name without increase or
decrease of liability.
(ii) Escrow Agent may consult with and obtain advice
from legal counsel in the event of any dispute or question as to
the construction of any of the provisions of this Agreement or
any of Escrow Agent's duties under this Agreement, and Escrow
Agent shall incur no liability in acting in good faith in
accordance with the advice of such counsel.
(i) INCUMBENCY CERTIFICATE. The Company and the Trustee
each shall provide a certificate to Escrow Agent as to the
incumbency and signatures of those individuals authorized to
provide instructions relating to the Escrow Account or to execute
documents to be provided to Escrow Agent. The Company and the
Trustee also shall promptly notify Escrow Agent of any changes to
such a certificate. Escrow Agent may rely on the accuracy and
completeness of any such certificate unless and until it has
received an acceptable replacement certificate. All certificates
provided under this Section 2(i) shall be executed by the
applicable party's corporate secretary or assistant secretary or,
if the party does not have a corporate secretary or assistant
secretary, by a comparable officer.
3. DISBURSEMENTS
(a) FUNDING OF INVESTMENT IN SHCL. Upon receiving
certification from the Company that SHCL, or a Subsidiary of
SHCL, has received Australian Gaming Approval and Management
Contract Approval, Escrow Agent shall release the Deposit and any
interest accrued thereon to the Company, or any other Subsidiary
or Affiliate of the Company, as the Company may direct; provided,
however, that the Company may use the Deposit released to it only
to make its investment in SHCL, or as otherwise provided by the
terms of the Indenture. Such certification from the Company to
Escrow Agent shall contain a certification by a duly elected and
authorized officer of the Company to the effect that Australian
Gaming Approval and Management Contract Approval have occurred, a
copy of notification to that effect from the New South Wales
Casino Control Authority (if such notification is in writing),
and a representation by the Company that the Deposit being
released to it is being used to fund the Company's investment
obligations with respect to SHCL.
(b) OFFERS TO PURCHASE. In the event that Escrow Agent has
not received notification from the Company in the manner
specified above that Australian Gaming Approval and Management
Contract Approval have occurred on or prior to the first
anniversary of the offering of the Notes, then, subsequent to the
Company's offer to Holders to purchase the Notes as required by
the Indenture, Escrow Agent shall release the funds in the Escrow
Account in an amount and in a manner as specified in a joint
written notice to Escrow Agent from the Company and the Trustee.
Such joint notice shall be executed by a duly elected and
authorized officer of each of the Company and the Trustee.
(c) Any funds remaining in the Escrow Account after the
release of the Deposit in accordance with Sections 3(a) and (b)
hereof shall be released to the Company upon request and may be
used for general corporate purposes.
(d) Any funds in the Escrow Account to be released pursuant
to the terms of this Section 3 shall only be released if Escrow
Agent shall not have received any notice from the Trustee that as
a result of an Event of Default, the indebtedness represented by
the Notes has been accelerated and has become due and payable.
4. INDEMNITY. The Company shall indemnify, hold harmless
and defend Escrow Agent and its respective directors, officers,
agents and employees, from and against any and all claims,
actions, obligations, liabilities and expenses, including
reasonable defense costs, investigative fees and costs,
reasonable legal fees, and claims for damages, arising from
Escrow Agent's performance under this Agreement, except to the
extent that such liability, expense or claim is directly
attributable to the gross negligence or wilful misconduct of such
indemnified person. In connection with any claim, action,
obligation, liability or expense for which indemnification is
sought by Escrow Agent hereunder, Escrow Agent shall be entitled
to recover its costs as incurred from funds available in the
Escrow Account.
5. TERMINATION. This Agreement shall terminate
automatically following disbursement of all funds remaining in
the Escrow Account, unless sooner terminated by agreement of the
parties hereto.
6. MISCELLANEOUS
(a) WAIVER. Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver
shall be deemed to have been given unless such waiver is in
writing, signed by the waiving party and specifically designating
the breach waived, nor shall any such waiver constitute a
continuing waiver of similar or other breaches.
(b) INVALIDITY. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed
to be inoperative, unenforceable or invalid in a particular case
or in all cases, such circumstances shall not have the effect of
rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible,
the parties' intent.
(c) ASSIGNMENT. This Agreement is personal to the parties
hereto, and the rights and duties of any party hereunder shall
not be assignable except with the prior written consent of the
other parties. In any event, this Agreement shall inure to the
benefit of and be binding upon the parties and their respective
successors and permitted assigns.
(d) BENEFIT. The parties hereto, the Holders of the Notes
and their respective permitted assigns, but no others, shall be
bound hereby and entitled to the benefits hereof.
(e) TIME. Time is of the essence of each provision of this
Agreement.
(f) CHOICE OF LAW. The existence, validity, construction,
operation and effect of any and all terms and provisions of this
Agreement shall be determined in accordance with and governed by
the laws of the State of New York.
(g) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains
the entire agreement among the parties with respect to the
subject matter hereof and supersedes any and all prior
agreements, understandings and commitments, whether oral or
written. This Agreement may be amended only by a writing signed
by duly authorized representatives of all parties.
(h) NOTICES. All notices and other communications required
or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been duly given and received,
regardless of when and whether received, either: (a) on the day
of hand delivery; or (b) three business days following the day
sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as
follows:
To Escrow Agent:
National Westminster Bank of New Jersey
2 Montgomery Street
Jersey City, NJ 07302
Attention: Francine Asselta
To the Trustee:
Marine Midland Bank
140 Broadway
New York, NY 10005-1180
Telecopier No: 212/658-6425
Attention: Eileen M. Hughes
To the Company:
Showboat, Inc.
2800 Fremont Street
Las Vegas, NV 89104
Telecopier No: 702/385-9678
Attention: Leann Schneider
or at such other address as the specified entity most recently
may have designated in writing in accordance with this section to
the others.
(ii) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
(iii)CAPTIONS. Captions in this Agreement are for
convenience only and shall not be considered or referred to in
resolving questions of interpretation of this Agreement
A-5
IN WITNESS WHEREOF, the parties have executed and delivered
this Escrow Agreement as of the day first above written.
ESCROW AGENT: NATIONAL WESTMINSTER BANK OF NEW
JERSEY
By:
___________________________________
Name:
Title:
TRUSTEE: MARINE MIDLAND BANK
By:
___________________________________
Name:
Title:
COMPANY: SHOWBOAT, INC.
By:
___________________________________
Name:
Title:
Acknowledged:
OCEAN SHOWBOAT, INC.
By: _________________________________
Name:
Title:
ATLANTIC CITY SHOWBOAT, INC.
By: _________________________________
Name:
Title:
SHOWBOAT OPERATING COMPANY
By: _________________________________
Name:
Title:
A-6
A-7
Execution Copy
WARRANT AGREEMENT
Dated as of May 6, 1994
by and between
SHOWBOAT, INC.
and
DLJ BRIDGE FINANCE, INC.
A-8
WARRANT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <C>
SECTION 1. Warrant Certificates............................1
SECTION 2. Execution of Warrant Certificates...............1
SECTION 3. Registration....................................2
SECTION 4. Registration of Transfers and Exchanges.........2
SECTION 5. Terms of Warrants; Exercise of Warrants.........3
SECTION 6. Payment of Taxes................................4
SECTION 7. Mutilated or Missing Warrant Certificates.......4
SECTION 8. Reservation of Warrant Shares...................5
SECTION 9. Obtaining Stock Exchange Listings...............5
SECTION 10. Adjustment of Exercise Price and
Number of Warrant Shares Issuable.............. 5
</TABLE>
<TABLE>
<C> <C> <C>
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.........5
(b) ADJUSTMENT FOR RIGHTS ISSUE....................6
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.............7
(d) ADJUSTMENT FOR COMMON STOCK ISSUE..............7
(e) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE....9
(f) CURRENT MARKET PRICE...........................10
(g) CONSIDERATION RECEIVED.........................10
(h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.....11
(i) WHEN NO ADJUSTMENT REQUIRED....................11
(j) NOTICE OF ADJUSTMENT...........................11
(k) VOLUNTARY REDUCTION............................11
(l) NOTICE OF CERTAIN TRANSACTIONS.................12
(m) REORGANIZATION OF SHOWBOAT.....................12
(n) SHOWBOAT DETERMINATION FINAL...................12
(o) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.......12
(p) ADJUSTMENT IN NUMBER OF SHARES.................13
(q) FORM OF WARRANTS...............................13
</TABLE>
<TABLE>
<S> <C> <C>
SECTION 11. Fractional Interests...........................13
SECTION 12. Notices to Warrant Holders.....................13
SECTION 13. Registration...................................15
SECTION 14. Regulatory Redemption of Warrants..............24
SECTION 15. Representations and Warranties of Showboat.....25
SECTION 16. Notices to Showboat and Warrant Holder.........26
SECTION 17. Supplements and Amendments.....................27
SECTION 18. Successors.....................................27
SECTION 19. Termination....................................27
SECTION 20. Governing Law..................................27
SECTION 21. Benefits of This Agreement.....................27
SECTION 22. Counterparts...................................27
</TABLE>
EXHIBIT A
EXHIBIT B
*This Table of Contents does not constitute a part of this
Agreement or have any bearing upon the interpretation of any of
its terms or provisions.
