<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-12168
BOYD GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0242733
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2950 SOUTH INDUSTRIAL ROAD
LAS VEGAS, NEVADA
89109
(Address of principal executive offices)
(Zip Code)
(702) 792-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes [X] No [ ]
Shares outstanding of each of the Registrant's classes of common stock as of
July 30, 1999:
Class Outstanding
----- -----------
Common stock, $.01 par value 62,215,232
<PAGE> 2
BOYD GAMING CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1999
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Item 1. Unaudited Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations for the
three and six month periods ended June 30, 1999 and 1998 4
Condensed Consolidated Statement of Changes in Stockholders'
Equity for the six month period ended June 30, 1999 5
Condensed Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1999 and 1998 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosure about Market Risk 27
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 6. Exhibits and Reports on Form 8-K 28
Signature Page 29
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED) JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE DATA) 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 71,829 $ 75,937
Accounts receivable, net 17,922 21,988
Inventories 7,846 9,567
Prepaid expenses and other 15,023 17,333
Income taxes receivable 8,571 11,065
Deferred income taxes 2,782 5,855
---------- ----------
Total current assets 123,973 141,745
Property and equipment, net 764,289 763,207
Other assets and deferred charges 38,957 38,690
Goodwill and other intangible assets, net 199,899 202,614
---------- ----------
Total assets $1,127,118 $1,146,256
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 1,444 $ 1,961
Accounts payable 30,268 32,065
Accrued liabilities
Payroll and related 25,724 29,465
Interest and other 54,371 54,162
---------- ----------
Total current liabilities 111,807 117,653
Long-term debt, net of current maturities 733,180 774,890
Deferred income taxes and other 34,960 26,407
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value; 5,000,000 shares authorized -- --
Common stock, $.01 par value; 200,000,000 shares authorized;
62,207,315 and 62,027,514 shares outstanding 622 620
Additional paid-in capital 141,872 140,616
Retained earnings 104,677 86,070
---------- ----------
Total stockholders' equity 247,171 227,306
---------- ----------
Total liabilities and stockholders' equity $1,127,118 $1,146,256
========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-3-
<PAGE> 4
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(UNAUDITED) JUNE 30, JUNE 30,
------------------------ ------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Casino $ 178,222 $ 181,673 $ 357,755 $ 367,537
Food and beverage 39,977 40,246 80,945 82,508
Room 17,470 18,364 36,774 36,878
Other 18,746 17,474 36,091 35,741
Management fee 10,031 9,563 20,844 20,359
--------- --------- --------- ---------
Gross revenues 264,446 267,320 532,409 543,023
Less promotional allowances 22,510 21,835 47,215 47,496
--------- --------- --------- ---------
Net revenues 241,936 245,485 485,194 495,527
--------- --------- --------- ---------
Costs and expenses
Casino 89,067 91,567 179,365 186,975
Food and beverage 26,193 27,272 52,026 53,409
Room 5,941 6,708 12,183 12,482
Other 17,103 16,377 32,504 32,276
Selling, general and administrative 35,239 37,212 70,277 75,795
Maintenance and utilities 9,891 10,618 19,545 20,113
Depreciation and amortization 18,534 18,387 37,266 36,998
Corporate expense 6,587 5,686 12,689 10,586
Preopening expense 315 -- 854 --
Restructuring charge -- 5,925 -- 5,925
--------- --------- --------- ---------
Total 208,870 219,752 416,709 434,559
--------- --------- --------- ---------
Operating income 33,066 25,733 68,485 60,968
--------- --------- --------- ---------
Other income (expense)
Interest income 46 93 103 206
Interest expense, net of amounts capitalized (16,662) (18,747) (33,793) (38,019)
--------- --------- --------- ---------
Total (16,616) (18,654) (33,690) (37,813)
--------- --------- --------- ---------
Income before provision for income taxes and cumulative
effect of a change in accounting principle 16,450 7,079 34,795 23,155
Provision for income taxes 6,745 3,045 14,450 9,797
--------- --------- --------- ---------
Income before cumulative effect of a change in
accounting principle 9,705 4,034 20,345 13,358
Cumulative effect of a change in accounting for
start-up activities, net of tax benefit of $936 -- -- 1,738 --
--------- --------- --------- ---------
Net income $ 9,705 $ 4,034 $ 18,607 $ 13,358
========= ========= ========= =========
BASIC AND DILUTED NET INCOME PER COMMON SHARE
Income before cumulative effect of a change in
accounting principle $ 0.16 $ 0.07 $ 0.33 $ 0.22
Cumulative effect of a change in accounting for
start-up activities, net of tax -- -- (0.03) --
--------- --------- --------- ---------
Net income $ 0.16 $ 0.07 $ 0.30 $ 0.22
========= ========= ========= =========
Average basic shares outstanding 62,029 61,671 62,029 61,670
Average diluted shares outstanding 62,143 61,817 62,085 61,870
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-4-
<PAGE> 5
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------------------------- ------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, January 1, 1999 62,027,514 $ 620 $ 140,616 $ 86,070 $ 227,306
Net income -- -- -- 18,607 18,607
Stock issued in connection with employee
stock purchase plan 179,801 2 1,256 -- 1,258
---------- ---------- ---------- ---------- ----------
Balances, June 30, 1999 62,207,315 $ 622 $ 141,872 $ 104,677 $ 247,171
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-5-
<PAGE> 6
BOYD GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) JUNE 30,
-------------------------
(IN THOUSANDS) 1999 1998
- ----------------------------------------------------------------------- -------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,607 $ 13,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 37,266 36,998
Cumulative effect of a change in accounting for start-up activities 2,674 --
Deferred income taxes 11,238 3,797
Restructuring charge -- 5,925
Changes in assets and liabilities:
Accounts receivable, net 4,066 1,514
Inventories 1,721 182
Prepaid expenses and other (364) (1,693)
Income taxes receivable 2,494 1,668
Other assets (1,077) (2,231)
Other current liabilities (1,896) 7,534
Other liabilities 388 --
-------- --------
Net cash provided by operating activities 75,117 67,052
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES-
Acquisition of property, equipment and other assets (38,068) (22,440)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 1,070 762
Net payments under bank credit facility (41,250) (45,000)
Payments on long-term debt (977) (1,994)
-------- --------
Net cash used in financing activities (41,157) (46,232)
-------- --------
Net decrease in cash and cash equivalents (4,108) (1,620)
Cash and cash equivalents, beginning of period 75,937 78,277
-------- --------
Cash and cash equivalents, end of period $ 71,829 $ 76,657
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest, net of amounts capitalized $ 35,172 $ 37,235
======== ========
Cash paid for income taxes $ 3,882 $ 4,946
======== ========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-6-
<PAGE> 7
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying condensed consolidated financial statements include the
accounts of Boyd Gaming Corporation and its wholly-owned subsidiaries,
collectively referred to herein as the "Company". At June 30, 1999, the Company
owned and operated ten casino entertainment facilities located in Las Vegas,
Nevada, Tunica, Mississippi, East Peoria, Illinois, and Kenner, Louisiana as
well as a travel agency located in Honolulu, Hawaii. In addition, the Company
manages a casino entertainment facility in Philadelphia, Mississippi, for which
it has a seven year management contract that expires in June 2001. All material
intercompany accounts and transactions have been eliminated.
Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the results of its operations
and cash flows for the three and six month periods ended June 30, 1999 and 1998.
It is suggested that this report be read in conjunction with the Company's
audited consolidated financial statements included in the Annual Report on Form
10-K for the year ended December 31, 1998. The operating results for the three
and six month periods ended June 30, 1999 and 1998 and cash flows for the six
month period ended June 30, 1999 and 1998 are not necessarily indicative of the
results that will be achieved for the full year or for future periods.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Significant estimates used by the Company include the
estimated useful lives for depreciable and amortizable assets, the estimated
allowance for doubtful accounts receivable, the estimated valuation allowance
for deferred tax assets, and estimated cash flows used in assessing the
recoverability of long-lived assets. Actual results could differ from those
estimates.
Capitalized Interest
Interest costs associated with major construction projects are capitalized. When
no debt is incurred specifically for a project, interest is capitalized on
amounts expended for the project using the Company's weighted average cost of
borrowing. Capitalization of interest ceases when the project is substantially
complete. Capitalized interest during the three and six month periods ended June
30, 1999 was $0.3 million and $0.4 million, respectively. There were no such
interest costs capitalized during the three and six month periods ended June 30,
1998.
-7-
<PAGE> 8
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Preopening Expenses
The American Institute of Certified Public Accountants issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," which is
effective for fiscal years beginning after December 15, 1998. The statement
requires businesses to expense certain costs of start-up activities as incurred.
During the three and six month periods ended June 30, 1999, the Company expensed
$0.3 million and $0.9 million, respectively, in preopening costs that related
primarily to the Company's share of preopening expense in the Atlantic City
Joint Venture. The initial application of this statement in January 1999
required the Company to expense certain previously capitalized items as a
cumulative effect of a change in accounting principle. As such, the Company
reported a charge of $1.7 million, net of tax, to the consolidated statement of
operations during the three month period ended March 31, 1999 as the cumulative
effect of the change in accounting principle.
Recently Issued Accounting Standards
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting of Derivative Instruments and Hedging
Activities." This statement establishes accounting and reporting standards for
derivative instruments for fiscal years beginning after June 15, 2000. Based
upon the expiration date of the Company's current interest rate swap agreement,
management believes that the initial adoption of this statement will not have a
material impact on the consolidated financial statements.
NOTE 2. - NET INCOME PER COMMON SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" that requires the presentation of basic and diluted net
income per share. Basic per share amounts are computed by dividing net income by
the average shares outstanding during the period. Diluted per share amounts are
computed by dividing net income by average shares outstanding plus the dilutive
effect of common share equivalents. Diluted net income per share during the
three and six month periods ended June 30, 1999 and 1998 is determined
considering the dilutive effect of outstanding stock options. The effect of
stock options outstanding to purchase approximately 4.5 million and 4.6 million
shares, respectively, was not included in the diluted calculations during the
three and six month periods ended June 30, 1999 and 2.7 million shares was not
included in the dilution calculations during the three and six month periods
ended June 30, 1998 since the exercise price of such options was greater than
the average price of the Company's common shares during the periods.
NOTE 3. - DEBT
On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter beginning on September 30, 1999 through March 31, 2003. The
interest rate on the New Bank Credit Facility is based upon either the agent
bank's quoted base rate or the Eurodollar rate, plus an applicable margin that
is determined by the level of a predefined financial leverage ratio. In
addition, the Company incurs a commitment fee on the unused portion of the
Revolver which ranges from 0.375% to 0.50% per annum. The New Bank Credit
Facility is secured by the real and personal property
-8-
<PAGE> 9
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
of the Company and its subsidiaries, including ten casino properties. The
obligations of the Company under the New Bank Credit Facility are guaranteed by
certain significant subsidiaries of the Company.
The New Bank Credit Facility contains certain financial and other covenants
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a minimum interest
coverage ratio, (iii) establishing a maximum permitted total leverage ratio and
senior secured leverage ratio, (iv) imposing limitations on the incurrence of
additional indebtedness, (v) imposing limitations on the maximum permitted
expansion capital expenditures during the term of the New Bank Credit Facility,
(vi) imposing limits on the maximum permitted maintenance capital expenditures
during each year of the term of the New Bank Credit Facility, and (vii) imposing
restrictions on investments and certain other payments. Management believes the
Company and its subsidiaries are in compliance with the New Bank Credit Facility
covenants.
NOTE 4. - ACQUISITION
On June 27, 1999, the Company entered into a definitive agreement to acquire the
Blue Chip Casino, a riverboat casino in Michigan City, Indiana for $255 million
in cash. In addition, the Company will acquire a hotel and parking facility,
currently under construction and attached to the existing casino complex, for
$18.6 million. The transaction is currently expected to close in the fourth
quarter of 1999 and is conditioned upon, among other things, approval by the
Indiana Gaming Commission. The Company plans to fund the acquisition from
borrowings under the New Bank Credit Facility.
NOTE 5. - SEGMENT INFORMATION
The Company's management reviews the results of operations based on four
distinct geographic gaming market segments: the Stardust Resort and Casino on
the Las Vegas Strip, Boulder Strip Properties, Downtown Properties and Central
Region Properties. As used herein, "Boulder Strip Properties" consist of Sam's
Town Hotel and Gambling Hall, the Eldorado Casino, and Jokers Wild Casino;
"Downtown Properties" consist of the California Hotel and Casino, the Fremont
Hotel and Casino, Main Street Station Casino, Brewery and Hotel and Vacations
Hawaii; "Central Region Properties" consist of Sam's Town Hotel and Gambling
Hall located in Tunica, Mississippi, Sam's Town Kansas City (through July 15,
1998), Par-A-Dice Hotel and Casino, Treasure Chest Casino, and management fee
income from Silver Star Resort and Casino.
-9-
<PAGE> 10
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
(IN THOUSANDS) 1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Casino Revenue
Stardust $ 23,038 $ 26,635 $ 50,570 $ 53,590
Boulder Strip Properties 38,033 35,302 75,632 71,565
Downtown Properties 32,830 32,301 66,182 64,318
-------- -------- -------- --------
Nevada Region 93,901 94,238 192,384 189,473
Central Region 84,321 87,435 165,371 178,064
-------- -------- -------- --------
Total Casino Revenue $178,222 $181,673 $357,755 $367,537
======== ======== ======== ========
EBITDA (1)
Stardust $ 4,015 $ 7,059 $ 10,229 $ 13,569
Boulder Strip Properties 10,001 9,845 20,150 20,538
Downtown Properties 9,584 7,309 18,930 13,130
-------- -------- -------- --------
Nevada Region 23,600 24,213 49,309 47,237
Central Region 34,902 31,518 69,985 67,240
-------- -------- -------- --------
Property EBITDA 58,502 55,731 119,294 114,477
-------- -------- -------- --------
Other Costs and Expenses
Corporate expense 6,587 5,686 12,689 10,586
Depreciation and amortization 18,534 18,387 37,266 36,998
Preopening expense 315 -- 854 --
Restructuring charge -- 5,925 -- 5,925
Other expense, net 16,616 18,654 33,690 37,813
-------- -------- -------- --------
Total Other Costs and Expenses 42,052 48,652 84,499 91,322
-------- -------- -------- --------
Income before provision for income taxes
and cumulative effect of a change in
accounting principle 16,450 7,079 34,795 23,155
Provision for taxes 6,745 3,045 14,450 9,797
-------- -------- -------- --------
Income before cumulative effect of a change
in accounting principle 9,705 4,034 20,345 13,358
Cumulative effect of a change in accounting
for start-up activities, net -- -- 1,738 --
-------- -------- -------- --------
Net Income $ 9,705 $ 4,034 $ 18,607 $ 13,358
======== ======== ======== ========
</TABLE>
(1) EBITDA is earnings before interest, taxes, depreciation and amortization
expense, preopening expense and restructuring charge. The Company believes that
EBITDA is a useful financial measurement for assessing the operating
performance of its properties. EBITDA does not represent net income or cash
flows from operating, investing and financing activities as defined by
generally accepted accounting principles.
-10-
<PAGE> 11
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 6. - GUARANTOR INFORMATION
The Company's $200 million of 9.25% Senior Notes (the "9.25% Notes") are
guaranteed by a majority of the Company's wholly-owned significant subsidiaries.
These guaranties are full, unconditional, and joint and several. The Company has
significant subsidiaries that do not guarantee the 9.25% Notes. As such, the
following consolidating schedules present separate condensed consolidating
financial statement information on a combined basis for the parent only, as well
as the Company's guarantor subsidiaries and non-guarantor subsidiaries, as of
June 30, 1999 and December 31, 1998 and for the three and six month periods
ended June 30, 1999 and 1998.