A-9
WARRANT AGREEMENT (the "Agreement") dated as of
May 6, 1994 between Showboat, Inc., a Nevada corporation
("Showboat"), and DLJ Bridge Finance, Inc., a Delaware
corporation ("DLJ Bridge"). (DLJ Bridge and any subsequent
assignee or transferee of any or all of the Warrants is
sometimes referred to herein as the Warrant holder(s).)
WHEREAS, Showboat has executed a commitment letter
along with an attached Summary of Terms and Conditions (the
"Bridge Commitment Letter") dated as of April 20, 1994 with DLJ
Bridge whereby DLJ Bridge has committed to purchase, subject
expressly to the execution of certain definitive documentation
satisfactory to DLJ Bridge, up to $60,000,000 in aggregate
amount of senior increasing rate preferred stock (the "Senior
Bridge Preferred") to be issued by Showboat for purposes of
financing in part the development of the exclusive casino
gaming establishment to be located in Sydney, Australia (the
"Sydney Casino") by Sydney Harbor Casino Holdings Limited
("SHCL"), an Australian Corporation owned collectively by
Showboat Australia Pty Limited, a wholly-owned Australian
subsidiary of Showboat, Leighton Properties Pty Limited, an
Australian subsidiary of Leighton Holdings Limited, an
Australian corporation, and certain institutional investors.
WHEREAS, Showboat has agreed, pursuant to the
Bridge Commitment Letter, that upon the granting of preferred
applicant status to develop the Sydney Casino to SHCL or any of
Showboat's other affiliates by the Casino Control Authority of
New South Wales, Australia, Showboat will issue to DLJ Bridge
common stock purchase warrants, as hereinafter described (the
"Warrants") to purchase 150,000 shares of common stock, par
value $1.00 per share (the "Common Stock") of Showboat (the
Common Stock issuable on exercise of the Warrants being
referred to herein as the "Warrant Shares"), at an exercise
price per share equal to the lesser of (i) $15.50 (which was
the closing share price of the Company's common stock on the
New York Stock Exchange on the date of the Bridge Commitment
Letter) or (ii) the exercise price of the Takedown Warrants (as
defined in the Bridge Commitment Letter) (the "Exercise
Price"), and such preferred applicant status was granted to
Showboat on May 6, 1994;
NOW, THEREFORE, in consideration of the premises
and the mutual agreements herein set forth, the parties hereto
agree as follows:
SECTION 1. Warrant Certificates. The
certificates evidencing the Warrants (the "Warrant
Certificates") to be delivered pursuant to this Agreement shall
be in registered form only and shall be substantially in the
form set forth in Exhibit A attached hereto. With respect to
any Warrant Shares issued upon the exercise of such Warrants,
such Warrant Certificates and certificates representing such
Warrant Shares shall bear the legend set forth in Exhibit B
attached hereto.
SECTION 2. Execution of Warrant Certificates.
Warrant Certificates shall be signed on behalf of Showboat by
its Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer or President and
Secretary or an Assistant Secretary. Each such signature upon
the Warrant Certificates may be in the form of a facsimile
signature of the present or any future Chairman of the Board,
Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer or President and Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the
Warrant Certificates and for that purpose Showboat may adopt
and use the facsimile signature of any person who shall have
been Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, Chief Operating Officer, President and
Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Warrant Certificates shall be delivered or
disposed of he shall have ceased to hold such office. The seal
of Showboat may be in the form of a facsimile thereof and may
be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.
In case any officer of Showboat who shall have
signed any of the Warrant Certificates shall cease to be such
officer before the Warrant Certificates so signed shall have
been disposed of by Showboat, such Warrant Certificates
nevertheless may be disposed of as though such person had not
ceased to be such officer of Showboat; and any Warrant
Certificate may be signed on behalf of Showboat by any person
who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of Showboat to sign such
Warrant Certificate, although at the date of the execution of
this Agreement any such person was not such officer. Warrant
Certificates shall be dated the date of signature by an officer
of Showboat.
SECTION 3. Registration. Showboat shall number
and register the Warrant Certificates in a register as they are
issued. Showboat may deem and treat the registered holder(s)
of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing
thereon made by anyone), for all purposes, and shall not be
affected by any notice to the contrary, except as provided in
Section 4 hereof.
Showboat shall, upon written instructions of its
Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer, or President and Secretary or
Assistant Secretary, initially sign and deliver Warrants
entitling the holders thereof to purchase not more than the
number of Warrant Shares referred to above in the second
recital hereof and shall sign and deliver Warrants as otherwise
provided in this Agreement.
SECTION 4. Registration of Transfers and
Exchanges. Showboat shall from time to time register the
transfer of any outstanding Warrant Certificates in a Warrant
register to be maintained by it for that purpose, upon
surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to Showboat, duly
executed by the registered holder or holders thereof or by the
duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a
new Warrant Certificate shall be issued to the transferee(s)
and the surrendered Warrant Certificate shall be cancelled by
Showboat. Cancelled Warrant Certificates shall thereafter be
disposed of by Showboat in accordance with applicable law.
The Warrant holders agree that prior to any
proposed transfer of the Warrants or of the Warrant Shares, if
such transfer is not made pursuant to an effective Registration
Statement under the Securities Act of 1933, as amended (the
"Act"), or an opinion of counsel, reasonably satisfactory in
form and substance to Showboat, that the Warrants or Warrant
Shares may be sold publicly without registration under the Act,
the Warrant holder will deliver to Showboat:
(1) an investment covenant reasonably
satisfactory to Showboat signed by the proposed
transferee;
(2) an agreement by such transferee to the
impression of the restrictive investment legend set forth
below on the Warrants or the Warrant Shares;
(3) an agreement by such transferee that
Showboat may place a notation in the stock books of
Showboat or a "stop transfer order" with any transfer
agent or registrar with respect to the Warrant Shares;
(4) an agreement by such transferee to be bound
by the provisions of this Section 4 relating to the
transfer of such Warrants or Warrant Shares; and
(5) an opinion of counsel that such transfer is
being made pursuant to an exemption from the Act.
Notwithstanding the foregoing paragraph, DLJ
Bridge may transfer any Warrants to (i) one or more affiliates
(as that term is defined in the Act) of DLJ Bridge, (ii) any
managing director, general partner, director, individual
limited partner, officer or employee of Donaldson, Lufkin &
Jenrette, Inc. or any of their affiliates (collectively, the
"DLJ Associates"), (iii) the heirs, executors, administrators,
testamentary trustees, legatees, custodians or beneficiaries of
any DLJ Associates and (iv) a trust, the beneficiaries of
which, or a corporation or partnership, the stockholders or
general or limited partners of which, include only the DLJ
Associates, their spouses or their lineal descendants.
The Warrant holders agree that each certificate
representing Warrant Shares will bear the legend set forth in
Exhibit B. Additional legends may be added as required by
Nevada and New Jersey gaming authorities or other gaming
authorities having jurisdiction over the Company.
Warrant Certificates may be exchanged at the
option of the holder(s) thereof, when surrendered to Showboat
at its office for another Warrant Certificate or other Warrant
Certificates of like tenor and representing in the aggregate a
like number of Warrants. Warrant Certificates surrendered for
exchange shall be cancelled by Showboat. Such cancelled
Warrant certificates shall then be disposed of by Showboat in
accordance with applicable law.
No service charge shall be made for any transfer
or exchange of Warrant Certificates or any issuance of Warrant
Certificates, but Showboat may require payment of a sum
sufficient to cover any stamp or other governmental charge or
tax that may be imposed in connection with any such transfer or
exchange.
SECTION 5. Terms of Warrants; Exercise of
Warrants. Subject to the terms of this Agreement, each Warrant
holder shall have the right, which may be exercised commencing
at the opening of business on May 6, 1994 and until 5:00 p.m.,
New York City time on May 6, 1999, to receive from Showboat the
number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of
such Warrants and payment of the Exercise Price then in effect
for such Warrant Shares. In the alternative, each Warrant
holder may exercise its right, during the Exercise Period, to
receive Warrant Shares on a net basis, such that, without the
exchange of any funds, the Warrant holder receives that number
of Warrant Shares otherwise issuable (or payable) upon exercise
of its Warrants less that number of Warrant Shares having an
aggregate Quoted Price (as defined in Section 10(f) hereof) at
the time of exercise equal to the aggregate Exercise Price that
would otherwise have been paid by the holder of the Warrant
Shares. Each Warrant not exercised prior to 5:00 p.m., New
York City time, on May 6, 1999 shall become void and all rights
thereunder and all rights in respect thereof under this
Agreement shall cease as of such time. Except as provided in
Section 10 hereof, no adjustments will be made upon exercise of
the Warrants with respect to any dividends declared as of any
record date prior to the exercise of the Warrants.
A Warrant may be exercised upon surrender to
Showboat at its office designated for such purpose of the
certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be
guaranteed by a bank or trust company having an office or
correspondent in the United States or a broker or dealer which
is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc. and upon payment to
Showboat of the Exercise Price, as adjusted as herein provided,
for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise
Price shall be made (i) in cash or (ii) by certified or
official bank check payable to the order of Showboat or (iii)
through the surrender of debt or preferred equity securities of
Showboat having a principal amount or liquidation preference,
as the case may be, equal to the aggregate Exercise Price to be
paid (Showboat will pay the accrued interest or dividends on
such surrendered debt or preferred equity securities in cash at
the time of surrender notwithstanding the stated terms
thereof).