-11-
<PAGE> 12
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 17,479 $ 82,573 $ 25,537 $ (1,616){1} $ 123,973
Property and equipment, net 38,488 686,456 39,345 -- 764,289
Other assets and deferred charges 899,342 (467,690) 165,171 (557,866){1}{2} 38,957
Goodwill and other intangible assets, net -- 117,736 82,163 -- 199,899
---------- ---------- ---------- ---------- ----------
Total assets $ 955,309 $ 419,075 $ 312,216 $ (559,482) $1,127,118
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 27,838 $ 63,825 $ 21,781 $ (1,637){1} $ 111,807
Long-term debt, net of current maturities 664,858 68,289 33 -- 733,180
Deferred income taxes and other 15,438 19,414 108 -- 34,960
Stockholders' equity 247,175 267,547 290,294 (557,845){2} 247,171
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $ 955,309 $ 419,075 $ 312,216 $ (559,482) $1,127,118
========== ========== ========== ========== ==========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany payables and receivables.
{2} - To eliminate investment in subsidiaries and subsidiaries' equity.
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets $ 23,193 $ 97,564 $ 22,533 $ (1,545){1} $ 141,745
Property and equipment, net 36,490 687,740 38,977 -- 763,207
Other assets and deferred charges 919,264 (515,630) 153,170 (518,114){1}{2} 38,690
Goodwill and other intangible assets, net -- 119,365 83,249 -- 202,614
---------- ---------- ---------- ---------- ----------
Total assets $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,301 $ 69,217 $ 15,575 $ (2,440){1} $ 117,653
Long-term debt, net of current maturities 706,373 68,484 33 -- 774,890
Deferred income taxes and other 9,984 16,382 41 -- 26,407
Stockholders' equity 227,289 234,956 282,280 (517,219){2} 227,306
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $ 978,947 $ 389,039 $ 297,929 $ (519,659) $1,146,256
========== ========== ========== ========== ==========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany payables and receivables.
{2} - To eliminate investment in subsidiaries and subsidiaries' equity.
-12-
<PAGE> 13
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 146,519 $ 31,703 $ -- $ 178,222
Food and beverage -- 37,259 2,718 -- 39,977
Room -- 17,470 -- -- 17,470
Other 2,846 8,298 11,147 (3,545){1} 18,746
Management fee 34,726 11,910 5,238 (41,843){1} 10,031
--------- --------- --------- --------- ---------
Gross revenues 37,572 221,456 50,806 (45,388) 264,446
Less promotional allowances -- 20,583 1,927 -- 22,510
--------- --------- --------- --------- ---------
Net revenues 37,572 200,873 48,879 (45,388) 241,936
--------- --------- --------- --------- ---------
Costs and expenses
Casino -- 77,745 11,322 -- 89,067
Food and beverage -- 23,510 2,683 -- 26,193
Room -- 5,941 -- -- 5,941
Other -- 17,938 11,601 (12,436){1} 17,103
Selling, general and administrative -- 27,925 7,314 -- 35,239
Maintenance and utilities -- 8,470 1,421 -- 9,891
Depreciation and amortization 471 15,820 2,243 -- 18,534
Corporate expense 9,629 66 437 (3,545){1} 6,587
Preopening expense 18 -- 297 -- 315
--------- --------- --------- --------- ---------
Total 10,118 177,415 37,318 (15,981) 208,870
--------- --------- --------- --------- ---------
Operating income 27,454 23,458 11,561 (29,407) 33,066
Other income (expense), net (15,427) (1,462) 273 -- (16,616)
--------- --------- --------- --------- ---------
Income before provision for income taxes 12,027 21,996 11,834 (29,407) 16,450
Provision for income taxes 2,322 4,423 -- -- 6,745
--------- --------- --------- --------- ---------
Net income $ 9,705 $ 17,573 $ 11,834 $ (29,407) $ 9,705
========= ========= ========= ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-13-
<PAGE> 14
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE THREE MONTH
PERIOD ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 151,410 $ 30,263 $ -- $ 181,673
Food and beverage -- 37,790 2,456 -- 40,246
Room -- 18,364 -- -- 18,364
Other -- 9,425 8,333 (284){1} 17,474
Management fee 29,203 11,381 5,279 (36,300){1} 9,563
--------- --------- --------- --------- ---------
Gross revenues 29,203 228,370 46,331 (36,584) 267,320
Less promotional allowances -- 20,067 1,768 -- 21,835
--------- --------- --------- --------- ---------
Net revenues 29,203 208,303 44,563 (36,584) 245,485
--------- --------- --------- --------- ---------
Costs and expenses
Casino -- 80,340 11,227 -- 91,567
Food and beverage -- 24,739 2,533 -- 27,272
Room -- 6,708 -- -- 6,708
Other -- 18,396 10,272 (12,291){1} 16,377
Selling, general and administrative -- 31,366 5,846 -- 37,212
Maintenance and utilities -- 9,684 934 -- 10,618
Depreciation and amortization 119 16,004 2,264 -- 18,387
Corporate expense 5,503 -- 183 -- 5,686
Restructuring charge -- 5,925 -- -- 5,925
--------- --------- --------- --------- ---------
Total 5,622 193,162 33,259 (12,291) 219,752
--------- --------- --------- --------- ---------
Operating income 23,581 15,141 11,304 (24,293) 25,733
Other income (expense), net (17,431) (1,572) 349 -- (18,654)
--------- --------- --------- --------- ---------
Income before provision (benefit) for income
taxes 6,150 13,569 11,653 (24,293) 7,079
Provision (benefit) for income taxes (453) 3,498 -- -- 3,045
--------- --------- --------- --------- ---------
Net income $ 6,603 $ 10,071 $ 11,653 $ (24,293) $ 4,034
========= ========= ========= ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-14-
<PAGE> 15
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 295,185 $ 62,570 $ -- $ 357,755
Food and beverage -- 75,737 5,208 -- 80,945
Room -- 36,774 -- -- 36,774
Other 5,692 17,091 20,396 (7,088){1} 36,091
Management fee 71,685 24,561 10,350 (85,752){1} 20,844
--------- --------- --------- --------- ---------
Gross revenues 77,377 449,348 98,524 (92,840) 532,409
Less promotional allowances -- 43,451 3,764 -- 47,215
--------- --------- --------- --------- ---------
Net revenues 77,377 405,897 94,760 (92,840) 485,194
--------- --------- --------- --------- ---------
Costs and expenses
Casino -- 156,434 22,931 -- 179,365
Food and beverage -- 46,832 5,194 -- 52,026
Room -- 12,183 -- -- 12,183
Other -- 36,256 21,701 (25,453){1} 32,504
Selling, general and administrative -- 56,429 13,848 -- 70,277
Maintenance and utilities -- 16,573 2,972 -- 19,545
Depreciation and amortization 917 31,877 4,472 -- 37,266
Corporate expense 18,850 95 832 (7,088){1} 12,689
Preopening expense 63 -- 791 -- 854
--------- --------- --------- --------- ---------
Total 19,830 356,679 72,741 (32,541) 416,709
--------- --------- --------- --------- ---------
Operating income 57,547 49,218 22,019 (60,299) 68,485
Other income (expense), net (31,243) (3,002) 555 -- (33,690)
--------- --------- --------- --------- ---------
Income before provision for income taxes 26,304 46,216 22,574 (60,299) 34,795
Provision for income taxes 5,959 8,491 -- -- 14,450
--------- --------- --------- --------- ---------
Income before cumulative effect 20,345 37,725 22,574 (60,299) 20,345
Cumulative effect, net 1,738 -- -- -- 1,738
--------- --------- --------- --------- ---------
Net income $ 18,607 $ 37,725 $ 22,574 $ (60,299) $ 18,607
========= ========= ========= ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-15-
<PAGE> 16
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON- ELIMINATION
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS ENTRIES CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Casino $ -- $ 306,512 $ 61,025 $ -- $ 367,537
Food and beverage -- 77,726 4,782 -- 82,508
Room -- 36,878 -- -- 36,878
Other -- 19,670 16,850 (779){1} 35,741
Management fee 58,872 24,090 10,656 (73,259){1} 20,359
--------- --------- --------- --------- ---------
Gross revenues 58,872 464,876 93,313 (74,038) 543,023
Less promotional allowances -- 44,083 3,413 -- 47,496
--------- --------- --------- --------- ---------
Net revenues 58,872 420,793 89,900 (74,038) 495,527
--------- --------- --------- --------- ---------
Costs and expenses
Casino -- 164,480 22,495 -- 186,975
Food and beverage -- 48,387 5,022 -- 53,409
Room -- 12,482 -- -- 12,482
Other -- 38,659 19,732 (26,115){1} 32,276
Selling, general and administrative -- 63,537 12,258 -- 75,795
Maintenance and utilities -- 17,818 2,295 -- 20,113
Depreciation and amortization 197 32,329 4,472 -- 36,998
Corporate expense 9,519 373 694 -- 10,586
Restructuring charge -- 5,925 -- -- 5,925
--------- --------- --------- --------- ---------
Total 9,716 383,990 66,968 (26,115) 434,559
--------- --------- --------- --------- ---------
Operating income 49,156 36,803 22,932 (47,923) 60,968
Other income (expense), net (34,937) (3,225) 349 -- (37,813)
--------- --------- --------- --------- ---------
Income before provision for income taxes 14,219 33,578 23,281 (47,923) 23,155
Provision for income taxes 560 9,237 -- -- 9,797
--------- --------- --------- --------- ---------
Net income $ 13,659 $ 24,341 $ 23,281 $ (47,923) $ 13,358
========= ========= ========= ========= =========
</TABLE>
Elimination Entries
{1} - To eliminate intercompany revenue and expense as well as equity income.
-16-
<PAGE> 17
BOYD GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by operating activities $ 37,928 $ 25,803 $ 11,386 $ 75,117
-------- -------- -------- --------
Cash flows from investing activities -
Acquisition of property, equipment and other assets (2,916) (31,323) (3,829) (38,068)
-------- -------- -------- --------
Cash flows from financing activities
Net payments under bank credit facility (41,250) -- -- (41,250)
Receipt (payment) of dividends 7,670 (3,304) (4,366) --
Other 293 (200) -- 93
-------- -------- -------- --------
Net cash used in financing activities (33,287) (3,504) (4,366) (41,157)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,725 (9,024) 3,191 (4,108)
Cash and cash equivalents, beginning of period 1,054 55,492 19,391 75,937
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 2,779 $ 46,468 $ 22,582 $ 71,829
======== ======== ======== ========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
COMBINED
COMBINED NON-
(IN THOUSANDS) PARENT GUARANTORS GUARANTORS CONSOLIDATED
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows provided by operating activities $ 37,128 $ 324 $ 29,600 $ 67,052
-------- -------- -------- --------
Cash flows from investing activities -
Acquisition of property equipment and other assets (1,384) (19,896) (1,160) (22,440)
-------- -------- -------- --------
Cash flows from financing activities
Net payments under bank credit facility (45,000) -- -- (45,000)
Receipt (payment) of dividends 11,437 9,850 (21,287) --
Other (741) (396) (95) (1,232)
-------- -------- -------- --------
Net cash provided by (used in) financing activities (34,304) 9,454 (21,382) (46,232)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,440 (10,118) 7,058 (1,620)
Cash and cash equivalents, beginning of period 2,832 58,317 17,128 78,277
-------- -------- -------- --------
Cash and cash equivalents, end of period $ 4,272 $ 48,199 $ 24,186 $ 76,657
======== ======== ======== ========
</TABLE>
-17-
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating
data for the Company's properties. As used herein, "Boulder Strip Properties"
consist of Sam's Town Las Vegas, the Eldorado and Jokers Wild; "Downtown
Properties" consist of the California, the Fremont, Main Street Station and
Vacations Hawaii, the Company's wholly-owned travel agency which operates for
the benefit of the Downtown casino properties; and "Central Region Properties"
consist of Sam's Town Tunica, Sam's Town Kansas City (through July 15, 1998),
Par-A-Dice, Treasure Chest Casino, and management fee income from Silver Star
Resort and Casino. Net revenues displayed in this table and discussed in this
section are net of promotional allowances; as such, references to room revenue
and food and beverage revenue do not agree to the amounts on the Condensed
Consolidated Statements of Operations. Operating income from properties for the
purposes of this table excludes corporate expense, including related
depreciation and amortization, preopening expense, and restructuring charge.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
(In thousands) 1999 1998 1999 1998
- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues
Stardust $ 35,831 $ 41,102 $ 77,121 $ 82,435
Boulder Strip Properties 47,968 46,247 96,547 94,304
Downtown Properties (a) 55,610 52,691 109,603 103,520
-------- -------- -------- --------
Nevada Region 139,409 140,040 283,271 280,259
Central Region 102,527 105,445 201,923 215,268
-------- -------- -------- --------
Total properties $241,936 $245,485 $485,194 $495,527
======== ======== ======== ========
Operating income
Stardust $ 1,073 $ 4,175 $ 4,368 $ 7,426
Boulder Strip Properties 6,280 6,200 12,670 13,307
Downtown Properties 5,649 3,429 11,146 5,501
-------- -------- -------- --------
Nevada Region 13,002 13,804 28,184 26,234
Central Region 27,710 23,886 55,318 51,973
-------- -------- -------- --------
Total properties $ 40,712 $ 37,690 $ 83,502 $ 78,207
======== ======== ======== ========
</TABLE>
(a) Includes revenues related to Vacations Hawaii, a Honolulu travel agency,
of $10,401 and $7,787, respectively, for the quarters ended June 30, 1999
and 1998, and revenues of $18,873 and $15,544, respectively, for the six
month period ended June 30, 1999 and 1998.
-18-
<PAGE> 19
REVENUES
Consolidated net revenues decreased 1.4% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998. Company-wide casino revenue
decreased 1.9%, food and beverage revenue decreased 2.8%, and room revenue
decreased 7.7%. Net revenues from the Stardust, Boulder Strip and Downtown
Properties (the "Nevada Region") decreased slightly (0.5%) during the quarter
ended June 30, 1999 compared to the quarter ended June 30, 1998. Net revenues at
the Downtown Properties and Boulder Strip properties increased 5.5% and 3.7%,
respectively, while net revenues at the Stardust decreased 12.8%. The decline in
revenues at the Stardust is primarily due to an increase in competition on the
Las Vegas Strip, construction disruption related to a renovation project that is
expected to be completed by the end of 1999, and the temporary closure,
beginning in April 1999, of approximately 550 motor inn rooms. Net revenues in
the Central Region decreased 2.8% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998, primarily as a result of the
closure of the Sam's Town Kansas City property in July 1998.
Consolidated net revenues decreased 2.1% during the six month period ended June
30, 1999 compared to the same period in the prior year. Company-wide casino
revenue decreased 2.7%, food and beverage revenue decreased 1.9% and room
revenue remained virtually unchanged. Net revenues from the Nevada Region
increased 1.1% during the six month period ended June 30, 1999 compared to the
six month period ended June 30, 1998 due to a 5.9% increase at the Downtown
Properties and a 2.4% increase at the Boulder Strip Properties, partially offset
by a 6.4% decline at the Stardust. Net revenues in the Central Region declined
6.2% during the six month period ended June 30, 1999 compared to the same period
in the prior year. The decrease is primarily a result of the closure of the
Sam's Town Kansas City property in July 1998.
OPERATING INCOME
Consolidated operating income before preopening expense and a restructuring
charge increased by 5.4% to $33 million during the quarter ended June 30, 1999
from $32 million during the quarter ended June 30, 1998. Operating income in the
Nevada Region decreased 5.8% as the result of a $3.1 million decline experienced
at the Stardust due to a 12.8% reduction in revenues. The Stardust decline was
partially offset by a $2.2 million increase at the Downtown Properties
principally due to more efficient operations. In the Central Region, operating
income increased 16.0% due primarily to the reduction in operating loss from the
Sam's Town Kansas City property which was closed in July 1998.
For the six month period ended June 30, 1999, consolidated operating income
before preopening expense and a restructuring charge increased 3.7% to $69
million compared to $67 million in the same period from the prior year.
Operating income in the Nevada Region increased 7.4% due primarily to the
operating efficiencies experienced at the Downtown Properties, partially offset
by a decline at the Stardust. In the Central Region, operating income increased
6.4% due primarily to the reduction in operating loss from the Sam's Town Kansas
City property which was closed in July 1998.
STARDUST
For the quarter ended June 30, 1999, net revenues at the Stardust decreased
12.8% compared to the quarter ended June 30, 1998 due to an increase in
competition on the Las Vegas Strip, construction disruption related to a
renovation project that is expected to be completed by the end of 1999, and the
temporary closure, beginning in April 1999, of approximately 550 motor inn
rooms. Casino revenue declined 13.5% due to a decrease in slot and table game
wagering. Room revenue declined 15.8% during the quarter ended June 30, 1999
compared to the quarter ended June 30, 1998 resulting from a decline in the
number of available rooms by 33% due to the closure of motor inn rooms and the
renovation of guest rooms in both hotel towers. Operating income at the Stardust
declined by 74% to $1.1 million during the quarter ended June 30, 1999 compared
to the same period in the prior year also as a result of the decline in
revenues.
-19-
<PAGE> 20
For the six month period ended June 30, 1999, net revenues at the Stardust
declined 6.4% versus the comparable period in the prior year. Casino revenue
declined 5.6% due to a decrease in slot and table game wagering. Room revenue
declined 5.3% as the number of available rooms declined 21% as a result of the
closure of the motor inn rooms and the renovation project. Operating income
declined 41% to $4.4 million during the six month period ended June 30, 1999
compared to $7.4 million during the same period in the prior year also as a
result of the decline in revenues.
BOULDER STRIP PROPERTIES
Net revenues at the Boulder Strip Properties increased 3.7% during the quarter
ended June 30, 1999 compared to the quarter ended June 30, 1998. The increase is
attributable to a 7.7% increase in casino revenue due to an increase in table
game and slot wagering volume, offset by a decline in non-gaming revenues.
Operating income at the Boulder Strip Properties remained virtually unchanged
during the quarter ended June 30, 1999 as compared to the same period in the
prior year.
During the six month period ended June 30, 1999, net revenues at the Boulder
Strip Properties increased 2.4% compared to the same period in the prior year.
The increase is attributable to a 5.7% increase in casino revenue due to an
increase in table game and slot wagering volume, partially offset by a decline
in non-gaming revenues. Operating income at the Boulder Strip Properties
declined 4.8% during the six month period ended June 30, 1999 and operating
income margin declined from 14.1% for the six month period ended June 30, 1998
to 13.1% for the six month period ended June 30, 1999. The declines in operating
income and operating income margin are primarily attributable to an increase in
marketing expenses.
DOWNTOWN PROPERTIES
Net revenues at the Downtown Properties increased 5.5% during the quarter ended
June 30, 1999 compared to the quarter ended June 30, 1998 due primarily to an
increase in revenues at the Company's Honolulu travel agency, Vacations Hawaii.
Casino revenue increased 1.6% due to an increase in table game and slot wagering
volume, while non-gaming revenues at the Downtown casino properties declined
slightly. Operating income at the Downtown Properties increased 65% to $5.6
million during the quarter ended June 30, 1999 due to operating income gains
experienced at the Fremont and the California, as well as a reduction in
operating loss experienced at Main Street Station. Operating income margin
increased to 10.2% during the quarter ended June 30, 1999 from 6.5% during the
comparable quarter in the prior year. The increase in operating income and
operating income margin is primarily attributable to the increase in net
revenues coupled with cost reductions in marketing and other expenses at each of
the Downtown casino properties.
Net revenues at the Downtown Properties increased 5.9% during the six month
period ended June 30, 1999 compared to the same period in the prior year. Casino
revenue increased 2.9% due primarily to increased slot wagering volumes at the
California and Main Street Station. Non-gaming revenues at the Downtown
Properties increased 10.8% during the six month period ended June 30, 1999
versus the comparable prior year period due primarily to an increase in revenues
at Vacations Hawaii as well as an increase in food and beverage and room
revenue. Operating income at the Downtown Properties increased $5.6 million or
103% during the six month period ended June 30, 1999 compared to the same period
in the prior year. Operating income margin increased to 10.2% during the six
month period ended June 30, 1999 versus 5.3% in the comparable prior year
period. The increase in operating income and operating income margin is
primarily attributable to the increase in net revenues as well as cost
reductions in marketing and other expenses at each of the Downtown Properties.
CENTRAL REGION
Net revenues in the Central Region declined 2.8% during the quarter ended June
30, 1999 compared to the quarter ended June 30, 1998. The decline in net
revenues was due to the closure of Sam's Town Kansas City in July 1998,
partially offset by increases in net revenues at all other Central Region
Properties. Net revenues
-20-
<PAGE> 21
at Par-A-Dice increased 11.2% for the quarter ended June 30, 1999 compared to
the same period in the prior year due primarily to an increase in casino
revenue. In addition, Par-A-Dice began dockside operations on June 26, 1999 as a
result of a new gaming law allowing once-cruising riverboats to remain dockside,
which allows patrons to come and go as they please. Management expects this
change should result in enhanced revenues at Par-A-Dice over the levels that
would have prevailed without the change. Net revenues at Treasure Chest
increased 5.1% due primarily to an increase in slot wagering coupled with an
increase in slot win percentage. At Sam's Town Tunica, net revenues increased
2.1% due primarily to an increase in slot win percentage. Management fee revenue
from Silver Star increased 2.1% for the quarter ended June 30, 1999 compared to
the quarter ended June 30, 1998. Operating income in the Central Region
increased 16.0% due to gains experienced by the closure of the Sam's Town Kansas
City property as well as an increase in net revenues at all of the other Central
Region Properties.
Net revenues in the Central Region declined 6.2% during the six month period
ended June 30, 1999 compared to the same period in the prior year. The majority
of the decrease is attributable to the closure of the Sam's Town Kansas City
property in July 1998, partially offset by an increase in net revenues at
Par-A-Dice (6.7%), Treasure Chest (2.7%) and management fee revenue from Silver
Star (2.4%). Operating income in the Central Region increased to $55 million
during the six month period ended June 30, 1999 from $52 million during the
comparable period in the prior year due to the closure of the Sam's Town Kansas
City property as well as the increase in net revenues at all other Central
Region Properties.
OTHER INCOME (EXPENSE)
Other income and expense is primarily comprised of interest expense. Interest
expense decreased by $2.1 million during the quarter ended June 30, 1999 and
decreased $4.2 million during the six month period ended June 30, 1999 compared
to the corresponding periods in the prior year. The decrease is attributable to
lower debt levels combined with a decline in interest rates on floating rate
debt. In addition, the Company capitalized $0.3 million and $0.4 million,
respectively, in interest costs during the quarter ended June 30, 1999 and the
six month period ended June 30, 1999. There were no such interest costs
capitalized during the quarter or six month periods ended June 30, 1998.
CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING FOR START-UP ACTIVITIES
The Company reported a charge of $1.7 million, net of $0.9 million in tax
benefits, as the cumulative effect of a change in accounting for start-up
activities. The American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" that
required the Company to expense certain previously capitalized costs of start-up
activities as a cumulative effect of a change in accounting principle.
NET INCOME
As a result of these factors, the Company reported net income of $9.7 million
and $4.0 million, respectively, during the quarters ended June 30, 1999 and 1998
and $18.6 million and $13.4 million, respectively, during the six month periods
ended June 30, 1999 and June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATING ACTIVITIES AND WORKING CAPITAL
The Company's policy is to use operating cash flow in combination with debt
financing to fund renovations and expansion of its business.
-21-
<PAGE> 22
During the six month period ended June 30, 1999, the Company generated operating
cash flows of $75 million compared to $67 million during the same period in the
prior year. The increase in operating cash flows is primarily attributable to
the Company's enhanced earnings, as well as the realization of a portion of the
tax benefits related to the sale of certain assets at the Sam's Town Kansas City
property. (See further discussion regarding the tax benefits in the following
paragraph). As of June 30, 1999 and 1998, the Company had balances of cash and
cash equivalents of $72 million and $77 million, respectively, and working
capital of $12.2 million and $0.6 million, respectively. The Company has
historically operated with minimal levels of working capital in order to
minimize borrowings and interest costs under the Company's bank credit facility.
In connection with the July 1998 sale of certain tangible assets of Sam's Town
Kansas City for $12.5 million, the Company has been and will be able to realize
the benefit of approximately $35 million in deferred tax assets. The realization
of these deferred tax assets, which began in the quarter ended September 30,
1998 will continue to benefit operating cash flow in 1999 by generating tax
refunds and reducing the amount of future federal tax payments on the Company's
taxable income. At June 30, 1999, the Company had $8.6 million in tax refunds
receivable and $2.8 million in current deferred tax assets.
CASH FLOWS FROM INVESTING ACTIVITIES
The Company is committed to continually maintaining and enhancing its existing
facilities, most notably by upgrading and remodeling its casinos, hotel rooms,
restaurants, and other public spaces and by providing the latest slot machines
for its customers. The Company's capital expenditures primarily related to these
purposes were approximately $38 million and $22 million, respectively, during
the six month periods ended June 30, 1999 and 1998. See "Expansion and Other
Projects" for a further discussion on current and planned investing activities.
CASH FLOW FROM FINANCING ACTIVITIES
Much of the funding for the Company's renovation and expansion projects comes
from debt financing, as well as cash flows from existing operations. The Company
paid down outstanding debt with its free cash flow generated from operations,
which resulted in cash flows used for financing activities of $41 million during
the six month period ended June 30, 1999 compared to $46 million during the six
month period ended June 30, 1998. At June 30, 1999, outstanding borrowings and
unused availability under the bank credit facility were $276 million and $149
million, respectively. Interest under the bank credit facility is based upon the
agent bank's quoted reference rate or the London Interbank Offered Rate
("LIBOR"), at the discretion of the Company. The blended rate on outstanding
borrowings under the bank credit facility during the quarter ended June 30, 1999
was 7.2%.
On July 21, 1999, the Company replaced its existing bank credit facility with a
new $600 million bank credit facility (the "New Bank Credit Facility"). The New
Bank Credit Facility consists of a $500 million revolver component (the
"Revolver") and a $100 million term loan component (the "Term Loan"), both of
which mature in June 2003. Availability under the Revolver will be reduced by
$15.6 million on December 31, 2001 and at the end of each quarter thereafter
until March 31, 2003. The Term Loan will be repaid in increments of $0.25
million per quarter beginning on September 30, 1999 through March 31, 2003. The
interest rate on the New Bank Credit Facility is based upon either the agent
bank's quoted base rate or the Eurodollar rate, plus an applicable margin that
is determined by the level of a predefined financial leverage ratio. In
addition, the Company incurs a commitment fee on the unused portion of the
Revolver which ranges from 0.375% to 0.50% per annum. The New Bank Credit
Facility is secured by the real and personal property of the Company and its
subsidiaries, including ten casino properties. The obligations of the Company
under the New Bank Credit Facility are guaranteed by certain subsidiaries of
the Company.
The New Bank Credit Facility contains certain financial and other covenants,
including, without limitation, various covenants (i) requiring the maintenance
of a minimum net worth, (ii) requiring the maintenance of a
-22-
<PAGE> 23
minimum interest coverage ratio, (iii) establishing a maximum permitted total
leverage ratio and senior secured leverage ratio, (iv) imposing limitations on
the incurrence of additional indebtedness, (v) imposing limitations on the
maximum permitted expansion capital expenditures during the term of the New Bank
Credit Facility, (vi) imposing limits on the maximum permitted maintenance
capital expenditures during each year of the term of the New Bank Credit
Facility, and (vii) imposing restrictions on investments and certain other
payments. Management believes the Company and its subsidiaries are in compliance
with the New Bank Credit Facility covenants.
The Company's $200 million principal amount of Senior Notes (the "9.25% Notes")
and $250 million principal amount of Senior Subordinated Notes (the "9.50%
Notes") contain limitations on, among other things, (a) the ability of the
Company and its Restricted Subsidiaries (as defined in the Indenture Agreements)
to incur additional indebtedness, (b) the payment of dividends and other
distributions with respect to the capital stock of the Company and its
Restricted Subsidiaries and the purchase, redemption or retirement of capital
stock of the Company and its Restricted Subsidiaries, (c) the making of certain
investments, (d) asset sales, (e) the incurrence of liens, (f) transactions with
affiliates, (g) payment restrictions affecting restricted subsidiaries and (h)
certain consolidations, mergers and transfers of assets. Management believes the
Company and its subsidiaries are in compliance with the covenants related to the
9.25% and 9.50% Notes at June 30, 1999.
The Company's ability to service its debt will be dependent on its future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.
EXPANSION AND OTHER PROJECTS
The Company, as part of its ongoing strategic planning process, is currently
establishing its priorities for the future. In Nevada, the Company is exploring
opportunities for the development of new properties in the Las Vegas local
market. In addition, the Company has recently initiated an $80 million expansion
and renovation project at Sam's Town Las Vegas. The project includes, among
other things, an 18 screen state-of-the-art movie theatre, additional casino
space for 500 slot machines, an 11,200 square foot events center, a new 550 seat
buffet, and a reconfigured and remodeled porte cochere and valet
parking area to improve access to the property. As of June 30, 1999, the
Company has incurred $0.8 million in costs associated with the Sam's Town Las
Vegas expansion and renovation. This project currently is expected to be
completed by December 31, 2000.
The Company has postponed plans to develop a new property on the Stardust's
61-acre site until the impact of the opening of several new resorts on the Las
Vegas Strip has been determined. Instead, the Company has initiated a $25
million renovation of the Stardust which includes guest rooms, public space and
exterior enhancements intended to make the property more competitive with other
Strip resorts. In connection with the renovation project, the Stardust
temporarily removed from service, beginning in April 1999, all of its
approximately 550 motor inn rooms. The Company is evaluating the impact of the
motor inn closure on the Stardust's operations. Based upon the results of the
evaluation, the Company will either refurbish or demolish the Stardust motor inn
rooms. As of June 30, 1999, the Company had incurred $11.0 million in costs
associated with the Stardust renovation, $9.5 million of which was incurred
during the six month period ended June 30, 1999. This project is expected to be
substantially complete by the end of 1999.
The Company, through a wholly-owned subsidiary, is a party to a Joint Venture
Agreement (the "Agreement") with Mirage Resorts, Incorporated, through a
wholly-owned subsidiary ("Mirage"), to jointly develop and own The Borgata, a
casino hotel entertainment facility in Atlantic City, New Jersey. The Agreement
contemplates a hotel of at least 1,200 rooms and a casino and related amenities
adjacent and connected to Mirage's planned wholly-owned resort. The Agreement
provides for each party to make an equity contribution of $150 million. The
Company will contribute $90 million
-23-
<PAGE> 24
when Mirage contributes the land to the venture, which is expected in the first
half of 2000. The Agreement further provides for the venture to arrange $450
million in non-recourse financing for the project. There can be no assurances
that the Borgata can be designed and developed for $750 million. Funding of the
Company's joint venture capital contributions is expected to be derived from
cash flow from operations, availability under the Company's New Bank Credit
Facility and additional debt offerings. The Borgata will be subject to the many
risks inherent in the establishment of a new business enterprise, including
potential unanticipated design, construction, regulatory, environmental and
operating problems, increased project costs, timing delays, lack of adequate
financing and the significant risks commonly associated with implementing a
marketing strategy in a new market. Once construction begins, if the Borgata
does not become operational within the time frame and budget currently
contemplated or does not compete successfully in its new market, it could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has begun work on the planning stages of this
development which is expected to open in 2002. As of June 30, 1999, the Company
has contributed or advanced funds of $5.2 million to the Borgata.