Subject to the provisions of Section 6 hereof,
upon such surrender of Warrants and payment of the Exercise
Price, Showboat shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the holder
and in such name or names as the Warrant holder may designate,
a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants together
with cash as provided in Section 11 hereof; PROVIDED, HOWEVER,
that if any consolidation, merger or lease or sale of assets is
proposed to be effected by Showboat as described in subsection
(m) of Section 10 hereof, or a tender offer or an exchange
offer for shares of Common Stock of Showboat shall be made,
upon such surrender of Warrants and payment of the Exercise
Price as aforesaid, Showboat shall, as soon as possible, but in
any event not later than two business days thereafter, issue
and cause to be delivered the full number of Warrant Shares
issuable upon the exercise of such Warrants in the manner
described in this sentence together with cash as provided in
Section 11 hereof. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be
named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price. No fractional
shares shall be issued upon exercise of any Warrants in
accordance with Section 11 hereof.
The Warrants shall be exercisable, at the election
of the holders thereof, either in full or from time to time in
part (in whole shares) and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time
prior to the date of expiration of the Warrants, a new
certificate evidencing the remaining Warrant or Warrants will
be issued and delivered in accordance with the terms of this
Agreement.
All Warrant Certificates surrendered upon exercise
of Warrants shall be cancelled by Showboat and disposed of in
accordance with applicable law.
SECTION 6. Payment of Taxes. Showboat will pay
all documentary stamp taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants;
PROVIDED, HOWEVER, that Showboat shall not be required to pay
any tax or taxes which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or
any certificates for Warrant Shares in a name other than that
of the registered holder of a Warrant Certificate surrendered
upon the exercise of a Warrant, and Showboat shall not be
required to issue or deliver such Warrant Certificates unless
or until the person or persons requesting the issuance thereof
shall have paid to Showboat the amount of such tax or shall
have established to the satisfaction of Showboat that such tax
has been paid.
SECTION 7. Mutilated or Missing Warrant
Certificates. If any of the Warrant Certificates shall be
mutilated, lost, stolen or destroyed, Showboat may in its
discretion issue in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu
of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to Showboat of such loss,
theft or destruction of such Warrant Certificate and indemnity
therefor, if requested, also satisfactory to it. Applicants
for such substitute Warrant Certificates shall also comply with
such other reasonable regulations and pay such other reasonable
charges as Showboat may prescribe.
SECTION 8. Reservation of Warrant Shares.
Showboat will at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized
but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of
Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding
Warrants.
Showboat or, if appointed, the transfer agent for
the Common Stock (the "Transfer Agent") and every subsequent
transfer agent for any shares of Showboat's capital stock
issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be
required for such purpose. Showboat will keep a copy of this
Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of Showboat's capital
stock issuable upon the exercise of the rights of purchase
represented by the Warrants. Showboat will furnish such
Transfer Agent a copy of all notices of adjustments and
certificates related thereto, transmitted to each holder
pursuant to Section 16 hereof.
Before taking any action which would cause an
adjustment pursuant to Section 10 hereof to reduce the Exercise
Price below the then par value (if any) of the Warrant Shares,
Showboat will take any corporate action which may, in the
opinion of its counsel (which may be counsel employed by
Showboat), be necessary in order that Showboat may validly and
legally issue fully paid and nonassessable Warrant Shares at
the Exercise Price as so adjusted.
Showboat covenants that all Warrant Shares which
may be issued upon exercise of Warrants will, upon issue, be
fully paid, nonassessable, free of preemptive rights and free
from all taxes, liens, charges and security interests with
respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings.
Showboat will from time to time take all action which may be
necessary so that the Warrant Shares, immediately upon their
issuance upon the exercise of the Warrants, will be listed on
the principal securities exchanges and markets within the
United States of America, if any, on which other shares of
Common Stock are then listed.
SECTION 10. Adjustment of Exercise Price and
Number of Warrant Shares Issuable. The Exercise Price and the
number of Warrant Shares issuable upon the exercise of each
Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 10. For
purposes of this Section 10, "Common Stock" means shares now or
hereafter authorized of any class of common stock of Showboat
and any other stock of Showboat, however designated, that has
the right (subject to any prior rights of any class or series
of preferred stock) to participate in any distribution of the
assets or earnings of Showboat without limit as to per share
amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If Showboat:
(1) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common
Stock into a greater number of shares;
(3) combines its outstanding shares of Common
Stock into a smaller number of shares;
(4) makes a distribution on its Common Stock in
shares of its capital stock other than Common Stock; or
(5) issues by reclassification of its Common
Stock any shares of its capital stock;
then the Exercise Price in effect immediately prior to such
action shall be proportionately adjusted so that the holder of
any Warrant thereafter exercised may receive the aggregate
number and kind of shares of capital stock of Showboat which he
would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately
after the record date in the case of a dividend or distribution
and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon
exercise of such Warrant may receive shares of two or more
classes of capital stock of Showboat, the allocation of the
adjusted Exercise Price between the classes of capital stock
shall be determined pro rata among such classes in accordance
with the fair market value of the respective classes as
determined in reasonable good faith by the board of directors
of Showboat. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 10.
Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE.
If Showboat distributes any rights, options or
warrants to all holders of its Common Stock entitling them to
purchase shares of Common Stock at a price per share less than
the current market price per share on that record date, the
Exercise Price shall be adjusted in accordance with the
formula:
O + N x P
___________
E' = E x M
___________
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on
the record date.
The adjustment shall be made successively whenever any
such rights, options or warrants are issued and shall become
effective immediately after the record date for the
determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which
such rights, options or warrants are exercisable, not all
rights, options or warrants shall have been exercised, the
Exercise Price shall be immediately readjusted to what it would
have been if "N" in the above formula had been the number of
shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.
If Showboat distributes to all holders of its Common
Stock any of its assets (including but not limited to cash),
debt securities, preferred stock, or any rights or warrants to
purchase debt securities, preferred stock, assets or other
securities of Showboat, the Exercise Price shall be adjusted in
accordance with the formula:
E' = E x M - F
______
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share
of Common Stock. The Board of Directors shall
determine the fair market value.
The adjustment shall be made successively whenever any
such distribution is made and shall become effective
immediately after the record date for the determination of
stockholders entitled to receive the distribution.
This subsection (c) does not apply to rights, options or
warrants referred to in subsection (b) of this Section 10.
This subsection (c) does not apply to cash dividends or cash
distributions paid out of consolidated current or retained
earnings as shown on the books of Showboat prepared in
accordance with generally accepted accounting principles other
than any Extraordinary Cash Dividend (as defined below). An
"Extraordinary Cash Dividend" shall be that portion, if any, of
the aggregate amount of all cash dividends paid in any fiscal
year which exceeds Showboat's net income for such fiscal year.
In all cases, Showboat shall give the Warrant holders at least
30 days notice of a record date for any dividend payment on the
Common Shares.
(d) ADJUSTMENT FOR COMMON STOCK ISSUE.
If Showboat issues shares of Common Stock for a
consideration per share less than the current market price per
share on the date Showboat fixes the offering price of such
additional shares, the Exercise Price shall be adjusted in
accordance with the formula:
P
______
E' = E x O + M
______
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such additional shares.
P = the aggregate consideration received for the issuance
of such additional shares.
M = the current market price per share on the date of
issuance of such additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately
after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections
(b), (c) or (e) of this Section 10 or any shares of Common
Stock issuable pursuant to an option, right, warrant or
security described thereunder,
(2) the exercise of Warrants, or the conversion or
exchange of other securities convertible or exchangeable for
Common Stock,
(3) Common Stock issued to Showboat's employees under
bona fide employee benefit plans or stock option plans
adopted by the Board of Directors and approved by the holders
of Common Stock when required by law, and Common Stock issued
to the non-employee directors of Showboat upon the exercise
of options granted to such persons, if such Common Stock
would otherwise be covered by this subsection (d) (but only
to the extent that the aggregate number of shares excluded
hereby and issued after the date of this Agreement shall not
exceed 20% of the Common Stock outstanding at the time of the
adoption of each such plan, exclusive of antidilution
adjustments thereunder),
(4) Common Stock issuable upon the exercise of rights
or warrants issued to the holders of Common Stock,
(5) Common Stock issued to shareholders of any person
which merges into Showboat in proportion to their stock
holdings of such person immediately prior to such merger,
upon such merger,
(6) Common Stock issued in a bona fide public
offering pursuant to a firm commitment underwriting, or
(7) Common Stock issued in a bona fide private
placement through a placement agent which is a member firm of
the National Association of Securities Dealers, Inc. (except
to the extent that any discount from the current market price
attributable to restrictions on transferability of the Common
Stock, as determined in good faith by the Board of Directors
and described in a Board resolution which shall be provided
to the Warrant holder(s), shall exceed 20%).
(e) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE.
If Showboat issues any securities, options or warrants
convertible into, exchangeable for or exercisable for Common
Stock ("Convertible Securities") (other than securities issued
in transactions described in subsections (b) and (c) of this
Section 10) for a consideration per share of Common Stock
initially deliverable upon conversion or exchange of such
securities less than the current market price per share on the
date of issuance of such securities, the Exercise Price shall
be adjusted in accordance with this formula:
P
___
E' = E x O + M
______
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to
the issuance of such Convertible Securities.
P = the aggregate consideration received for the issuance
of such Convertible Securities.
M = the current market price per share on the date of
issuance of such Convertible Securities.
D = the maximum number of shares deliverable upon
conversion or in exchange for such Convertible
Securities at the initial conversion or exchange rate.
The adjustment shall be made successively whenever any
such issuance is made, and shall become effective immediately
after such issuance.
If all of the Common Stock deliverable upon conversion or
exchange of such Convertible Securities has not been issued
when such Convertible Securities are no longer outstanding,
then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment
upon the issuance of such Convertible Securities been made on
the basis of the actual number of shares of Common Stock issued
upon conversion or exchange of such Convertible Securities.
This subsection (e) does not apply to:
(1) Convertible Securities issued to shareholders of
any person which merges into Showboat, or with a subsidiary
of Showboat, in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger,
(2) Convertible Securities issued in a bona fide
public offering pursuant to a firm commitment underwriting,
or
(3) Convertible Securities issued in a bona fide
private placement through a placement agent which is a member
firm of the National Association of Securities Dealers, Inc.
(except to the extent that any discount from the current
market price attributable to restrictions on transferability
of Common Stock issuable upon conversion, as determined in
good faith by the Board of Directors and described in a Board
resolution which shall be filed with the Trustee, shall
exceed 20% of the then current market price).
(f) CURRENT MARKET PRICE.
In subsections (b), (c), (d) and (e) of this Section 10
the current market price per share of Common Stock on any date
is the average of the Quoted Prices of the Common Stock for 30
consecutive trading days commencing 45 trading days before the
date in question. The "Quoted Price" of the Common Stock is
the last reported sales price of the Common Stock as reported
by the New York Stock Exchange, or if the Common Stock is
listed on another securities exchange, the last reported sales
price of the Common Stock on such exchange which shall be for
consolidated trading if applicable to such exchange, or as
reported by NASDAQ, National Market System, or if neither so
reported or listed, the last reported bid price of the Common
Stock. In the absence of one or more such quotations, the
Board of Directors of Showboat shall determine the current
market price on the basis of such quotations as it in
reasonable good faith considers appropriate.
(g) CONSIDERATION RECEIVED.
For purposes of any computation respecting consideration
received pursuant to subsections (d) and (e) of this Section
10, the following shall apply:
(1) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made
for any commissions, discounts or other expenses incurred by
Showboat for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to be
the fair market value thereof as determined in good faith by
the Board of Directors (irrespective of the accounting
treatment thereof), whose determination shall be conclusive,
and described in a Board resolution which shall be provided
to the Warrant holder(s); and
(3) in the case of the issuance of securities
convertible into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be the
consideration received by Showboat for the issuance of such
securities plus the additional minimum consideration, if any,
to be received by Showboat upon the conversion or exchange
thereof (the consideration in each case to be determined in
the same manner as provided in clauses (1) and (2) of this
subsection).
(h) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Price need be made unless
the adjustment would require an increase or decrease of at
least 1% in the Exercise Price. Any adjustments that are not
made shall be carried forward and taken into account in any
subsequent adjustment.
All calculations under this Section 10 shall be made to
the nearest cent or to the nearest 1/100th of a share, as the
case may be.
(i) WHEN NO ADJUSTMENT REQUIRED.
No adjustment need be made for a transaction referred to
in subsections (a), (b), (c), (d) or (e) of this Section 10 if
Warrant holders agree to participate in the transaction on a
basis and with notice that the Board of Directors determines to
be fair and appropriate in light of the basis and notice on
which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common
Stock pursuant to a Showboat plan for reinvestment of dividends
or interest.
No adjustment need be made for a change in the par value
or no par value of the Common Stock.
To the extent the Warrants become convertible into cash,
no adjustment need be made thereafter as to the cash. Interest
will not accrue on the cash.
(j) NOTICE OF ADJUSTMENT.
Whenever the Exercise Price is adjusted, Showboat shall
provide the notices required by Section 16 hereof.
(k) VOLUNTARY REDUCTION.
Showboat from time to time may reduce the Exercise Price
by any amount for any period of time if the period is at least
20 days and if the reduction is irrevocable during the period;
PROVIDED, HOWEVER, that in no event may the Exercise Price be
less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, Showboat shall
mail to Warrant holders a notice of the reduction. Showboat
shall mail the notice at least 15 days before the date the
reduced Exercise Price takes effect. The notice shall state
the reduced Exercise Price and the period it will be in effect.
A reduction of the Exercise Price does not change or
adjust the Exercise Price otherwise in effect for purposes of
subsections (a), (b), (c), (d) and (e) of this Section 10.
(l) NOTICE OF CERTAIN TRANSACTIONS.
If:
(1) Showboat takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a),
(b), (c), (d) or (e) of this Section 10 and if Showboat does
not arrange for Warrant holders to participate pursuant to
subsection (i) of this Section 10;
(2) Showboat takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (m) of
this Section 10; or
(3) there is a liquidation or dissolution of
Showboat,
Showboat shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. Showboat shall mail the notice at
least 15 days before such date. Failure to mail the notice or
any defect in it shall not affect the validity of the
transaction.
(m) REORGANIZATION OF SHOWBOAT.
If Showboat consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any
person, upon consummation of such transaction the Warrants
shall automatically become exercisable for the kind and amount
of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the
Warrant immediately before the effective date of the
transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such
consolidation or merger if other than Showboat, or the person
to which such sale or conveyance shall have been made, shall
enter into a supplemental Warrant Agreement so providing and
further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for
in this Section 10. The successor shall mail to Warrant
holders a notice describing the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of
Warrants under the supplemental Warrant Agreement is an
affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental Warrant
Agreement.
If this subsection (m) applies, subsections (a), (b),
(c), (d) and (e) of this Section 10 do not apply.
(n) SHOWBOAT DETERMINATION FINAL.
Any determination that Showboat or the Board of Directors
must make pursuant to subsection (a), (c), (d), (e), (f), (g)
or (i) of this Section 10 is conclusive.
(o) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 10 shall require that
an adjustment in the Exercise Price be made effective as of a
record date for a specified event, Showboat may elect to defer
until the occurrence of such event (i) issuing to the holder of
any Warrant exercised after such record date the Warrant Shares
and other capital stock of Showboat, if any, issuable upon such
exercise over and above the Warrant Shares and other capital
stock of Showboat, if any, issuable upon such exercise on the
basis of the Exercise Price and (ii) paying to such holder any
amount in cash in lieu of a fractional share pursuant to
Section 11 hereof; PROVIDED, HOWEVER, that Showboat shall
deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional Warrant Shares, other capital stock and cash upon
the occurrence of the event requiring such adjustment.
(p) ADJUSTMENT IN NUMBER OF SHARES.
Upon each adjustment of the Exercise Price pursuant to
this Section 10, each Warrant outstanding prior to the making
of the adjustment in the Exercise Price shall thereafter
evidence the right to receive upon payment of the adjusted
Exercise Price that number of shares of Common Stock
(calculated to the nearest hundredth) obtained from the
following formula:
N'= N x E
___
E'
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
N = the number of Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise Price
prior to adjustment.
E' = the adjusted Exercise Price (prior to rounding to the
nearest cent as provided in the second paragraph of
subsection (h)).
E = the Exercise Price prior to adjustment.
(q) FORM OF WARRANTS.
Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 11. Fractional Interests. Showboat shall not be
required to issue fractional Warrant Shares on the exercise of
Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the
number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 11, be
issuable on the exercise of any Warrants (or specified portion
thereof), Showboat shall pay to the Warrant holder an amount in
cash equal to the Exercise Price on the day immediately
preceding the date the Warrant is presented for exercise,
multiplied by such fraction.
SECTION 12. Notices to Warrant Holders. Upon any
adjustment of the Exercise Price pursuant to Section 10 hereof,
Showboat shall promptly thereafter (i) cause to be filed with
Showboat a certificate of a firm of independent public
accountants of recognized standing selected by the Board of
Directors of Showboat (who may be the regular auditors of
Showboat) setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise
Price, upon exercise of a Warrant and payment of the adjusted
Exercise Price, which certificate shall be conclusive evidence
of the correctness of the matters set forth therein, and (ii)
cause to be given to each of the registered holders of the
Warrant Certificates at his address appearing on the Warrant
register written notice of such adjustments by first-class
mail, postage prepaid. Where appropriate, such notice may be
given in advance and included as a part of the notice required
to be mailed under the other provisions of this Section 12.
In case:
(a) Showboat shall authorize the issuance to all holders
of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any
other subscription rights or warrants; or
(b) Showboat shall authorize the distribution to all
holders of shares of Common Stock of evidences of its
indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned
surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 10
hereof); or
(c) of any consolidation or merger to which Showboat is a
party and for which approval of any shareholders of Showboat is
required, or of the conveyance or transfer of the properties
and assets of Showboat substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon
exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a
tender offer or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of Showboat; or
(e) Showboat proposes to take any action (other than
actions of the character described in Section 10(a)) which
would require an adjustment of the Exercise Price pursuant to
Section 10;
then Showboat shall cause to be given to each of the registered
holders of the Warrant Certificates at his address appearing on
the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (a) or (b) above) prior to the applicable
record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the date as of
which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or
distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer
for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation,
merger, conveyance, transfer, dissolution, liquidation or
winding up. The failure to give the notice required by this
Section 12 or any defect therein shall not affect the legality
or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the
holders thereof the right to vote or to consent or to receive
notice as shareholders in respect of the meetings of
shareholders or the election of Directors of Showboat or any
other matter, or any rights whatsoever as shareholders of
Showboat.