On June 27, 1999, the Company entered into a definitive agreement to acquire the
Blue Chip Casino, a riverboat casino in Michigan City, Indiana for $255 million
in cash. In addition, the Company will acquire a hotel and parking facility,
currently under construction and attached to the existing casino complex, for
$18.6 million. The transaction is currently expected to close in the fourth
quarter of 1999 and is conditioned upon, among other things, approval by the
Indiana Gaming Commission. The Company plans to fund the acquisition from
borrowings under the New Bank Credit Facility.
The Company began a Customer Information System ("CIS") project that will
standardize the Company's customer tracking systems. The purpose of the CIS
project is to link all points of customer contact to enable the Company to
better monitor customer activity in order to enhance and direct marketing
efforts. The Company expects to spend $14 million in 1999 on the CIS project. As
of June 30, 1999, the Company had incurred $3.4 million in costs associated with
the CIS project, substantially all of which was capitalized. The Company has
never undertaken a CIS project of this magnitude and may experience difficulties
in the integration and implementation of this project. In addition, given the
inherent difficulties of a project of this magnitude and the resources required,
the timing and costs involved could differ materially from those anticipated by
the Company. There can be no assurance that the CIS project will be completed
successfully, on schedule or within budget.
Substantial funds are required for The Borgata and the Blue Chip Casino
acquisition, as well as the other projects discussed above and would also be
required for other future expansion projects. There are no assurances that any
of the above mentioned projects will go forward or ultimately become
operational. The source of funds required to meet the Company's working capital
needs (including maintenance capital expenditures) is expected to be cash flow
from operations and availability under the Company's New Bank Credit Facility.
The source of funds for the Company's expansion projects may come from cash flow
from operations and availability under the Company's New Bank Credit Facility,
additional debt or equity offerings, joint venture partners or other sources. No
assurance can be given that additional financing will be available or that, if
available, such financing will be obtainable on terms favorable to the Company
or its stockholders.
YEAR 2000 PROJECT
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure or
miscalculations.
The Company is currently engaged in a five-phase process of evaluating and
resolving the problems that might be associated with its internal operating
systems and the Year 2000 issue. The five phases are as follows:
-24-
<PAGE> 25
1. Evaluation and development of remediation plans for traditional
information technology ("IT") systems;
2. Evaluation and development of remediation plans for non-IT
systems;
3. Implementation and testing of remediation plans;
4. Evaluation of vendor compliance with Year 2000 issues; and
5. Preparation of contingency plans.
The first phase of the process is the evaluation and development of remediation
plans for IT systems which was completed in the fourth quarter of 1998. In this
phase, the Company evaluated which IT systems are Year 2000 compliant and made
plans to bring identified non-compliant systems into compliance.
The second phase of the process, expected to be completed by the third quarter
of 1999, is the evaluation and development of remediation plans for non-IT
systems. Currently, non-IT systems are still under evaluation. The Company does
not expect the impact of the Year 2000 to be material for its non-IT systems.
The Company may discover Year 2000 issues in the course of its evaluation
processes in phases one or two, or issues may not be detected, that would have a
material adverse effect on the business, financial condition and results of
operations of the Company.
Phase three of the process involves the implementation of remediation plans for
IT and non-IT systems that were identified in phase one and two as
non-compliant. This process is expected to be completed by the end of the third
quarter of 1999 and will involve either the replacement of the Company's
existing systems with systems that are Year 2000 compliant or the remedial
review and replacement of the software code with code that does not use the two
digit year code. As part of this phase, the Company intends to perform date
sensitive testing including testing on systems that vendors have certified to be
Year 2000 compliant, to ensure that the modifications developed adequately
resolve the Year 2000 issue. While the Company believes the testing program
should provide additional evidence of its ability to operate in the Year 2000,
the Company may discover Year 2000 issues in the course of its testing process,
or issues may not be detected, that would have a material adverse effect on the
business, financial condition and results of operations of the Company.
Phase four, expected to be completed by the end of the third quarter of 1999,
involves evaluating Year 2000 compliance for those vendors who provide the
Company with goods and services critical to the servicing of our guests, mainly
in the non-gaming portions of our business. While no individual vendor supplies
the Company with a significant portion of the goods or services used in the
non-gaming operations, the Company may discover Year 2000 issues in the course
of evaluation of its vendors, or issues may not be detected, that would have a
material adverse effect on the business, financial condition and results of
operations of the Company.
-25-
<PAGE> 26
The final phase of the process, expected to be completed during the third
quarter of 1999, will involve the development of a contingency plan in the event
any non-compliant critical systems remain by January 1, 2000. As part of this
phase, the Company will attempt to quantify the impact, if any, of the failure
to complete any necessary corrective action. The Company currently believes that
the majority of the equipment and processes used by the Company have adequate
manual backup procedures that would allow the Company to continue to operate a
significant portion of the business in the event the conversion project is not
completed on schedule (or the systems of other companies on which the Company
may rely are not timely converted). However, in most of the Central Region
gaming jurisdictions, electronic monitoring of operations is required. Waivers
for manual processes may be obtained from these gaming jurisdictions; however,
there can be no assurance that a material portion of the gaming business at
those properties would not be affected until the time at which a waiver is
granted or if this waiver will be granted at all. If the Company is able to
obtain timely waivers for the Central Region properties, the remaining primary
risks associated with the Year 2000 may be an effect on the timing of the
reporting of certain operating results to management and may include an adverse
effect on business volumes if the Year 2000 problems could not be timely
corrected. Although the Company cannot currently estimate the magnitude of such
impact, if systems material to the Company's operations have not been made Year
2000 compliant upon completion of this phase, the Year 2000 issue could have a
material adverse impact on the Company's business, financial condition and
results of operation.
The Company currently estimates approximately $8 million in costs directly
associated with the project that is expected to be funded from cash flow from
operations and availability under the Company's New Bank Credit Facility. This
current estimate includes approximately $3 million in operating expenses related
to the remediation efforts, including training. At June 30, 1999, the Company
had incurred approximately $5.6 million in costs directly related to the Year
2000 project, $4.4 million of which were capitalized as they related to
replacement of systems that were not Year 2000 compliant.
Given the inherent risks for a project of this magnitude and the resources
required, the timing and costs involved could differ materially from those
anticipated by the Company. There can be no assurance that the Year 2000 project
will be completed on schedule or within budget.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 to Notes to Condensed Consolidated Financial Statements for a
complete discussion of recently issued accounting standards and their expected
impact on the Company's consolidated financial statements.
PRIVATE SECURITIES LITIGATION REFORM ACT
Certain information included in this Form 10-Q and other materials filed or to
be filed by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made or to
be made by the Company) contains statements that are forward looking, such as
statements relating to the Company's Year 2000 project, plans for future
expansion and other business development activities as well as capital spending,
financing sources, anticipated timing of completion of projects under
development, and the effects of regulation (including gaming and tax regulation)
and competition. These statements may be identified by the utilization of words
such as "believes", "expects", "anticipates", "intends", "plans" and similiar
expressions. Forward looking statements involve important risks and
uncertainties that could significantly affect anticipated results in the future,
and accordingly, actual results may differ materially from those expressed in
any forward looking statements made by or on behalf of the Company. These risks
and uncertainties include, but are not limited to, those related to
construction, expansion and development activities, economic conditions, changes
in tax laws, changes in laws or regulations affecting gaming licenses, changes
in competition, and factors affecting leverage and debt service including
sensitivity to fluctuation in interest rates, risks related to the Year 2000
project and other factors described from time to time in the Company's reports
filed with the Securities and Exchange Commission, including the Company's
-26-
<PAGE> 27
Annual Report on Form 10-K for the year ended December 31, 1998. Any forward
looking statements are made pursuant to the Private Securities Litigation Reform
Act of 1995 and, as such, speak only as of the date made.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates. To reduce
such risks, the Company selectively uses financial instruments for its floating
rate debt. On December 31, 1997, the Company entered into an interest rate swap
agreement for a notional amount of $100 million. The agreement calls for the
Company to swap its variable LIBOR rate (5.33% at June 30, 1999) for a fixed
LIBOR rate of 5.54%. The variable LIBOR rate readjusts each quarter and the
agreement is cancelable should the LIBOR rate exceed 5.99%. The swap agreement
terminates in December 2000. The fair value of the swap liability at June 30,
1999 is approximately $0.3 million based on the present value of future cash
outflows expected from the Company based on the LIBOR rate at June 30, 1999.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting was held May 20, 1999. The stockholders
re-elected William R. Boyd, Michael O. Maffie, Warren L. Nelson and
Donald D. Snyder to three year terms, ending on the date of the
Company's Annual Meeting in 2002. The following persons remain directors
of the Company: William S. Boyd, Robert L. Boughner, Marianne Boyd
Johnson, Perry B. Whitt, Philip J. Dion, Maj. Gen. Billy G. McCoy, Ret.
USAF, and William G. Yates. The number of shares voting as to the
election of each nominee, the ratification of the appointment of
Deloitte & Touche LLP to serve as independent auditors for the year
ending December 31, 1999 and the ratification of an amendment to the
1993 Directors' Non-Qualified Stock Option Plan to provide options
exercisable for up to an aggregate of 100,000 shares of the Company's
common stock is set forth below:
<TABLE>
<CAPTION>
Votes
-----------------------------
Election of Class I Directors For Withheld
----------------------------- ----------- --------
<S> <C> <C>
William R. Boyd 54,677,523 353,191
Michael O. Maffie 54,679,425 351,289
Warren L. Nelson 54,680,710 350,004
Donald D. Snyder 54,675,335 355,379
</TABLE>
The Stockholders ratified the selection of Deloitte & Touche LLP as
independent auditors for the Company for the year ending December 31,
1999 with voting as follows: [54,856,665] for; [140,984] against;
[33,069] non-votes.
The Stockholders ratified the amendment to the 1993 Directors'
Non-Qualified Stock Option Plan with voting as follows: [52,847,131]
for; [2,054,050] against; [129,533] non-votes.
-27-
<PAGE> 28
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<S> <C>
4 (1) Amended 1993 Directors' Non-Qualified Stock Option Plan.
10.29 Unit Purchase Agreement among the Company, Boyd Indiana,
Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and
certain individuals, dated as of June 27, 1999.
10.30 First Amended and Restated Credit Agreement, dated as of
June 30, 1999 among the Company as the Borrower, Certain
Commercial Lending Institutions, as the Lenders, Canadian
Imperial Bank of Commerce, as L/C Issuer and
Administrative Agent, Wells Fargo Bank N.A., as Swingling
Lender and Syndication Agent, and Bank of America
National Trust and Savings Association, as Documentation
Agent.
27. Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
(i) The Company filed a current report on Form 8-K dated July
13, 1999 related to a definitive agreement to acquire
100% of the equity interests in Blue Chip Casino, LLC.
- ----------
(1) Incorporated by reference to the Registration Statement on Form S-8, File
No. 333-79895, dated June 3, 1999.
-28-
<PAGE> 29
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 thereunto duly authorized.
BOYD GAMING CORPORATION
(Registrant)
Date: August 13, 1999 By /s/ Ellis Landau
------------------------------------
Ellis Landau,
Executive Vice President,
Chief Financial Officer, and
Treasurer (Principal Financial Officer)
-29-
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- ------------
<S> <C>
4 (1) Amended 1993 Directors' Non-Qualified Stock Option Plan.
10.29 Unit Purchase Agreement among the Company, Boyd Indiana,
Inc., Blue Chip Casino, Inc., Blue Chip Casino, LLC, and
certain individuals, dated as of June 27, 1999.
10.30 First Amended and Restated Credit Agreement, dated as of
June 30, 1999 among the Company as the Borrower, Certain
Commercial Lending Institutions, as the Lenders, Canadian
Imperial Bank of Commerce, as L/C Issuer and
Administrative Agent, Wells Fargo Bank N.A., as Swingling
Lender and Syndication Agent, and Bank of America
National Trust and Savings Association, as Documentation
Agent.
27. Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the Registration Statement on Form S-8, File
No. 333-79895, dated June 3, 1999.