SECTION 13. Registration.
(a) SHELF REGISTRATION OF WARRANTS AND WARRANT SHARES.
Showboat shall cause to be filed pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), a shelf
registration statement on Form S-3 (the "Warrant Shelf
Registration Statement") covering the issuance of the Warrant
Shares and any resale of the Warrants and Warrant Shares (the
Warrants and Warrant Shares included in the Warrant Shelf
Registration Statement, and any shares registered pursuant to
any Piggy-Back Registration ((as defined below)), shall
collectively be referred to herein as the "Registered
Securities") and shall use its best efforts to cause such
Warrant Shelf Registration Statement to become effective within
30 days of the execution of this Agreement. Showboat shall use
its best efforts to keep such Warrant Shelf Registration
Statement continuously effective until 30 days after the
expiration of the Warrants.
(b) PIGGY-BACK REGISTRATION.
(i) If Showboat proposes to file a registration statement
under the Securities Act with respect to an offering by
Showboat for its own account or for the account of any of its
security holders of any class of equity security (other than a
registration statement on Form S-4 or S-8 (or any substitute
form that may be adopted by the Commission), any shelf
registration, or offering of securities solely to Showboat's
existing security holders, and other than the offering of
3,100,000 shares of Common Stock contemplated by the
Registration Statement filed on form S-3 with the Commission on
June 28, 1994), then the Company shall give written notice of
such proposed filing to the holders of the Warrants as soon as
practicable (but in no event less than ten days before the
anticipated filing date), and such notice shall offer such
holders the opportunity to register such amount of Registered
Securities as each such holder may request (a "Piggy-Back
Registration") (For purposes of this agreement, the Warrant
Shelf Registration Statement and any registration statement
pursuant to which shares in any Piggy-Back Registration are
registered, shall be collectively referred to herein as a
"Registration Statement.");
(ii) Showboat shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten
offering to permit the Registered Securities requested to be
included in the registration statement for such offering to be
included on the same terms and conditions as any similar
securities of Showboat or of such other security holders
included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering deliver a
written opinion to the holders of such Registered Securities
that either (i) the kind or combination of securities which the
holders, Showboat and any other persons or entities intend to
include in such offering or (ii) the size of the offering which
the holders, Showboat and such other persons or entities intend
to make, are such that the success of the offering would be
materially and adversely affected by inclusion of the
Registered Securities requested to be included, then (a) in
the event that the size of the offering is the basis of such
managing underwriter's or underwriters' opinion, the amount of
securities to be offered for the accounts of holders of the
Warrant shall be reduced pro rata (according to the Registered
Securities proposed for registration) to the extent necessary
to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter
or underwriters; provided that if securities are being offered
for the account of other persons or entities as well as
Showboat, then with respect to the Registered Securities
intended to be offered by holders, the proportion by which the
amount of such class of securities intended to be offered by
holders is reduced shall not exceed the proportion by which the
amount of such class of securities intended to be offered by
such other persons or entities is reduced; and (b) in the event
that the kind (or combination) of securities to be offered is
the basis of such managing underwriter's or underwriters'
opinion, (x) the Registered Securities to be included in such
offering shall be reduced as described in clause (a) above
(subject to the proviso in clause (a)) or, (y) if the actions
described in clause (x) would, in the judgment of the managing
underwriter or underwriters, be insufficient to substantially
eliminate the adverse effect that inclusion of the Registered
Securities requested to be included would have on such
offering, such Registered Securities will be excluded from such
offering.
(c) WARRANT SHELF REGISTRATION STATEMENT. In connection
with the Warrant Shelf Registration Statement and any
Prospectus required by this Agreement to permit the sale or
resale of Registered Securities, Showboat shall:
(i) use its best efforts to keep such Warrant Shelf
Registration Statement continuously effective until 30 days
after the expiration of the Warrants; upon the occurrence of
any event that would cause any such Warrant Shelf
Registration Statement or the Prospectus (which means the
prospectus first filed with the Commission pursuant to Rule
424(b) under the Act or, if no prospectus is required to be
filed pursuant to said Rule 424(b), such term means the
prospectus included in the Warrant Shelf Registration
Statement, as amended when it is or was declared effective)
(A) to contain a material misstatement or omission or (B) not
to be effective and usable for sale or resale of Registered
Securities during the period required by this Agreement;
Showboat shall file promptly an appropriate amendment to such
Warrant Shelf Registration Statement, in the case of clause
(A), correcting any such misstatement or omission, and, in
the case of either clause (A) or (B), use its best efforts to
cause such amendment to be declared effective and such
Warrant Shelf Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as
soon as practicable thereafter;
(ii) prepare and file with the Securities and
Exchange Commission (the "Commission") such amendments and
post-effective amendments to the Warrant Shelf Registration
Statement as may be necessary to keep the Warrant Shelf
Registration Statement effective and usable for purposes
stated in Section 13(a) until 30 days after the expiration of
the Warrants; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under
the Act in a timely manner; and comply with the provisions of
the Act with respect to the disposition of all securities
covered by such Warrant Shelf Registration Statement during
the applicable period in accordance with the intended method
or methods of distribution by the sellers thereof set forth
in such Warrant Shelf Registration Statement or supplement to
the Prospectus;
(iii) advise the holders of the Warrants and selling
holders, if any, promptly and, if requested by such persons,
to confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Warrant Shelf
Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any
request by the Commission for amendments to the Warrant Shelf
Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Warrant Shelf
Registration Statement under the Act or of the suspension by
any state securities commission of the qualification of the
Registered Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes, (D) of the existence of any fact or
the happening of any event that makes any statement of a
material fact made in the Warrant Shelf Registration
Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or
changes in the Warrant Shelf Registration Statement or the
Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Warrant Shelf
Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the
Registered Securities under state securities or Blue Sky
laws, Showboat shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible
time;
(iv) furnish to each of the selling holders before
filing with the Commission, copies of any Warrant Shelf
Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Warrant Shelf
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such
Warrant Shelf Registration Statement), which documents will
be subject to the review of such holders for a period of at
least five business days, and Showboat will not file any such
Warrant Shelf Registration Statement or Prospectus or any
amendment or supplement to any such Warrant Shelf
Registration Statement or Prospectus (including all such
documents incorporated by reference) to which a selling
holder of Registered Securities covered by such Warrant Shelf
Registration Statement shall reasonably object within five
business days after the receipt thereof. A selling holder
shall be deemed to have reasonably objected to such filing if
such Warrant Shelf Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission;
(v) promptly provide, prior to the filing of any
document that is to be incorporated by reference into a
Warrant Shelf Registration Statement or Prospectus, copies of
such document to the selling holders and make Showboat's
representatives available for discussion of such document and
other customary due diligence matters, and include such
information in such document prior to the filing thereof as
such selling holders reasonably may request;
(vi) make available at reasonable times for
inspection by the selling holders and any attorney or
accountant retained by such selling holders, all financial
and other records, pertinent corporate documents and
properties of Showboat and cause Showboat's officers,
directors and employees to supply all information reasonably
requested by any such holder, attorney or accountant in
connection with such Warrant Shelf Registration Statement
subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling holders promptly
incorporate in any Warrant Shelf Registration Statement or
Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling
holders may reasonably request to have included therein,
including, without limitation, information relating to the
"Plan of Distribution" of the Registered Securities; and make
all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after
Showboat is notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(viii) upon request, furnish to each holder of
Warrants and selling holder, without charge, at least one
copy of the Warrant Shelf Registration Statement, as first
filed with the Commission, and of each amendment thereto,
including all documents incorporated by reference therein and
all exhibits (including exhibits incorporated therein by
reference);
(ix) deliver to each holder of Warrants and selling
holder, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such persons reasonably may request;
Showboat hereby consents to the use of the Prospectus and any
amendment or supplement thereto by each of the selling
holders in connection with the offering and the sale or
resale of the Registered Securities covered by the Prospectus
or any amendment or supplement thereto;
(x) enter into such agreements, and make such
representations and warranties, and take all such other
actions in connection therewith in order to expedite or
facilitate the disposition of the Registered Securities
pursuant to the Warrant Shelf Registration Statement, all to
such extent as may be reasonably requested by any selling
holder of Registered Securities in connection with any sale
or resale pursuant to the Warrant Shelf Registration
Statement; and Showboat shall:
(A) upon request, furnish to each selling holder in
such substance and scope as they reasonably may request
and as are customarily made by issuers to underwriters in
primary underwritten offerings, upon the date of the
effectiveness of the Warrant Shelf Registration
Statement, as amended:
(1) a certificate, dated the date of
effectiveness of the Warrant Shelf Registration
Statement, signed by (y) the President or any Vice
President and (z) a principal financial or accounting
officer of Showboat confirming, as of the date
thereof any matters as such selling holders may
reasonably request;
(2) an opinion, dated the date of effectiveness
of the Warrant Shelf Registration Statement as
amended, of counsel for Showboat, covering such
matters as such selling holders may reasonably
request, and in any event including a statement to
the effect that such counsel has participated in
conferences with officers and other representatives
of Showboat, and representatives of the independent
public accountants for Showboat in connection with
the preparation of such Warrant Shelf Registration
Statement and the related Prospectus and have
considered the matters required to be stated therein
and the statements contained therein, although such
counsel has not independently verified the accuracy,
completeness or fairness of such statements; and that
such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by
officers and other representatives of Showboat
without independent check or verification), no facts
came to such counsel's attention that caused such
counsel to believe that the Warrant Shelf
Registration Statement, at the time such Warrant
Shelf Registration Statement or any post-effective
amendment thereto became effective, contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Warrant Shelf Registration Statement as of its date
contained an untrue statement of a material fact or
omitted to state a material fact necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes
no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and
other financial or statistical data included in any
Warrant Shelf Registration Statement or the related
Prospectus; and
(3) a customary comfort letter, dated as of the
date of effectiveness of the Warrant Shelf
Registration Statement from Showboat's independent
accountants, in the customary form and covering
matters of the type customarily covered in comfort
letters by underwriters in connection with primary
underwritten offerings;
(B) deliver such other documents and certificates as
may be reasonably requested by the selling holders to
evidence compliance with clause (A) above and with any
customary conditions contained in any agreement entered
into by Showboat pursuant to this clause (x).