<PAGE> 1
================================================================================
UNIT PURCHASE AGREEMENT
among
BOYD GAMING CORPORATION,
BOYD INDIANA, INC.,
BLUE CHIP CASINO, INC.,
BLUE CHIP CASINO, LLC,
and
THE INDIVIDUALS SET FORTH ON
THE SIGNATURE PAGES HERETO
Dated as of June 27, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I PURCHASE AND SALE OF UNITS.............................................1
Section 1.1 Purchase and Sale of Units.............................................1
Section 1.2 Payments at Closing....................................................1
Section 1.3 Closing................................................................1
Section 1.4 Deliveries by the Company and LLC......................................2
Section 1.5 Deliveries by Boyd Indiana.............................................2
Section 1.6 Payments at Closing; Deferred Company Closing Payment..................3
Section 1.7 Contingent Purchase Price Payment......................................3
Section 1.8 LLC Working Capital Certificate........................................5
ARTICLE II CERTAIN PRE-CLOSING TRANSACTIONS.......................................8
Section 2.1 Transfer of Assets and Assumed Liabilities.............................8
Section 2.2 Deliveries.............................................................9
Section 2.3 Excluded Liabilities..................................................11
Section 2.4 Transfer Costs........................................................11
Section 2.5 Prorations............................................................11
Section 2.6 Post-Closing Deliveries...............................................11
Section 2.7 Termination of Agreements.............................................12
Section 2.8 Consents to Assignment of Assumed Agreements..........................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND LLC...............................................................13
Section 3.1 Ownership of LLC Units................................................13
Section 3.2 Organization and Qualification........................................13
Section 3.3 Authority.............................................................14
Section 3.4 Capitalization........................................................14
Section 3.5 Binding Effect, No Violation, Consents................................14
Section 3.6 Financial Information.................................................15
Section 3.7 No Undisclosed Liabilities............................................15
Section 3.8 Absence of Certain Changes............................................16
Section 3.9 Tax Matters...........................................................16
Section 3.10 Real Property and Riverboat...........................................17
Section 3.11 Leases................................................................18
Section 3.12 Title to Assets.......................................................19
Section 3.13 Tangible Personal Property............................................19
Section 3.14 Intellectual Property.................................................20
Section 3.15 Litigation............................................................21
Section 3.16 Insurance.............................................................21
Section 3.17 Labor Matters.........................................................22
Section 3.18 Compliance with WARN Act..............................................23
Section 3.19 Employee Benefit Plans; ERISA.........................................23
Section 3.20 Environmental Matters.................................................26
Section 3.21 No Condemnation or Expropriation......................................28
Section 3.22 Suppliers.............................................................28
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.23 Contracts and Commitments.............................................28
Section 3.24 Compliance with Applicable Laws.......................................30
Section 3.25 Bank Accounts.........................................................31
Section 3.26 Assets Necessary to Business..........................................32
Section 3.27 Commissions...........................................................32
Section 3.28 Disclosure of All Material Facts......................................32
Section 3.29 City Matters..........................................................32
Section 3.30 Year 2000.............................................................33
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BOYD INDIANA
AND BGC...............................................................33
Section 4.1 Organization..........................................................33
Section 4.2 Authority.............................................................33
Section 4.3 Binding Effect, No Violation, Consents................................33
Section 4.4 Litigation............................................................34
Section 4.5 Commissions...........................................................34
Section 4.6 Disclosure of All Material Facts......................................34
ARTICLE V COVENANTS OF THE COMPANY AND LLC......................................35
Section 5.1 Operation of the Business.............................................35
Section 5.2 Access................................................................38
Section 5.3 Existence.............................................................38
Section 5.4 Consents..............................................................39
Section 5.5 Governmental Approvals................................................39
Section 5.6 Performance...........................................................39
Section 5.7 Updating of Information...............................................39
Section 5.8 Tax Status............................................................40
Section 5.9 Monthly Financial Statements; Weekly Gaming Revenue Reports;
Employment Information Updates........................................40
Section 5.10 Other Transactions....................................................40
Section 5.11 Owner's Affidavits....................................................40
Section 5.12 Confidentiality of Information........................................40
Section 5.13 Shareholder Meeting...................................................41
Section 5.14 Governmental Transfer Approvals.......................................41
Section 5.15 LLC Organization Documents............................................41
Section 5.16 Indebtedness..........................................................41
Section 5.17 Employees.............................................................42
Section 5.18 Potential Land Transfer...............................................42
Section 5.19 Insurance.............................................................43
ARTICLE VI COVENANTS OF BOYD INDIANA.............................................43
Section 6.1 Performance...........................................................43
Section 6.2 Governmental Filings..................................................43
Section 6.3 Employee Termination Payments.........................................43
ARTICLE VII ENVIRONMENTAL MATTERS.................................................44
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.1 Site Access...........................................................44
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BOYD INDIANA.............................44
Section 8.1 Representations and Warranties Correct................................44
Section 8.2 Performance; No Default...............................................44
Section 8.3 Delivery of Certificate...............................................44
Section 8.4 Opinion of Counsel to the Company.....................................44
Section 8.5 Good Standing Certificates............................................45
Section 8.6 Consents..............................................................45
Section 8.7 Governmental Approvals................................................45
Section 8.8 Absence of Litigation.................................................45
Section 8.9 FIRPTA Certificate....................................................45
Section 8.10 Termination of Certain Contracts......................................45
Section 8.11 Post-Closing Escrow Agreements........................................46
Section 8.12 RPTA Certificate......................................................46
Section 8.13 Shareholder/Member Approval...........................................46
Section 8.14 Performance of the Obligations........................................46
Section 8.15 Condition of Real Property and Assets.................................46
Section 8.16 Release of Liens......................................................46
Section 8.17 Title Policy..........................................................46
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................46
Section 9.1 Representations and Warranties Correct................................46
Section 9.2 Performance; No Default...............................................47
Section 9.3 Delivery of Certificate...............................................47
Section 9.4 Opinion of Counsel to Boyd Indiana....................................47
Section 9.5 Governmental Approvals................................................47
Section 9.6 Absence of Litigation.................................................47
Section 9.7 Shareholder Approval..................................................47
ARTICLE X ADDITIONAL COVENANTS..................................................47
Section 10.1 Asset Purchase/Purchase Price Allocation..............................47
Section 10.2 Noncompetition........................................................48
Section 10.3 Construction of the Hotel.............................................48
Section 10.4 Flynn Guaranty........................................................55
Section 10.5 Bonds.................................................................55
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.....................................55
Section 11.1 Termination of Agreement..............................................55
Section 11.2 Effect of Termination.................................................56
ARTICLE XII SURVIVAL; ESCROWS; INDEMNIFICATION....................................56
Section 12.1 Survival of Representations...........................................56
Section 12.2 [Intentionally Omitted]...............................................56
Section 12.3 Company Escrow........................................................56
Section 12.4 Indemnification by the Company for Certain Matters....................57
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 12.5 Indemnification of the Company by Boyd Indiana........................58
Section 12.6 Company Tax Indemnification Matters...................................59
Section 12.7 Preparation and Filing of LLC Tax Returns.............................60
Section 12.8 Defense of Claims By the Company and Boyd Indiana.....................61
Section 12.9 Company Escrow Statements.............................................62
Section 12.10 Release of Company Reimbursable Losses................................63
Section 12.11 Release of Escrowed Funds to the Company..............................63
Section 12.12 Environmental Remediation Matters.....................................64
Section 12.13 Subrogation...........................................................64
Section 12.14 Adjustment to Purchase Price..........................................64
Section 12.15 Liquidation of Company................................................64
ARTICLE XIII MISCELLANEOUS.........................................................65
Section 13.1 Remedies Cumulative...................................................65
Section 13.2 Expenses..............................................................65
Section 13.3 Transfer Taxes........................................................65
Section 13.4 Press Releases and Announcements......................................65
Section 13.5 Entire Agreement......................................................65
Section 13.6 Amendment, Extension and Waiver.......................................66
Section 13.7 Headings..............................................................66
Section 13.8 Notices...............................................................66
Section 13.9 Assignment............................................................67
Section 13.10 Applicable Law........................................................68
Section 13.11 Words in Singular and Plural Form.....................................68
Section 13.12 Further Assurances; Antitrust Notification............................68
Section 13.13 Counterparts..........................................................69
Section 13.14 No Third-Party Beneficiaries..........................................69
Section 13.15 Severability..........................................................69
Section 13.16 Consent to Jurisdiction...............................................69
ARTICLE XIV DEFINITIONS...........................................................70
</TABLE>
iv
<PAGE> 6
INDEX OF EXHIBITS
Exhibit 2.1(a) Deed to Owned Property
Exhibit 2.1(b) Assignment of Leases
Exhibit 2.1(d) Bill of Sale (Tangible Personal Property)
Exhibit 2.1(e) Assignment of Contracts
Exhibit 2.1(f) Assignment of Governmental Approvals and Intangibles
Exhibit 2.1(g) Assignment of Development Agreement
Exhibit 2.2(h) FIRPTA Affidavit
Exhibit 2.2(q) City Consent
Exhibit 2.2(r) Contractor Estoppel Certificate
Exhibit 5.18 Potential Land Transfer Agreement
Exhibit 8.4 Opinion of Counsel to Company and LLC
Exhibit 9.4(a) Opinion of BGC's Counsel
Exhibit 9.4(b) Opinion of Boyd Indiana's Counsel
Exhibit 12.3 Company Escrow Agreement
Exhibit 14.1 Title Commitment
v
<PAGE> 7
INDEX OF SCHEDULES
Schedule 1.8(a) Working Capital
Schedule 2.1(e) Assumed Contracts
Schedule 2.7 Certain Contracts
Schedule 3.6 Company Financial Information
Schedule 3.10(a) Owned Property
Schedule 3.10(b) Leased Property
Schedule 3.11(a) Leases
Schedule 3.13(a) Tangible Personal Property
Schedule 3.13(b) Tangible Personal Property (Leased)
Schedule 3.13(c) Tangible Personal Property (Gaming)
Schedule 3.14 Intellectual Property
Schedule 3.16(a) Insurance
Schedule 3.19(a)(1) Plans
Schedule 3.19(a)(2) Benefit Plan
Schedule 3.20(a) Environmental Permits
Schedule 3.20(d) Materials of Environmental Concern
Schedule 3.20(h) Company Environmental Reports
Schedule 3.22 Suppliers
Schedule 3.23(f) Contracts
Schedule 3.25 Bank Accounts
Schedule 3.29(d) Hotel Expenditures
Schedule 5.1 Operation of the Business
Schedule 5.1(d) Liens
Schedule 5.1(f) Debts or Claims
Schedule 5.17 Terminated Employees
Schedule 5.18 Legal Description of Potential Land
Schedule 7.1 Known Environmental Conditions
Schedule 10.1 Purchase Price Allocation
Schedule 10.2 Existing Engagements
Schedule 10.2(b) Excluded Employees
Schedule 10.3(g) Hotel Construction Budget
Schedule 10.5 Bonds
Schedule 13.2 Expenses
Schedule 14.1 Assumed Liabilities
Schedule 14.2 Excluded Assets
Schedule 14.3 Untitled Property
Schedule 14.4 Plans and Specifications
vi
<PAGE> 8
UNIT PURCHASE AGREEMENT (this "Agreement") dated as of June 27, 1999,
among BOYD GAMING CORPORATION, a Nevada corporation ("BGC"), BOYD INDIANA, INC.,
an Indiana corporation, ("Boyd Indiana"), BLUE CHIP CASINO, INC., an Indiana
corporation (the "Company"), BLUE CHIP CASINO, LLC, an Indiana limited liability
company ("LLC"), and each of the INDIVIDUALS SET FORTH UNDER THE CAPTION
"INDIVIDUAL COVENANTORS" ON THE SIGNATURE PAGES HERETO (each, an "Individual
Covenantor" and collectively, the "Individual Covenantors"). Collectively, BGC,
Boyd Indiana, the Company, LLC and the Individual Covenantors are referred to as
the "parties." Capitalized terms used herein are defined in Article XIV.
WHEREAS, the Company is currently engaged in the business of owning and
operating a Riverboat casino and related facilities in Michigan City, Indiana,
including the construction of the Hotel (the "Business"); and
WHEREAS, the Company owns, and at the Closing will own, all of the
issued and outstanding membership units of LLC; and
WHEREAS, immediately prior to the Closing, and as a condition precedent
thereto, the Company will transfer to LLC all of the Company's rights, title and
interest in the Assets and the LLC will assume the Assumed Liabilities
associated with the Business; and
WHEREAS, this Agreement sets forth the terms and conditions pursuant to
which at the Closing Boyd Indiana will purchase from the Company all of the
outstanding LLC Units.
NOW THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF UNITS
Section 1.1 Purchase and Sale of Units. Upon the terms and subject to
the satisfaction or waiver, if permissible, of all the conditions set forth
herein, at the Closing, the Company will sell, transfer and convey to Boyd
Indiana, and Boyd Indiana will purchase from the Company, one hundred (100) LLC
Units, representing all of the outstanding Units of LLC, free and clear of all
Liens, for an aggregate amount equal to the LLC Purchase Price.
Section 1.2 Payments at Closing. In consideration of the sale, transfer
and conveyance of the LLC Units to Boyd Indiana by the Company and the other
agreements of the Company and the Individual Covenantors contained herein, at
the Closing Boyd Indiana will deliver, or cause to be delivered as provided in
Section 1.6 hereof, (i) to the Company, the Initial Company Closing Payment, and
(ii) to the Escrow Agent, the Company Escrowed Funds. BGC guarantees Boyd
Indiana's performance of its obligations under this Agreement, including the
payments pursuant to this Section 1.2.
Section 1.3 Closing. The Closing (the "Closing") on the purchase of the
LLC Units under this Agreement will take place at the offices of Bell, Boyd &
Lloyd, 70 West Madison, Suite 3300, Chicago, Illinois, at 8:00 A.M., Central
Standard time, on the second (2nd) Business Day after the satisfaction or
waiver, if permissible, of all the conditions set forth herein, or such other
time and place as Boyd Indiana and the Company may mutually agree upon in
writing.
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Section 1.4 Deliveries by the Company and LLC. At the Closing, the
Company will deliver, or cause LLC to deliver, (unless previously delivered) to
Boyd Indiana the following:
(a) membership certificates, if applicable, representing the LLC
Units, accompanied by unit transfer powers duly executed in blank, and otherwise
in form acceptable to Boyd Indiana for transfer on the books of LLC;
(b) copies of the Articles of Incorporation, Bylaws, Articles of
Organization, operating agreement or other comparable organizational or
governing documents of each of the Company and LLC, certified (to the extent
available) as of a date within thirty (30) days of the Closing Date by the
Secretary of State of the State of Indiana;
(c) the certificate referred to in Section 1.8;
(d) the evidence of termination and release referred to in Section
2.7;
(e) the certified resolutions referred to in Section 3.3;
(f) the records referred to in Section 3.25;
(g) executed counterparts of any consents referred to in Section
5.14;
(h) the executive officer certificate referred to in Section 8.3;
(i) the opinions of counsel referred to in Section 8.4;
(j) the affidavits referred to in Section 5.11;
(k) resignations effective as of the Closing Date from such officers
and managers of LLC as Boyd Indiana shall have requested in writing not less
than seven (7) days prior to the Closing Date;
(l) evidence that the Transfer shall have been consummated
immediately prior to the Closing; and
(m) all other previously undelivered documents, instruments or
writings required to be delivered by the Company or LLC to Boyd Indiana at or
prior to the Closing pursuant to this Agreement or otherwise required in
connection herewith.
Section 1.5 Deliveries by Boyd Indiana. At the Closing, Boyd Indiana
shall deliver, or cause to be delivered, to the Company (unless previously
delivered) the following:
(a) the payments to the Company and the Individual Covenantors
required by Section 1.6;
(b) the certified resolutions referred to in Section 4.2;
(c) the executive officer certificate referred to in Section 9.3;
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(d) the opinions of counsel referred to in Section 9.4; and
(e) all other previously undelivered documents, instruments or
writings required to be delivered by Boyd Indiana to the Company at or prior to
the Closing pursuant to this Agreement or otherwise required in connection
herewith.
Section 1.6 Payments at Closing; Deferred Company Closing Payment.
(a) At the Closing, Boyd Indiana shall deliver by wire transfer of
immediately available funds (i) to the account or accounts of the Company
specified by the Company, an aggregate amount equal to the Initial Company
Closing Payment and (ii) to the Escrow Agent, the Company Escrowed Funds. In
addition, at the Closing, Boyd Indiana shall deliver by wire transfer of
immediately available funds to the account or accounts specified by each
Individual Covenantor an aggregate amount, in the case of each Individual
Covenantor, equal to the Noncompetition Covenant Payment in consideration for
each Individual Covenantor's agreements under Sections 5.12, 10.2 and 12.15.
(b) On the first Business Day following the Closing, Boyd Indiana
shall deliver by wire transfer of immediately available funds to the liquidation
account or accounts of the Company specified by the Company an aggregate amount
equal to the Deferred Company Closing Payment.
Section 1.7 Contingent Purchase Price Payment.
(a) As additional consideration for the purchase of the LLC Units,
Boyd Indiana agrees to make the following payment (the "Contingent Purchase
Price Payment") to the Company (subject to the conditions set forth below and
the offset rights of Boyd Indiana under Section 12.4(b)(v)):
(i) If the Computed Amount equals or exceeds an aggregate of
Two Hundred Ten Million and No/100 Dollars ($210,000,000.00) for the first
thirty-six (36) months subsequent to the Closing Date beginning on the first day
of the first such subsequent month ("Measurement Period"), then Boyd Indiana
will pay the Company an aggregate amount equal to Five Million and No/100
Dollars ($5,000,000.00), as provided below.
(ii) If the Computed Amount for the Measurement Period is
less than Two Hundred Ten Million and No/100 Dollars ($210,000,000.00), no
Contingent Purchase Price Payment will be due or payable under this Agreement.
(b) Within sixty (60) days following the last day of the Measurement
Period, Boyd Indiana shall prepare a statement setting forth the Computed Amount
for the Measurement Period ("Buyer's Computed Amount") describing in reasonable
detail how Buyer's Computed Amount was determined ("Buyer's Computed Amount
Statement"). Within twenty (20) days following the delivery of Buyer's Computed
Amount Statement, the Company may deliver to Boyd Indiana a written statement
(the "Company's Computed Amount Statement") setting forth with reasonable
specificity any disagreement with Buyer's Computed Amount Statement. During such
twenty (20) day period, the Company shall be permitted to review the working
papers of Boyd Indiana and its auditors relating to Buyer's Computed Amount
Statement. If the
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Company does not submit the Company's Computed Amount Statement on or prior to
such twentieth (20th) day, then the Computed Amount for the Measurement Period
shall be deemed to have been finally determined for purposes of this Agreement.
(c) If the Company does submit the Company's Computed Amount
Statement on or prior to such twentieth (20th) day, any amounts contained in
Buyer's Computed Amount Statement which are not disputed by the Company's
Computed Amount Statement shall be deemed to have been finally determined for
purposes of calculating the Computed Amount. For a period of fifteen (15) days,
Boyd Indiana and the Company shall attempt to resolve in good faith any dispute
or disagreement between Buyer's Computed Amount Statement and the Company's
Computed Amount Statement. Amounts resolved by such attempts shall be deemed to
have been finally determined for purposes of calculating the Computed Amount.
(d) At the end of such fifteen (15) day period if the Company's and
Boyd Indiana's disagreement concerning the calculation of the Computed Amount
has not been resolved, the Accounting Firm shall be deemed appointed by the
parties hereto to finally determine the Computed Amount. Within ten (10) days
thereafter, Boyd Indiana shall submit to the Accounting Firm Buyer's Computed
Amount Statement and any supporting evidence and statements which it deems
necessary to verify and support Buyer's Computed Amount Statement, and the
Company shall (i) submit to the Accounting Firm the Company's Computed Amount
Statement and any supporting evidence and statements which it deems necessary to
verify and support the Company's Computed Amount Statement and (ii) provide an
arrangement satisfactory to the Accounting Firm and consented to by Boyd Indiana
(which consent will not be unreasonably withheld) to assure payment of the
Accounting Firm's Fees in the event Company is the Losing Party as described
below. Neither party may revise the amounts claimed on its respective Computed
Amount Statement prior to submission to the Accounting Firm except to reflect
amounts finally determined pursuant to Section 1.7(b) or (c). Based solely upon
the foregoing submissions, the Accounting Firm shall make a final, binding and
unappealable determination of the matters in dispute and of whether the Computed
Amount, which the parties agree shall be conclusively binding upon all parties,
equals or exceeds Two Hundred Ten Million and No/100 Dollars ($210,000,000.00).
The "Losing Party" for purposes of this Section 1.7 shall be the Company if the
Computed Amount is less than Two Hundred Ten Million and No/100 Dollars
($210,000,000.00) for the Measurement Period and otherwise shall be Boyd
Indiana. The Losing Party shall pay all fees, charges and expenses for the
services of the Accounting Firm (including any fees, charges and expenses of any
experts used by the Accounting Firm) plus any reasonable fees and expenses of
enforcement of a determination of the Accounting Firm. In addition, the Losing
Party shall reimburse (in cash) all reasonable attorneys' fees, charges and
expenses and reasonable accountant's fees, charges and expenses incurred by the
other party in connection with the dispute (all of the foregoing, for purposes
of this Section 1.7, the "Fees"). The Accounting Firm shall be instructed to
make its final determination within twenty (20) days of the submissions to the
Accounting Firm and, in any case, as soon as practicable after such submissions.
Within five (5) days of the Accounting Firm's determination of the Computed
Amount, the Accounting Firm shall deliver to Boyd Indiana and the Company a
statement (the "Computed Amount Statement") setting forth the Computed Amount
and describing in reasonable detail how the Computed Amount was determined.
Within ten (10) days after the final determination by the Accounting Firm, the
party entitled to receive the Fees shall submit a statement setting forth its
Fees incurred and the
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Accounting Firm, within ten (10) days after such submission, will make a final,
binding and unappealable determination of the amount of such Fees and award such
amounts to such party.
(e) Any final determination and award of Fees shall be in writing
and shall state the reasons upon which it is based. Judgment upon the award may
be entered in any court having jurisdiction thereof. The provisions of this
Section 1.7 shall constitute the exclusive and sole means for resolving those
disputes, disagreements, controversies or claims between Boyd Indiana and the
Company with respect to the Computed Amount.
(f) If the Computed Amount is equal to or greater than Two Hundred
Ten Million and No/100 Dollars ($210,000,000.00), Boyd Indiana shall, within two
(2) business days of Boyd Indiana's receipt of the Computed Amount Statement or
other final determination of the Computed Amount, deliver by wire transfer of
immediately available funds to the liquidation account or accounts specified by
the Company an aggregate amount equal to Five Million and No/100 Dollars
($5,000,000.00).
(g) In the event that prior to the end of the Measurement Period,
Boyd Indiana sells substantially all of the assets of LLC, LLC merges with
another entity in which LLC is not the surviving entity or the LLC Units are
sold to another Person, then the purchaser of such assets or LLC Units or the
surviving entity shall assume the obligations of Boyd Indiana hereunder, but
such assumption shall not relieve BGC of its guaranty obligations hereunder.
(h) For each of the first two (2) years of the Measurement Period,
Boyd Indiana shall, within sixty (60) days of the end of each such year provide
to the Company a calculation of the Buyer's Computed Amount through the end of
such year.
Section 1.8 LLC Working Capital Certificate.
(a) On the second (2nd) Business Day prior to the scheduled Closing
Date, the Company shall cause LLC to deliver to Boyd Indiana a certificate of
the chief financial officer of LLC, dated the date of delivery, (i) estimating
in good faith the amount of Working Capital of LLC as of the Closing Date (the
"LLC Preliminary Working Capital Amount") assuming the Transfer occurs on the
scheduled Closing Date (which estimate shall be reasonably satisfactory to Boyd
Indiana) and (ii) certifying that such officer has no basis to believe that
Working Capital of LLC as of the Closing Date will vary materially from the LLC
Preliminary Working Capital Amount for LLC reflected in the certificate
(assuming that the Closing occurs on the scheduled Closing Date). "Working
Capital" for the purposes of this Section 1.8 shall be calculated in the manner
set forth in Schedule 1.8(a).
(b) Within thirty (30) days following the Closing Date, Boyd Indiana
shall prepare a statement setting forth the Working Capital of LLC as of the
Closing Date ("Buyer's LLC Working Capital Amount") describing in reasonable
detail how Buyer's LLC Working Capital Amount was determined ("Buyer's LLC
Working Capital Statement"). Within twenty (20) days following the delivery of
Buyer's LLC Working Capital Statement, the Company may deliver to Boyd Indiana a
written statement (the "Company's Working Capital Statement") setting forth with
reasonable specificity any disagreement with Buyer's LLC Working Capital
Statement. During such twenty (20) day period, the Company shall be permitted to
review the working
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papers of Boyd Indiana and its auditors relating to Buyer's LLC Working Capital
Statement. The Company's Working Capital Statement may disagree with Buyer's LLC
Working Capital Statement either on the basis that (i) Working Capital has not
been calculated in accordance with Schedule 1.8(a) or (ii) there has been an
arithmetical error in calculating Working Capital. If the Company does not
submit the Company's Working Capital Statement on or prior to such twentieth
(20th) day then Working Capital of LLC as of the Closing Date (the "LLC Closing
Date Working Capital Amount") shall be deemed to have been finally determined
for purposes of this Agreement.
(c) If the Company does submit the Company's Working Capital
Statement on or prior to such twentieth (20th) day, any amounts contained in
Buyer's LLC Working Capital Statement which are not disputed by the Company's
Working Capital Statement shall be deemed to have been finally determined for
purposes of calculating the LLC Closing Date Working Capital Amount. For a
period of ten (10) days, Boyd Indiana and the Company shall attempt to resolve
in good faith any dispute or disagreement between Buyer's LLC Working Capital
Statement and the Company's Working Capital Statement. During such ten (10) day
period, Boyd Indiana shall be permitted to review the working papers of the
Company and the Company's auditors relating to the Company's Working Capital
Statement. Amounts resolved by such attempts shall be deemed to have been
finally determined for purposes of calculating the LLC Closing Date Working
Capital Amount.
(d) At the end of such ten (10) day period, the Accounting Firm
shall be deemed appointed by the parties hereto to finally determine the LLC
Closing Date Working Capital Amount. Within ten (10) days thereafter, Boyd
Indiana shall submit to the Accounting Firm Buyer's LLC Working Capital
Statement and any supporting evidence and statements which it deems necessary to
verify and support Buyer's LLC Working Capital Statement, and the Company shall
submit to the Accounting Firm the Company's Working Capital Statement and any
supporting evidence and statements which it deems necessary to verify and
support the Company's Working Capital Statement. Neither party may revise the
amounts claimed on its respective Working Capital Statement prior to submission
to the Accounting Firm except to reflect amounts finally determined pursuant to
Section 1.8(b) or (c). Based solely upon the foregoing submissions, the
Accounting Firm shall make a final, binding and unappealable determination of
the matters in dispute and of the LLC Closing Date Working Capital Amount, which
the parties agree shall be conclusively binding upon all parties; provided,
however, that (i) the Accounting Firm must choose either the LLC Closing Date
Working Capital Amount set forth on Buyer's LLC Working Capital Statement or the
LLC Closing Date Working Capital Amount set forth on the Company's Working
Capital Statement (in each case relying without modification upon any portions
of the LLC Closing Date Working Capital Amount resolved pursuant to Section
1.8(c)) and may not choose any other amount and (ii) the Accounting Firm may not
make any determination with respect to any matter not in dispute between Buyer's
LLC Working Capital Statement and the Company's Working Capital Statement;
provided further, however, that any determination by the Accounting Firm shall
not be final, binding and nonappealable, and shall be without effect, if it does
not comply with the foregoing proviso. The party whose Working Capital Statement
is not selected is the "Losing Party" for purposes of this Section 1.8 and shall
pay all fees, charges and expenses for the services of the Accounting Firm
(including the fees, charges and expenses of any experts used by the Accounting
Firm) plus any reasonable fees and expenses of enforcement of a determination of
the Accounting Firm. In
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addition, the Losing Party shall reimburse (in cash) all reasonable attorneys'
fees, charges and expenses and reasonable accountant's fees, charges and
expenses incurred by the other party in connection with the dispute (all of the
foregoing, for purposes of this Section 1.8, the "Fees"). The Accounting Firm
shall be instructed to make its final determination within twenty (20) days of
the submissions to the Accounting Firm and, in any case, as soon as practicable
after such submissions. Within five (5) days of the Accounting Firm's
determination of the LLC Closing Date Working Capital Amount, the Accounting
Firm shall deliver to Boyd Indiana and the Company a statement (the "LLC Closing
Date Working Capital Statement") setting forth the LLC Closing Date Working
Capital Amount and describing in reasonable detail how the LLC Closing Date
Working Capital Amount was determined. Within ten (10) days after the final
determination by the Accounting Firm, the party entitled to receive the Fees
shall submit a statement setting forth its Fees incurred and the Accounting
Firm, within ten (10) days after such submission, will make a final, binding and
unappealable determination of the amount of such Fees and award such amounts to
such party.
(e) Any final determination and award of Fees shall be in writing
and shall state the reasons upon which it is based. Judgment upon the award may
be entered in any court having jurisdiction thereof. The provisions of this
Section 1.8 shall constitute the exclusive and sole means for resolving those
disputes, disagreements, controversies or claims between Boyd Indiana and the
Company with respect to the LLC Closing Date Working Capital Amount.
(f) To the extent the LLC Closing Date Working Capital Amount is (i)
greater than the LLC Preliminary Working Capital Amount, Boyd Indiana shall,
within ten (10) days of Boyd Indiana's receipt of the LLC Closing Date Working
Capital Statement or other final determination of the LLC Closing Date Working
Capital Amount, deliver by wire transfer of immediately available funds to the
liquidation account or accounts specified by the Company, an amount equal to
such excess or (ii) less than the LLC Preliminary Working Capital Amount, within
ten (10) days of the Company's receipt of the LLC Closing Date Working Capital
Statement or other final determination of the LLC Closing Date Working Capital
Amount there shall be released from the Company Escrowed Funds and delivered by
wire transfer of immediately available funds to the account or accounts
specified by Boyd Indiana an amount equal to such shortfall, in either case plus
interest on such amount at the Interest Rate for the period commencing on (and
including) the Closing Date to (but excluding) the date of payment, as well as
the amount of any Fees to be borne by LLC as a Losing Party under this Section
1.8.
(g) To the extent that following the settlement of the LLC Closing
Date Working Capital Amount described in Section 1.8(b), outstanding chips and
tokens that represent liabilities appearing on the LLC Closing Date Working
Capital Statement cannot legally be redeemed by LLC, the remaining amount of any
reserve for the liability represented by such chips and tokens shall be
delivered by wire transfer of immediately available funds to the Escrow Agent
and become part of the Company Escrowed Funds. The Company and Boyd Indiana each
agree that they shall each receive fifty percent (50%) of the net proceeds after
expenses of sale of that certain noncontiguous parcel of real estate to the Park
Land Partnership, whether or not such sale occurs pre-Closing or post-Closing,
so long as the Closing occurs.
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ARTICLE II
CERTAIN PRE-CLOSING TRANSACTIONS
Section 2.1 Transfer of Assets and Assumed Liabilities. Immediately
prior to the Closing, and as a condition precedent thereto, the Company shall
assign, convey and transfer (the "Transfer") to LLC all of the Company's right,
title and interest in the Assets and the Assumed Liabilities, and LLC shall
acquire the Assets and assume the Assumed Liabilities. The Transfer shall
include, but not be limited to, the following assignments, conveyances and
transfers:
(a) Owned Property. The Company shall convey to LLC title to the
Owned Property by a duly executed and acknowledged general warranty deed (the
"Deed") in substantially the form attached hereto as Exhibit 2.1(a). Evidence of
delivery of title to the Owned Property shall be the issuance by the Title
Company of an ALTA Form B (1970) Extended Coverage Owner's Policy (rev. 11-17-70
and 10-17-84) with regional exceptions deleted (the "Title Policy"). The Title
Policy shall be in an amount equal to Seventy-Five Million Nine Hundred Seventy
Thousand and No/100 Dollars ($75,970,000.00) and shall show title to the Owned
Property vested in LLC, subject to any Permitted Liens. The Title Policy shall
include contiguity, survey, zoning and such other endorsements as are reasonably
requested by Boyd Indiana. Prior to the Transfer Date, Boyd Indiana will order
an updated preliminary title report and an updated survey to verify that the
only Liens encumbering the Owned Property as of such date are the Permitted
Liens. Boyd Indiana shall have the right to notify the Company of any additional
Liens reflected on such updated survey or updated title report. Upon the
Company's receipt of such notice, the Company shall take such steps as is
necessary to cause the Title Company to remove such additional Liens prior to
the Transfer Date including, but not limited to, posting a bond or obtaining
additional endorsements to the Title Policy. In addition to the foregoing, the
Company shall convey to the LLC by quitclaim deed all of Company's right, title
and interest in and to the Untitled Property.
(b) Leased Property. The Company shall assign to LLC all of its
right, title and interest in and to the Leased Property included in the Assets
pursuant to that certain Assignment of Leases (the "Assignment of Leases") in
substantially the form attached hereto as Exhibit 2.1(b).
(c) Riverboat. The Company shall assign, transfer and convey to LLC
all of its right, title and interest to the Riverboat by a bill of sale (the
"Bill of Sale (Riverboat)") in the form required by the United States Coast
Guard free and clear of all Liens or interests of third parties not arising from
or through BGC or Boyd Indiana, except Permitted Liens.