The provisions of this clause (x) shall be applicable at
each closing of a resale transaction, and if at any time the
representations and warranties of Showboat contemplated in
(A)(1) above cease to be true and correct, Showboat shall so
advise the selling holders promptly and if requested by such
persons, shall confirm such advice in writing;
(xi) prior to any public offering of the Registered
Securities, cooperate with the selling holders and their
counsel in connection with the registration and qualification
of the Registered Securities under the securities or Blue Sky
laws of such jurisdictions as the selling holders may request
and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of
the Registered Securities covered by the Warrant Shelf
Registration Statement; PROVIDED, HOWEVER, that Showboat
shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any
action that would subject it to the service of process in
suits or to taxation, other than as to matters and
transactions relating to the Warrant Shelf Registration
Statement, in any jurisdiction where it is not now so
subject;
(xii) cooperate with the holders of the Warrants and
the selling holders to facilitate the timely preparation and
delivery of certificates representing the Registered
Securities to be sold and not bearing any restrictive
legends; and enable such Registered Securities to be in such
denominations and registered in such names as such holders
may request at least two business days prior to any sale or
resale of the Registered Securities;
(xiii) use its best efforts to cause the Registered
Securities covered by the Warrant Shelf Registration
Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to
enable the selling holders to consummate the disposition of
such Registered Securities, subject to the proviso contained
in clause (xi) above;
(xiv) if any fact or event contemplated by clause
(b)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Warrant Shelf
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers
of Registered Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading;
(xv) provide a CUSIP number for all Warrant Shares
not later than the effective date of the Warrant Shelf
Registration Statement and provide the Warrant holders with
printed certificates for the Warrant Shares which are in a
form eligible for deposit with the Depositary Trust Company;
(xvi) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due
diligence investigation by any selling holder or any
"qualified independent underwriter" that is required to be
retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such
Warrant Shelf Registration Statement to become effective and
approved by such governmental agencies or authorities as may
be necessary to enable the consummation of the disposition of
such Registered Securities;
(xvii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make generally available to its security holders, as soon as
practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) for the
twelve-month period beginning with the first month of
Showboat's first fiscal quarter commencing after the
effective date of the Warrant Shelf Registration Statement;
(xviii) provide promptly to each holder upon request
each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange
Act.
Each selling holder agrees by acquisition of a Registered
Security that, upon receipt of any notice from Showboat of the
existence of any fact of the kind described in Section
13(b)(iii)(D), such holder will forthwith discontinue
disposition of Registered Securities pursuant to the applicable
Warrant Shelf Registration Statement until such holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 13(b)(xiv), or until it is advised in
writing (the "Advice") by Showboat that the use of the
Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by
reference in the Prospectus. If so directed by Showboat, each
such holder will deliver to Showboat (at Showboat's expense)
all copies, other than permanent file copies then in such
holder's possession, of the Prospectus covering such Registered
Securities that was current at the time of receipt of such
notice. If Showboat shall give any such notice, the time
period regarding the effectiveness of such Warrant Shelf
Registration Statement set forth above shall be extended by the
number of days during the period from and including the date of
the giving of such notice pursuant to Section 13(b)(iii)(D) to
and including the date when each selling holder covered by such
Warrant Shelf Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated
by Section 13(b)(xiv) or shall have received the Advice.
(d) REGISTRATION EXPENSES.
All expenses incident to Showboat's performance of or
compliance with this Agreement will be borne by Showboat,
regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration
and filing fees and expenses (including filings, if any, made
with the NASD (including, if applicable, the fees and expenses
of any "qualified independent underwriter" and its counsel, as
may be required by the rules and regulations of the NASD));
(ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the
Warrants, Warrant Shares and printing of Prospectuses),
messenger and delivery services and telephone calls; (iv) all
fees and disbursements of counsel for Showboat and the selling
holders of Registered Securities (which, in the case of such
selling holders, shall be limited to one firm of attorneys);
(v) all application and filing fees in connection with listing
Warrants or Warrant Shares on the principal securities
exchanges and markets within the United States of America, if
any, on which other shares of Common Stock are then listed
pursuant to the requirements hereof; (vi) all fees and
disbursements of independent certified public accountants of
Showboat (including the expenses of any special audit and
comfort letters required by or incident to such performance)
and (vii) Showboat's internal expenses (including, without
limitation, all salaries and expenses of their officers and
employees performing legal or accounting duties), the expenses
of any annual audit, rating agency fees and the fees and
expenses of any person, including special experts, retained by
Showboat.
(e) INDEMNIFICATION.
(i) Showboat shall indemnify and hold harmless each
selling holder, its directors, officers, and each person, if
any, who controls such selling holder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and
each such person's officers and directors against any losses,
claims, damages or liabilities, joint or several, to which each
such person may become subject under the Act, the Exchange Act
or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon:
(1) any untrue statement or alleged untrue statement of
any material fact contained in (A) any Registration
Statement, or any amendment thereto or any preliminary
prospectus or the Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by or on behalf of
Showboat or based upon information furnished by or on behalf
of Showboat by its counsel or counsel to such selling holders
specifically for the purpose of having same filed in any
jurisdiction in order to qualify the Registered Securities
under the securities or "Blue Sky" laws thereof or filed with
any securities association or securities exchange (each an
"Application"); or
(2) the omission or alleged omission to state, in any
Registration Statement or any amendment thereto, any
preliminary prospectus or the Prospectus or any amendment or
supplement thereto, or any Application, a material fact
required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, such selling holder and each
such other person for any reasonable legal or other reasonable
expenses incurred by such selling holder or such person in
connection with investigating, defending against or appearing
as a third-party witness in connection with any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, Showboat
will not be liable in any such case to the extent that any such
loss, claim, damage, or liability arises out of or is based
upon any untrue statement or alleged untrue statement or
omission or alleged omission made in any Registration Statement
or any amendment thereto, any preliminary prospectus or the
Prospectus or any amendment or supplement thereto, or any
Application in reliance upon and in conformity with written
information furnished to Showboat by the selling holder
specifically for use therein; and PROVIDED, FURTHER, that the
indemnity agreement contained in this Section 13(d) with
respect to any preliminary prospectus shall not inure to the
selling holder's benefit or to the benefit of any such other
person in respect of any loss, claim, damage or liability
asserted by a person who purchased the Registered Securities
from the selling holder if a copy of the Prospectus (as the
same may be amended or supplemented) was not sent or given to
such person with or prior to written confirmation of the sale
to such person and if the untrue statement or omission or
alleged untrue statement or omission of a material fact
contained in such preliminary prospectus was corrected in the
Prospectus (as the same may be amended or supplemented prior to
such sale) and if the selling holder would not have been liable
had a copy of the Prospectus (as the same may be amended or
supplemented prior to such sale) been so sent or given, unless
such failure to send or give the Prospectus is a result of
non-compliance by Showboat with Section 13(b)(ix) hereof. This
indemnity agreement will be in addition to any liability that
Showboat may otherwise have to the indemnified parties.
Showboat will not, without the prior written consent of the
selling holders, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification by the
selling holders may be sought hereunder (whether or not the
selling holder or any person who controls the selling holders
within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent to
the entry of any judgment includes an unconditional release of
the selling holders and each such other person from all
liability arising out of such claim, action, suit or
proceeding.