(d) Tangible Personal Property. The Company shall assign, transfer
and convey to LLC all of its right, title and interest to the Tangible Personal
Property included in the Assets (other than the Riverboat) by a bill of sale
(the "Bill of Sale (Tangible Personal Property)") in substantially the form
attached hereto as Exhibit 2.1(d) free and clear of all Liens or interests of
third parties not arising from or through BGC or Boyd Indiana, except Permitted
Liens. In connection with the Transfer, new chips and tokens will be required
under applicable Gaming Laws. In that regard, Boyd Indiana will advise the
Company on the color, inserts and design of new chips and tokens to be utilized
by LLC, and the Company will implement Boyd Indiana's reasonable requests with
respect thereto at Boyd Indiana's expense as provided in Schedule 13.2.
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(e) Contracts and Equipment Leases; Plans and Specifications. The
Company shall assign, transfer and convey to LLC all of its right, title and
interest under the Contracts of the Company listed on Schedule 2.1(e) (the
"Assumed Contracts"), including all of its right, title and interest under the
Plans and Specifications and the Equipment Leases by an Assignment and
Assumption of Contracts (the "Assignment of Contracts") in substantially the
form attached hereto as Exhibit 2.1(e); provided that failure of the other party
or parties to an Assumed Contract to consent to such assignment will not be
deemed to be a breach of this Section 2.1(e).
(f) Governmental Approvals and Intangibles. The Company shall
assign, transfer and convey to LLC, all of its right, title and interest in and
to the Governmental Approvals and Intangibles (including, but not limited to,
the Liquor License and the Gaming License) by an Assignment and Assumption of
Governmental Approvals and Intangibles (the "Assignment of Governmental
Approvals and Intangibles") in substantially the form attached hereto as Exhibit
2.1(f); provided that failure to receive a consent from a Governmental Body to
the assignment of a Governmental Approval will not be deemed to be a violation
of this Section 2.1(f).
(g) Development Agreement. The Company shall assign, transfer and
convey to LLC, all of its right, title and interest in and to the Development
Agreement by an Assignment and Assumption of Development Agreement (the
"Assignment of Development Agreement") in substantially the form attached hereto
as Exhibit 2.1(g).
(h) Employees. The Company shall transfer to LLC all employees of
the Company who are employed as of the Transfer Date except for any employees
listed individually on Schedule 5.17 shown thereon as terminating on the Closing
Date, which employment shall be upon terms equivalent to those in effect
immediately prior to the Transfer Date; provided, however, in no event shall the
Company be obligated to transfer to LLC any employees who elect not to continue
their employment with LLC after the Transfer Date.
Section 2.2 Deliveries. Immediately prior to the Closing, and as a
condition precedent thereto, the Company and/or LLC, as applicable, shall have
executed, acknowledged where necessary and delivered to Boyd Indiana or their
authorized agents, as applicable, all of the following:
(a) The Assignment of Leases duly executed by the Company and LLC.
(b) The Assignment of Contracts duly executed by the Company and
LLC.
(c) The Bill of Sale (Tangible Personal Property) duly executed by
the Company.
(d) The Bill of Sale (Riverboat) duly executed by the Company,
together with originals of the current certificate of documentation, certificate
of inspection, vessel certificate of financial responsibility, vessel inspection
user fee renewal letter and such other documents required by applicable Laws
necessary to effect transfer of the Riverboat to LLC and permit LLC to use and
operate the Riverboat after the Transfer Date to the same extent in all material
respects as the Company prior to the Transfer Date.
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(e) The Assignment of Governmental Approvals and Intangibles duly
executed by the Company and LLC.
(f) All documents and consents as may be reasonably required in
connection with the transfer of the Liquor Assets to LLC.
(g) Originals, if available, or copies of all Books and Records.
(h) An affidavit (the "FIRPTA Affidavit") of the Company stating
that the Company is a "United States person," as referred to and defined in
Internal Revenue Code Paragraph 1445(f)(3) and 7701(g) in substantially the form
attached hereto as Exhibit 2.2(h).
(i) Originals, as applicable, of all Intangibles, Intellectual
Property and all other documents or instruments included in the Assets relating
to the Intangibles.
(j) Duly executed Governmental Approvals to or from any Governmental
Body or other Persons to whom notice is required to be given, or from whom
consent or approval is required upon, and material to, the Transfer or the
purchase and sale of the LLC Units to Boyd Indiana, or any portion thereof,
including, but not limited to the following:
(i) A copy of all Governmental Approvals necessary to the
transfer of the Riverboat from the Company to LLC including, but not limited to,
the consent of the United States Coast Guard, as well as originals of all
licenses, certificates and other documents relating to such transfer.
(ii) A copy of all Governmental Approvals necessary to the
transfer of the Gaming License from the Company to LLC including, but not
limited to, the consent of the Indiana Gaming Commission.
(k) A complete set of all keys and security codes for the Riverboat,
appropriately tagged or otherwise marked for identification.
(l) Originals or copies of such other documents as may be reasonably
requested by the Title Company.
(m) Originals of all Leases and all amendments thereto, and
originals or copies of all records and correspondence relating thereto.
(n) Originals of all material warranties or guaranties received by
the Company or LLC from any contractors, subcontractors, suppliers or
materialmen in connection with the Business.
(o) All marketing materials in the possession of the Company or LLC
with respect to the Business.
(p) All ledgers and financial statements for the Riverboat.
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(q) A duly executed Consent to Assignment (the "City Consent")
executed by the City in substantially the form attached hereto as Exhibit 2.2(q)
certifying, among other things, that there is no default under the Development
Agreement and that the City has consented to the assignment of the Development
Agreement and to all of the other transactions contemplated by this Agreement.
(r) A duly executed Estoppel Certificate and Consent to Assignment
(the "Contractor Estoppel Certificate") executed by the Contractor in
substantially the form attached hereto as Exhibit 2.2(r) certifying, among other
things, that there is no default under the Construction Contract to which the
Contractor is a party and that the Contractor has consented to the assignment of
such Construction Contract.
(s) The Assignment of Development Agreement duly executed by the
Company and LLC.
(t) Originals (to the extent available, or copies if originals are
not available) of all Assumed Contracts and the Management Agreement.
(u) The Potential Land Transfer Agreement, to the extent applicable
pursuant to Section 5.18.
(v) Such other documents, instruments, agreements, assignments,
instruments of assumption, correspondence and other items as Boyd Indiana may
reasonably request to evidence the Transfer to LLC and all other transactions
contemplated hereby.
Section 2.3 Excluded Liabilities. The Company hereby assumes and agrees
to pay and discharge, and will indemnify and hold harmless, to the extent and in
the manner provided in Section 12.4, LLC, Boyd Indiana and BGC for all of the
Excluded Liabilities.
Section 2.4 Transfer Costs. The Company and Boyd Indiana shall bear the
fees, charges, commissions, expenses or taxes related to the Transfer in
accordance with Sections 2.8, 13.2 and 13.3. To the extent (but only to the
extent) any such costs are accrued or reserved for in the calculation of the LLC
Closing Date Working Capital Amount, they shall be deemed to have been paid by
the Company in apportioning such costs. No such Transfer costs shall reduce the
Computed Amount.
Section 2.5 Prorations. All special or general assessments, real and
personal property taxes (other than those taxes imposed in connection with the
transfer of the Owned Property) and any other taxes or assessments that may be
required to be prorated as of the Transfer Date pursuant to any Laws or by the
Title Company in order to issue the Title Policy shall be allocated and prorated
between the Company and LLC as of 12:01 A.M. on the Transfer Date on the basis
of the fiscal year for which they are assessed.
Section 2.6 Post-Closing Deliveries. As soon as practicable following
the Closing Date, the Company shall deliver or cause to be delivered to Boyd
Indiana the executed and recorded original Deed and an original of the Title
Policy.
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Section 2.7 Termination of Agreements. Immediately prior to the Closing,
the Company and/or LLC, as noted in Schedule 2.7, will cause the Contracts set
forth on Schedule 2.7 to be terminated and LLC and the LLC Units to be released
from any liability, restriction or required performance thereunder. Evidence of
such termination and release, in form and substance reasonably satisfactory to
BGC, shall be furnished by Company or LLC, as applicable, at the Closing.
Section 2.8 Consents to Assignment of Assumed Contracts. In the event
any Assumed Contract to which the Company is a party requires the consent of
another party thereto, the Company will make all reasonable efforts to obtain
such consent in writing prior to the Transfer Date. Expenses in relation thereto
shall be apportioned as set forth in Schedule 2.8. If another party to any
Assumed Contract requires a specific written assumption by LLC of the Company's
obligations thereunder as a condition to consent to assignment thereof, LLC
agrees to provide such written assumption on terms no less favorable in all
material respects to LLC than the existing terms of such Assumed Contract.
Nothing in this Agreement shall be construed as an attempt to assign any Assumed
Contract which is not assignable without the consent of the other party or
parties thereto, unless such consent shall have been obtained. If, after the
Company and LLC have made all reasonable efforts to obtain the consent of any
such other party to such Assumed Contract, such consent shall not have been
obtained at or prior to the Transfer Date, such Assumed Contract shall not be
deemed assigned to LLC hereunder, and the Company, LLC, and Boyd Indiana shall
cooperate in an arrangement (each, an "Assignment Arrangement") reasonable to
both the Company and Boyd Indiana designed to provide LLC after the Closing Date
with all of the benefits of such Assumed Contract and all of the obligations
under such Assumed Contract arising on or after the Closing Date, including the
enforcement of any rights of the Company against such other party thereto
arising out of the breach or cancellation thereof by such other party or
otherwise. Boyd Indiana agrees to cause LLC to fulfill all obligations arising
on or after the Closing Date of any Assumed Contract for which it receives the
benefits pursuant to the foregoing, including all related payments thereunder,
on a timely basis and to indemnify and hold the Company harmless for any breach
of such Assignment Arrangement or any claim arising under such Assumed Contract
in connection with the operation of the Business after the Closing. The Company
and LLC shall, for a reasonable period, not to exceed ninety (90) business days
following the Closing Date, continue to use all reasonable efforts to attempt to
obtain such consents. If the Company and LLC enter into any Assignment
Arrangement in connection with any such Assumed Contract, LLC after the Closing
Date shall be responsible for the performance of such contract and any payments
required to be made to the other party to such contract or agreement to the same
extent as would have been required if the Assumed Contract had been effectively
assigned to LLC on the Transfer Date. In addition, after the Closing, in order
that the full value of every Assumed Contract and all claims and demands with
respect to such Assumed Contracts may be realized, the Company hereby agrees
that it will, at the written request and under the direction of Boyd Indiana and
as shall be permitted by law and the terms of such Assumed Contracts, take all
actions and do or cause to be done all things as shall be reasonably necessary
in order that LLC after the Closing Date may obtain the full benefit and
enjoyment of the Assumed Contracts, subject to the provisions of Schedule 2.8.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND LLC
Except as set forth in the corresponding subsection of the disclosure
letter delivered to Boyd Indiana at or prior to the execution of this Agreement
(the "Company/LLC Disclosure Schedule"), the Company and LLC, jointly and
severally, represent and warrant to Boyd Indiana, as of the date of this
Agreement and as of the Closing Date (unless a contrary date is indicated
below), as follows:
Section 3.1 Ownership of LLC Units. The Company owns and has an
unqualified right to and shall transfer to Boyd Indiana at the Closing good and
valid title to the LLC Units free and clear of all Liens. Other than this
Agreement, the LLC Units are not subject to any voting trust agreement or other
Contract, including any Contract restricting or otherwise relating to the voting
or disposition of such LLC Units.
Section 3.2 Organization and Qualification.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Indiana and has the
corporate power and authority to carry on its business as presently conducted,
to enter into this Agreement and the other documents and instruments to be
executed and delivered by it, to perform its obligations hereunder or thereunder
and to carry out the transactions contemplated hereby and thereby. LLC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Indiana, has conducted no business prior to the
Transfer Date except as contemplated hereby and has the requisite power and
authority to carry on its business as presently conducted, to enter into this
Agreement and the other documents and instruments to be executed and delivered
by it, to perform its obligations hereunder or thereunder and to carry out the
transactions contemplated hereby and thereby.
(b) Neither the Company nor LLC has any Subsidiaries. Neither the
Company nor LLC directly or indirectly owns any capital stock of or other equity
interests in any Person and neither the Company nor LLC is a member of or
participant in any partnership, joint venture, limited liability corporation, or
similar Person.
(c) The copies of the Articles of Incorporation of the Company, and
all amendments thereto, as certified by the Secretary of State of Indiana, and
the Bylaws, as amended to date, of the Company, as certified by the Secretary of
the Company, which have heretofore been delivered to Boyd Indiana, are complete,
accurate and current. The copies of the organizational and governing documents
of LLC, and all amendments thereto, as certified by the Secretary of State of
the State of Indiana or, if not applicable, a manager or executive officer of
LLC, which have heretofore been delivered to Boyd Indiana, are complete,
accurate and current. The stock transfer books and minute books or similar
records of the Company and LLC, which have heretofore been made available to
Boyd Indiana, are complete, accurate and current.
(d) The Company is duly qualified or registered for the transaction
of business and is in good standing in Indiana and Illinois, which are the only
jurisdictions wherein the character of the properties so owned or leased by or
the nature of its business makes such licensing or qualification to do business
necessary, except for any such failures to so qualify or be licensed,
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which, when taken together with all other such failures, has not had and would
not reasonably be likely to have a Material Adverse Effect. At the Closing, LLC
will be duly qualified or registered to do business and in good standing in
Indiana.
Section 3.3 Authority. The execution and delivery of this Agreement by
the Company and LLC and the execution and delivery of the other instruments or
documents required or contemplated hereby and the consummation of the
transactions contemplated hereby by each of the Company and LLC have been duly
and validly authorized by the Board of Directors or other applicable governing
body of such entity. Prior to the Closing, each of the Company and LLC will
deliver to Boyd Indiana a complete and correct copy, certified by its Secretary
(or other appropriate executive officer or manager), of the resolutions
heretofore duly and validly adopted by its Board of Directors or other
applicable governing body evidencing such authorization and resolutions of the
Company's shareholders duly and validly adopted prior to the Closing, which
resolutions in each case will not have been rescinded prior to, and will be in
full force and effect on the date of, the Closing. No other corporate or limited
liability company act or proceeding on the part of any of the Company or LLC is
necessary to authorize this Agreement or the other documents and instruments to
be executed and delivered by the Company or LLC pursuant hereto or the
transactions contemplated hereby or thereby.
Section 3.4 Capitalization. The authorized capital of LLC consists
solely of one hundred (100) Units, of which one hundred (100) Units are issued
and outstanding and are owned of record by the Company. All of the issued and
outstanding Units of LLC have been duly authorized and are validly issued, fully
paid and nonassessable, are not subject to any preemptive rights and have not
been issued in violation of any applicable Laws, Articles of Organization,
operating agreement or the terms of any agreement to which the LLC, Company or,
to the knowledge of the Company and LLC, any shareholder of the Company is a
party or is bound. There are no units or other equity interest or securities of
LLC reserved for issuance or any outstanding subscriptions, options, warrants,
rights, "phantom" stock rights, convertible or exchangeable securities, stock
appreciation rights or other agreements or commitments (other than this
Agreement) granting to any Person any interest in or right to acquire at any
time, or upon the happening of any stated event, any Units or other equity
interest or securities of LLC, or any interest in, exchangeable for or
convertible into Units or other equity interest or securities of LLC or
restricting the Company's rights to transfer any of the LLC Units.