(ii)Each selling holder will severally and not jointly
indemnify and hold harmless Showboat and each of its directors
and officers who signed any Registration Statement each person,
if any, who controls Showboat within the meaning of Section 15
of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which Showboat or any
such director, officer or controlling person may become subject
under the Act, the Exchange Act, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in any Registration Statement or any amendment
thereto, any preliminary prospectus or the Prospectus or any
amendment or supplement thereto, or any Application or (ii) the
omission or the alleged omission to state therein a material
fact required to be stated in any Registration Statement or any
amendment thereto, any preliminary prospectus or the Prospectus
or any amendment or supplement thereto, or any Application, or
necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity
with written information furnished to Showboat by such selling
holder specifically for use therein; and, subject to the
limitation set forth immediately preceding this clause, will
reimburse, as incurred, any reasonable legal or other
reasonable expenses incurred by Showboat or any such director,
officer or controlling person in connection with investigating
or defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in
addition to any liability that the such selling holder may
otherwise have to the indemnified parties. Such selling holder
shall not be liable under this Section 13(d) for any settlement
of any claim or action effected without its consent, which
shall not be unreasonably withheld. In no event shall the
liability of any selling holder hereunder be greater in amount
than the dollar amount of the proceeds received by such holder
upon the sale of the Registered Securities giving rise to such
indemnification obligation.
(iii)Promptly after receipt by an indemnified party under
this Section 13(d) of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section
13(d), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party
(1) will not relieve it from any liability under paragraph (i)
or (ii) above unless it did not otherwise learn of such action
and only if and to the extent that such failure results in the
forfeiture by the indemnifying party of substantial rights and
defenses and (2) will not, in any event, relieve the indemni-
fying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraphs (i)
and (ii) above. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be enti-
tled to participate therein and, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, that if (1) the use of counsel chosen by the
indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (2) the
parties in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have
been advised by counsel that there may be one or more legal
defenses available to it and/or other indemnified parties that
are different from or additional to those available to the
indemnifying party, or (3) the indemnifying party shall not
have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action,
then, in each such case, the indemnifying party shall not have
the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or par-
ties at the cost and expense of the indemnifying party. After
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by
such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such
indemnified party under this Section 13(d) for any legal or
other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection
with the defense thereof, unless (1) the indemnified party
shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more
than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations
or circumstances, designated by the selling holders in the case
of paragraph (i) of this Section 13(d) or Showboat in the case
of paragraph (ii) of this Section 13(d), representing the
indemnified parties under such paragraph (i) or paragraph (ii),
as the case may be, who are parties to such action or actions)
or (2) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense
of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party
without the consent of the indemnifying party, which consent
shall not be unreasonably withheld.
(iv)In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 13(d)
is unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabili-
ties (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by
the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the
Registered Securities or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not
only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the
statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative fault of the parties
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 Showboat on the one
hand, or any selling holder on the other, the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, and any other
equitable considerations appropriate in the circumstances.
Showboat and the selling holders agree that it would not be
equitable if the amount of such contribution were determined by
pro rata or per capita allocation (even if the selling holders
were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the
equitable considerations referred to in the first sentence of
this paragraph (iv). Notwithstanding any other provision of
this paragraph (iv), none of the selling holders shall be
obligated to make contributions hereunder that in the aggregate
exceed the net proceeds received by such holder with respect to
such holder's Registered Securities, less the aggregate amount
of any damages that such holder has otherwise been required to
pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph
(iv), each person, if any, who controls any selling holder
within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as
each selling holder, and each director of Showboat, each
officer of Showboat who signed any Registration Statement each
person, if any, who controls Showboat within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as Showboat.
SECTION 14. Regulatory Redemption of Warrants.
(a) Notwithstanding any other provision of this Warrant
Agreement, each holder, by accepting the Warrants, shall be
deemed to have agreed (to the extent permitted by applicable
law) that if the Nevada Gaming Authorities or Gaming
Authorities of any other jurisdiction into which Showboat or
any of its subsidiaries may in the future expand (except as
provided below in (e)) require that a person who is a holder or
a beneficial owner of any of the Warrants must be licensed or
found suitable under applicable gaming laws, such holder shall
apply for a license or a finding of suitability within the
required time period. The applicant for a license or finding
of suitability must pay all costs of licensure or investigation
for such finding of suitability. If such holder fails to apply
or become licensed or is found unsuitable (a "Disqualified
Holder"), Showboat has the right, at its option, (i) to require
such holder to dispose of its Warrants or beneficial interest
therein within 30 days of receipt of notice of Showboat's
election or such earlier date as may be ordered by such Gaming
Authorities or (ii) to redeem that holder's Warrants (the
"Redemption"). The terms and conditions of such Redemption
shall be as follows:
(i) the redemption price (the "Redemption Price") of the
Warrants to be redeemed shall be determined as of a date not
more than 10 days prior to the Commencement Date (as defined
below) in accordance with subsection (c) below;
(ii) Showboat shall give notice (the "Redemption Notice")
on a date (the "Commencement Date") that is at least 30 days
(or such shorter period of time as may be required by the
appropriate gaming authority) and not more than 60 days prior
to the date of the Redemption (the "Redemption Date");
(iii) Showboat shall provide the Warrant holder with
notice of the Redemption at least 10 days before the
Commencement Date; and
(iv) Showboat shall send, by first class mail, a notice
of Redemption to each Disqualified Holder (as defined below),
stating:
(A)that the Redemption is being made pursuant to
Section 14 of the Warrant Agreement;
(B)the number of Warrants held by such Disqualified
Holder to be redeemed, the Redemption Price and
the Redemption Date;
(C)that the Disqualified Holder whose Warrants are
to be redeemed pursuant to the Redemption will be
required to surrender such Warrants to Showboat
at the principal office of Showboat specified in
the notice in order to be paid the Redemption
Price therefor; and
(D)that, on the Redemption Date and payment of the
Redemption Price by Showboat as provided in
paragraph (b) of this Section 14, the Warrants of
the Disqualified Holder to be redeemed shall be
cancelled and thereafter the holder shall have
none of the rights afforded to holders of
Warrants.
(b) On or prior to the Redemption Date, Showboat, upon
receipt of the Warrant Certificates for the Warrants to be
redeemed from a Disqualified Holder, shall promptly mail or
deliver to such Disqualified Holder a check in an amount equal
to the aggregate Redemption Price of the Warrants redeemed by
Showboat from such holder. Such Warrants shall be cancelled by
Showboat and may not be reissued.
(c) Except as may otherwise be required by a Gaming
Authority (as defined below), the Redemption Price for each
Warrant to be redeemed shall be the Current Market Price (as
defined below) of the Warrant Shares into which such Warrant is
exercisable, less the Exercise Price. The "Current Market
Price" of a Warrant Share on any date is the average of the
Quoted Prices of the Common Stock for 30 consecutive trading
days commencing 45 trading days before the date in question.
The "Quoted Price" of the Common Stock is the last reported
sales price of the Common Stock as reported by NASDAQ National
Market System, or if the Common Stock is listed on a securities
exchange, the last reported sales price of the Common Stock on
such exchange which shall be for consolidated trading if
applicable to such exchange, or if neither so reported or
listed, the last reported bid price of the Common Stock. In
the absence of one or more such quotations, the Current Market
Price shall be the fair market value of each Warrant Share on
the date in question as determined in good faith by an
investment banking firm of national standing.
(d) "Gaming Authority" shall mean any agency of Nevada or
any other jurisdiction that has, or may at any time after the
date of this Warrant Agreement have, jurisdiction over all or a
portion of the gaming activities of Showboat or any of its
subsidiaries, direct or indirect, or any successor to such
authority.
"Gaming License" shall mean any material license,
material franchise or other material approval or authorization
on the date hereof or hereafter required to own, lease, operate
or otherwise conduct gaming in the State of Nevada or any other
jurisdiction in which Showboat or its subsidiaries, direct or
indirect, conducts or proposes in good faith to conduct
material gaming business, including any applicable liquor
licenses.
(e) Showboat shall have no redemption rights whether
under this Section 14 or otherwise with respect to the
Warrants, in the event that Showboat or any of its subsidiaries
enters into a jurisdiction, other than Nevada, which requires
holders or beneficial owners of equity securities such as the
Warrants generally to be licensed or found suitable. This
subsection (e) shall not effect the right of Showboat to effect
a Redemption where such Redemption is triggered by Nevada
licensing or suitability requirements, as described in
subsection (a) of this Section 14.
SECTION 15. Representations and Warranties of Showboat.
Showboat represents and warrants exclusively to DLJ Bridge that
the statements contained in this Section 15 are true, correct
and complete as of the date of this Agreement:
(1) Each of Showboat and its subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation;
(2) Each of Showboat and its subsidiaries is duly
authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is
required;
(3) Showboat has full corporate power and authority to
execute and deliver each of this Agreement and any Warrants
and Warrant Shares issued pursuant to this Agreement and to
perform its obligations thereunder. This Agreement and any
Warrants issued pursuant to this Agreement are duly
authorized and constitute valid and legally binding
obligations of Showboat, enforceable in accordance with their
terms and conditions. Upon payment of the Exercise Price in
accordance with the terms of this Agreement, the Warrant
Shares will be duly authorized, validly issued, fully paid
and nonassessable.
(4) Showboat will at all times reserve and keep
available, free from preemptive rights, out of the aggregate
of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose
of enabling it to satisfy any obligation to issue Warrant
Shares upon exercise of Warrants, the maximum number of
shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants;
(5) DLJ Bridge, upon receipt of this Agreement, will not
be required to be licensed, qualify, or file any applications
for suitability in any jurisdiction in which Showboat is
currently, or may at any time in the future be, doing
business, as the result of being the owner of any Warrant
Shares.
SECTION 16. Notices to Showboat and Warrant Holder. Any
notice or demand authorized by this Agreement to be given or
made by the registered holder of any Warrant Certificate to or
on Showboat shall be sufficiently given or made when and if
deposited in the mail, first class or registered, postage
prepaid, addressed to the office of Showboat expressly
designated by Showboat as its office for purposes of this
Agreement (until the Warrant holders are otherwise notified in
accordance with this Section by Showboat), as follows:
Showboat, Inc.
2800 Fremont Street
Las Vegas, Nevada 89104
Attention: Corporate Secretary
Telephone: (702) 385-9141
Telecopier: (702) 385-9163
with a copy to:
Kummer Kaempfer Bonner & Renshaw
3800 Howard Hughes Parkway, 7th Fl.
Las Vegas, Nevada 89109
Attention: John N. Brewer, Esq.
Telephone: (702) 792-7000
Telecopier: (702) 796-7181
Any notice pursuant to this Agreement to be given by
Showboat to the registered holder(s) of any Warrant Certificate
shall be sufficiently given or made when and if deposited in
the mail, first-class or registered, postage prepaid, addressed
(until Showboat is otherwise notified in accordance with this
Section by such holder) to such holder at the address appearing
on the Warrant register of the Company:
Notice may also be given by either party by facsimile
transmission (effective when receipt is acknowledged), by hand
(effective at the time of delivery) or by overnight delivery
service (effective the next business day).
SECTION 17. Supplements and Amendments. Showboat may
from time to time supplement or amend this Agreement without
the approval of any holders of Warrant Certificates in order to
cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which Showboat
may deem necessary or desirable and which shall not in any way
adversely affect the interests of the holders of Warrant
Certificates.
SECTION 18. Successors. All covenants and provisions of
this Agreement by or for the benefit of Showboat and any
Warrant holder(s) shall bind and inure to the benefit of its
respective successors and assigns, including any subsequent
holder of any Warrant, hereunder.
SECTION 19. Termination. This Agreement shall terminate
at 5:00 p.m., New York City time on May 6, 1999.
Notwithstanding the foregoing, this Agreement will terminate on
any earlier date on which all Warrants have been exercised.
SECTION 20. Governing Law. THIS AGREEMENT AND EACH
WARRANT CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR
ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF SAID STATE EXCEPT AS OTHERWISE
REQUIRED BY MANDATORY PROVISIONS OF NEVADA OR NEW JERSEY LAW,
INCLUDING WITHOUT LIMITATION, THE NEVADA GAMING CONTROL ACT AND
THE NEW JERSEY CASINO CONTROL ACT, AND THE REGULATIONS
PROMULGATED THEREUNDER.
SECTION 21. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or
corporation other than Showboat and the registered holders of
the Warrant Certificates any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of Showboat and the registered
holders of the Warrant Certificates.
SECTION 22. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
A-10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first
above written.
DLJ Bridge Finance, Inc.
By: /s/ Robert Grien
Name: Robert Grien
Title: Vice President
Showboat, Inc.
By:/s/ J. Kell Houssels, III
Name: J. Kell Houssels, III
Title: President and Chief Executive Officer
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EXHIBIT A
Form of Warrant Certificate
[Face]
No. _____ Warrants
Warrant Certificate
SHOWBOAT, INC.
This Warrant Certificate certifies that DLJ Bridge
Finance, Inc., or its registered assigns, is the registered
holder of 150,000 Warrants (the "Warrants") expiring May 6,
1999 to purchase shares of Common Stock, par value $1.00 per
share (the "Common Stock"), of Showboat, Inc., a Nevada
corporation (the "Company"). Each Warrant entitles the holder
upon exercise to receive from the Company on or before 5:00
p.m. New York City time on May 6, 1994, one fully paid and
nonassessable share of Common Stock (a "Warrant Share") at the
initial exercise price (the "Exercise Price") of $15.50 payable
in lawful money of the United States of America upon surrender
of this Warrant Certificate and payment of the Exercise Price
at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The
Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m., New York
City time on May 6, 1999, and to the extent not exercised by
such time, such Warrants shall become void.
Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof and
such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Warrant Certificate shall be governed and construed
in accordance with the internal laws of the State of New York.
EXERCISABLE ON OR BEFORE May 6, 1999
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IN WITNESS WHEREOF, Showboat, Inc. has caused this
Warrant Certificate to be signed by its President and by its
Secretary, each by a facsimile of his signature, and has caused
a facsimile of its corporate seal to be affixed hereunto or
imprinted hereon.
Dated: __________ ___, 1994.
Showboat, Inc.
By:
President
By:
Secretary
(seal)
Countersigned:
DLJ Bridge Finance, Inc.
By:
Its:
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Form of Warrant Certificate
[Reverse]
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants expiring May 6,
1999 entitling the holder on exercise to receive shares of
Common Stock of the Company (the "Common Stock"), and are
issued or to be issued pursuant to a Warrant Agreement dated as
of May 6, 1994 (the "Warrant Agreement"), duly executed and
delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders"
or "holder" meaning the registered holders or registered
holder) of the Warrants. A copy of the Warrant Agreement may
be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before May 6,
1999. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant
Certificate, with the form of election to purchase set forth
hereon properly completed and executed, together with payment
of the Exercise Price in lawful money of the United States of
America at the office of the Company designated for such
purpose. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less
than the total number of Warrants evidenced hereby, there shall
be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised.
No adjustment shall be made for any dividends on any Common
Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price set forth on the face
hereof may, subject to certain conditions, be adjusted. If the
Exercise Price is adjusted, the Warrant Agreement provides that
the number of shares of Common Stock issuable upon the exercise
of each Warrant shall be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant,
but the Company will pay the cash value thereof determined as
provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock
purchasable upon exercise thereof. Said registration rights
are set forth in full in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of
the Company by the registered holder thereof in person or by
legal representative or attorney duly authorized in writing,
may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like
number of Warrants.
Upon due presentation for registration of transfer of
this Warrant Certificate at the office of the Company a new
Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company may deem and treat the registered holder(s)
thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice
to the contrary. Neither the Warrants nor this Warrant
Certificate entitles any holder hereof to any rights of a
stockholder of the Company.
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Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive
__________ shares of Common Stock and herewith tenders payment
for such shares (in lawful money of the United States of
America) to the order of Showboat, Inc. in the amount of $_____
in accordance with the terms hereof. The undersigned requests
that a certificate for such shares be registered in the name of
___________________________, whose address is
______________________________________, and that such shares be
delivered to _______________________, whose address is
_____________________________________. If said number of
shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such
shares be registered in the name of __________________________,
whose address is _______________________________, and that
such Warrant Certificate be delivered to
________________________________, whose address is
__________________________________________.
____________________________
Signature:
Date: ____________________
_____________________________
Signature Guaranteed:
EXHIBIT B
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND IT MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OR
(2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
THE ARTICLES OF INCORPORATION OF THE COMPANY AND
PROVISIONS OF THE NEVADA GAMING CONTROL ACT, THE NEW
JERSEY CASINO CONTROL ACT AND OTHER STATUTES IN
JURISDICTIONS IN WHICH THE COMPANY IS DOING BUSINESS AND
THE REGULATIONS PROMULGATED THEREUNDER, IMPOSE CERTAIN
RESTRICTIONS ON REPORTING OR APPLICATION RESPONSIBILITIES
ON THE OWNERS OF FIVE PERCENT OR MORE OF THE CAPITAL
STOCK OF THE COMPANY AND EMPOWER THE BOARD OF DIRECTORS
TO REDEEM CAPITAL STOCK UNDER CERTAIN CIRCUMSTANCES. THE
COMPANY WILL FURNISH ANY SHAREHOLDER UPON REQUEST AND
WITHOUT CHARGE, A COPY OF THE ARTICLES OF INCORPORATION
AND A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES,
LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH
CLASS OR SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY
HAVE BEEN DETERMINED, AND THE AUTHORITY OF THE BOARD TO
DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF
SUBSEQUENT CLASSES OR SERIES.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND ANY
SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF ARE
SUBJECT TO THE NEVADA GAMING CONTROL ACT AND THE
REGULATIONS OF THE NEVADA GAMING COMMISSION, THE NEW
JERSEY CASINO CONTROL ACT AND THE REGULATIONS OF THE NEW
JERSEY CASINO CONTROL COMMISSION, AND OTHER STATUTES AND
REGULATIONS OF STATE REGULATORY AGENCIES IN JURISDICTIONS
IN WHICH THE COMPANY IS DOING BUSINESS AND THE HOLDERS OF
SUCH SECURITIES ARE, THEREFORE, SUBJECT TO THE
JURISDICTION OF SUCH REGULATORY AGENCIES. THE EXERCISE
OF SUCH SECURITIES MAY RESULT IN THE HOLDER OF SUCH
SECURITIES BEING REQUIRED TO REPORT THEIR OWNERSHIP TO
THE NEVADA GAMING COMMISSION, THE NEW JERSEY CASINO
CONTROL COMMISSION OR OTHER REGULATORY AGENCIES OR THE
COMPLETION OF APPLICATIONS FOR FINDINGS OF SUITABILITY.