Section 3.5. Binding Effect, No Violation, Consents. This Agreement
constitutes, and, when executed and delivered, the other documents and
instruments to be executed and delivered by each of the Company and LLC pursuant
hereto will constitute, valid and binding agreements of each of the Company and
LLC, enforceable in accordance with their respective terms (except as such
enforceability may be affected by bankruptcy, reorganization, moratorium or
similar laws generally affecting creditors' rights and by general principles of
equity), and (assuming receipt of the consents, approvals and authorizations
specifically contemplated by the next sentence) neither the execution and
delivery of this Agreement and the other documents and instruments to be
executed and delivered by the Company and LLC pursuant hereto, nor the
consummation by the Company or LLC of the transactions contemplated hereby or
thereby will (i) violate or conflict with or result in any breach of any
provision of its Articles of Incorporation, Bylaws, Articles of Organization,
operating agreement or other organizational or governing documents; (ii) violate
or conflict with or constitute a default (or an event which, with
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notice or lapse of time, or both, would constitute a default) under or will
result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the assets under, any Assumed
Contract to which the Company or LLC is a party or by which the Company or LLC
or its respective assets or properties may be bound or affected; or (iii)
violate any Law, excluding from the foregoing clauses (ii) and (iii) such
defaults, rights and violations which, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Except for the consents required
under the Gaming Laws, the consent of the City under the Development Agreement
and the applicable requirements of the HSR Act, the consent of the United States
Coast Guard to the transfer of the Riverboat, and the consents of the Army Corps
of Engineers, the Indiana Department of Natural Resources and the Walsh
Construction Contract, no Governmental Approval, or consent, approval,
authorization or action by, notice to, or filing with, any other Person is
required in connection with the execution, delivery and performance of this
Agreement, the other documents and instruments to be executed and delivered by
the Company or LLC pursuant hereto or the consummation by the Company or LLC of
the transactions contemplated hereby or thereby, except in the case of
Governmental Approvals or consents, approvals, authorizations, actions, notices
or filings required under Contracts where the failure to obtain such consents
and approvals and give such notices would not reasonably be expected to have a
Material Adverse Effect.
Section 3.6 Financial Information. Set forth as Schedule 3.6 are audited
(a) consolidated balance sheets of the Company as at December 31, 1997 and 1998
(such balance sheet as at December 31, 1998 is sometimes referred to herein as
the "Company Balance Sheet") and (b) consolidated statements of income, cash
flows and changes in shareholders equity of the Company for each of the years
ended December 31, 1998 and 1997, all audited by Arthur Andersen LLP, whose
reports thereon are included therein (together with the balance sheets, and
including all notes thereto, the "Company Financial Statements"). Schedule 3.6
also contains the unaudited (a) consolidated balance sheet of the Company as at
March 31, 1999 and (b) the consolidated statements of income and cash flows of
the Company for the three months ended March 31, 1999. Such balance sheets and
the notes thereto are true, complete and accurate and fairly present the assets,
liabilities and financial condition of the Company on a consolidated basis as of
the respective dates thereof, and such consolidated statements of income, cash
flows and changes in shareholders' equity and the notes thereto are true,
complete and accurate and fairly present the results of operations of the
Company on a consolidated basis for the period therein referred to, all in
accordance with GAAP consistently applied throughout the periods involved,
except that the interim, quarterly unaudited financial information is subject to
normal and immaterial year-end audit adjustments.
Section 3.7 No Undisclosed Liabilities. The Company does not have any
material liability or obligation of any nature, whether fixed or contingent or
otherwise, whether due or to become due, including, without limitation, any
unfunded obligation under any pension plan, any liability for Taxes or any
environmental liabilities, that is not reflected or reserved against in the
Company Balance Sheet or otherwise disclosed in the notes thereto, other than
liabilities and obligations incurred subsequent to the date of the Company
Balance Sheet in the ordinary course of business consistent with past practice
and not in violation of this Agreement. The Company does not know or have any
reasonable expectation of any basis for the assertion against the Company or LLC
of any such liability or obligation. There are no agreements or arrangements
pursuant to which the Company or LLC has incurred Indebtedness or is liable for
payments to its
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shareholders or members or former shareholders or members, any Related Entity or
their respective Affiliates. As of the date of this Agreement, LLC has no
liabilities and, as of the Closing Date, LLC will have no liabilities except the
Assumed Liabilities, except for any liabilities arising from Excluded
Environmental Matters.
Section 3.8 Absence of Certain Changes. Except as otherwise contemplated
by this Agreement, (a) since the date of the Company Balance Sheet, the Business
has been conducted only in the ordinary course, consistent with past practice,
and there has not occurred any event, condition, circumstance, change or
development (whether or not in the ordinary course of business consistent with
past practice) that, individually or in the aggregate, has had or, in the
future, would reasonably be expected to have a Material Adverse Effect on the
Company or LLC and (b) since the date of the Company Balance Sheet, none of LLC,
the Company or, to the knowledge of the Company and LLC, any shareholder of the
Company has taken any action which, if taken after the date of this Agreement,
would constitute a breach of any of the covenants set forth in Section 5.1
(excluding any requirement set forth in Section 5.1 to give notice as to any
action occurring prior to the date of this Agreement).
Section 3.9 Tax Matters.
(a) The Company is a small business corporation as defined in
Section 1361 of the Code and has had in effect since January 1, 1998 a valid
election to be treated as an "S" corporation for federal Income Tax purposes
under the Code and in the State of Indiana, and neither the Company nor, to the
knowledge of the Company, any of its existing or former shareholders has taken
or caused or permitted to be taken any action during such periods that would
have caused a termination of such S election.
(b) The Company and LLC are not registered to do business as a
foreign entity in any state, and the Company files Tax Returns only in the
United States and the States of Indiana and Illinois. LLC has filed no Income
Tax returns with any local, state or federal taxing authority.
(c) Each of the Company and LLC has (i) duly filed with the
appropriate Governmental Bodies all Tax Returns required to be filed by it on or
prior to the date hereof, and such Tax Returns are true, correct and complete in
all material respects and (ii) duly paid in full or made provision in accordance
with GAAP for the payment of all Taxes for all periods ending through the date
hereof.
(d) There are no Liens for Taxes upon the LLC Units or the Assets
except for statutory liens for current Taxes not yet due.
(e) Since the date of the Company Balance Sheet, neither the Company
nor LLC has incurred any liability for Taxes other than in the ordinary course
of business consistent with past practice or as contemplated by this Agreement.
(f) Each of the Company and LLC has complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441, 1442, 3121, 3402, 3406 and 4421 of the Code or
similar provisions under any foreign laws) and has, within the time and the
manner prescribed by law, withheld from and paid over to the proper
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Governmental Bodies all amounts required to be so withheld and paid over under
applicable laws.
(g) No audits or other administrative proceedings or court
proceedings are presently pending with any Governmental Body with regard to any
Taxes or Tax Returns of either the Company or LLC, and neither the Company nor
LLC has received a written notice of any pending audits or proceedings. All
information statements have been filed under Section 401 of the Code.
(h) There are no outstanding written requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or LLC.
(i) Neither the Company nor LLC is a party to any Contract providing
for the allocation or sharing of Taxes.
(j) Neither the Company nor LLC is a party to any Contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(k) No power of attorney has been executed by either the Company or
LLC with respect to any matter relating to Taxes which is currently in force.
(l) At all times since the date of formation of LLC, and as of the
Closing, (i) the Company is and has been the sole owner of any and all issued
and outstanding Units of LLC; (ii) LLC has not conducted any business other than
that related to the consummation of the transactions contemplated hereby; (iii)
LLC does not have any assets or liabilities other than, following the Transfer,
the Assets, the Assumed Liabilities, the Excluded Environmental Matters and
assets acquired after the Transfer in the ordinary course of the Business; and
(iv) each of the Company and LLC has treated LLC for all Income Tax purposes as
being disregarded as an entity separate from the Company with the meaning of
Treasury Regulations Section 301.7701-3(b)(1)(ii) (a "Disregarded Entity") and
has not taken or caused or permitted to be taken any action inconsistent with
such treatment or failed to take any action if such failure would be
inconsistent with such treatment.
Section 3.10 Real Property and Riverboat.
(a) Schedule 3.10(a) sets forth the location and a description of
the Owned Property.
(b) Schedule 3.10(b) sets forth the location of the Leased Property.
(c) There are now in full force and effect duly issued certificates
of occupancy, where required, permitting the Real Property, the Riverboat and
the improvements located thereon to be legally used, occupied and operated as
the same presently exist. The Real Property and the Riverboat are used by the
Company or LLC exclusively for the Business. Neither the Real Property nor the
Riverboat violates any material provisions of any applicable Laws, including
without limitation, any building code, fire, health or safety regulations, and
the Company or LLC, as applicable, is in material compliance with all applicable
Laws and restrictions relating to
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the Real Property, the Riverboat or any part thereof; provided, however, that
this Section 3.10(c) shall not include Environmental Laws which shall be covered
by Section 3.20.
(d) The current use of the offices, if any, and other facilities
located on the Riverboat or the Real Property does not violate any Law,
including without limitation, any local zoning or similar land use or government
regulation, where such violation would reasonably be likely to have a Material
Adverse Effect.
(e) Neither the Company nor LLC has made or entered into any
Contracts to sell, mortgage, pledge or hypothecate, lease, sublease, convey,
alienate, transfer or otherwise dispose of the Riverboat or the Real Property,
or any portion thereof.
(f) Neither the Riverboat nor the Real Property is subject to any
outstanding purchase options, and no Person has any right or option to acquire,
or right of first refusal with respect to, the Company's or LLC's interest in
the Riverboat or the Real Property, or any part thereof.
(g) The Real Property is zoned for the lawful development of the
Hotel, and the Company or LLC has obtained to date, and will obtain with respect
to activities conducted by the Company or LLC up to the Closing Date, all
Governmental Approvals required for the lawful construction, development and
operation of the Hotel in accordance with the Plans and Specifications, except
where the failure to do so would not be reasonably expected to have a Material
Adverse Effect. To the knowledge of the Company and LLC, there are no material
impediments to or constraints on the development of the Hotel within the time
frame and for the cost set forth in the Hotel Construction Budget.
(h) The Company and LLC, as applicable, have obtained all
Governmental Approvals and other approvals required for the lawful acquisition,
ownership, use, operation, management and maintenance of the Riverboat as such
is owned, used, operated, managed and maintained and including, but not limited
to, all approvals required by the United States Coast Guard and the Army Corps
of Engineers, except where the failure to do so would not be reasonably expected
to have a Material Adverse Effect.
(i) To the knowledge of the Company, the Riverboat has been
constructed in a workmanlike manner, by duly licensed contractors in accordance
with applicable plans, specifications and Laws, and is in good working order
with no known material defects.
(j) Prior to Closing, LLC shall have provided Boyd Indiana a true
and complete list of each Person who, to the knowledge of the Company and LLC,
possesses keys or security codes for the Riverboat.
Section 3.11 Leases.
(a) All leases of real property leased or subleased by or for the
use or benefit of the Company, LLC or the Business and all leases as to which
the Company or LLC is the lessee or sublessee, and all amendments and
modifications thereof (collectively, the "Leases"), are listed on Schedule
3.11(a) and true, correct and complete copies thereof have been delivered to
Boyd Indiana. All such Leases are valid, binding and in full force and effect
and are enforceable by the Company or LLC, as applicable, in accordance with
their terms (except as such
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enforceability may be affected by bankruptcy, reorganization, moratorium or
similar laws generally affecting creditors' rights and by general principles of
equity) and have not been modified or amended; the Company or LLC, as
applicable, has performed all material obligations required to be performed by
it under each such Lease; and there has been no material breach or default under
any such Leases by the Company or LLC, or, to the knowledge of the Company or
LLC, any other party thereto, nor any such breach or default by the Company or
LLC, or, to the knowledge of the Company or LLC, any other party thereto which
with notice or lapse of time or both would constitute an event of default
thereunder.
(b) There are no oral or written leases, subleases, occupancy
agreements or tenancies in effect pertaining to the Owned Property, and no
parties other than the Company are in possession of the Owned Property.
Section 3.12 Title to Assets.
(a) The Company has and will have until the Transfer, and LLC will
have at the Closing, good, marketable and insurable title (fee title, in the
case of the Owned Property) to, and is, and will be in the case of LLC, the
owner of, the Owned Property (other than Owned Property included in the Excluded
Assets) and such ownership is and will be at the Closing free and clear of any
and all Liens, other than Permitted Liens.
(b) The Company has and will have until the Transfer good and
marketable title to the Riverboat and owns and will own until the Transfer the
Riverboat free and clear of all Liens and LLC, at the Closing, will have good
and marketable title to the Riverboat and will own the Riverboat free and clear
of all Liens, other than Permitted Liens.
(c) The Company has and will have until the Transfer, and LLC will
have at the Closing, good and marketable title to the Assets (other than the
Owned Property and the Riverboat which are covered by Section 3.12(a) and (b)),
free and clear of any and all Liens, other than Permitted Liens.
Section 3.13 Tangible Personal Property. Schedule 3.13(a) lists each
item of Tangible Personal Property (other than inventory and supplies) owned by
the Company or LLC having an initial purchase price in excess of Ten Thousand
and No/100 Dollars ($10,000.00); Schedule 3.13(b) lists each item of Tangible
Personal Property leased by the Company or LLC (other than pursuant to
individual leases having an annual rental of less than Ten Thousand and No/100
Dollars ($10,000.00) or which are terminable by the Company or LLC, as
applicable, within ninety (90) days of the date hereof without penalty) and each
item of Tangible Personal Property having a value of Ten Thousand and No/100
Dollars ($10,000.00) or more used by the Company or LLC and owned or leased by
Persons providing services to the Company or LLC; and Schedule 3.13(c) lists
each live gaming device (including all gaming tables), electronic gaming device
(including all slot machines) and other gaming-related equipment owned, leased
or otherwise used by the Company or LLC. The Tangible Personal Property set
forth on the above-referenced Schedules constitutes substantially all of the
tangible personal property used in the operation of the Business and constitutes
substantially all tangible personal property necessary to conduct the Business
as presently conducted by the Company. The Tangible Personal Property owned by
the Company or LLC and all other material personal property,
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whether tangible or intangible, owned by the Company or LLC is free and clear of
any and all Liens, except for Permitted Liens. All Tangible Personal Property
owned by the Company or LLC (other than Excluded Assets) is located at the Real
Property or the Riverboat, and there is no tangible personal property material
to the operation of the Business located at the Real Property or the Riverboat
which is not owned or leased by the Company or LLC. The Tangible Personal
Property owned or leased by the Company or LLC is in all material respects in
working order, ordinary wear and tear excepted. All the material Tangible
Personal Property owned by the Company or LLC has been maintained in all
material respects in accordance with the past practice of the Company or LLC.
All leased Tangible Personal Property of the Company or LLC is in all material
respects in the condition required of such property by the terms of the lease
applicable thereto during the term of the lease.
Section 3.14 Intellectual Property.
(a) Schedule 3.14 contains a true, correct and complete list of the
Intellectual Property and all license agreements relating thereto to which the
Company or LLC is a party (either as licensor or licensee) (the "License
Agreements"), provided that Schedule 3.14 need not list end-user licenses
granted to the Company or LLC relating to standard "off the shelf" personal
computer software that is generally available from vendors, including software
made available from such vendors on a "shrinkwrap license" basis.
(b) The Company is and until the Transfer will be, and LLC will be
at Closing, the sole and exclusive owner of the Intellectual Property (other
than Intellectual Property licensed from third parties) and Company's rights
under the License Agreements, and all registrations and applications for
registration therefor are currently standing and, until the Transfer will be, in
the name of the Company and will be assigned to LLC on the Transfer Date. The
Intellectual Property (other than Intellectual Property licensed from third
parties), License Agreements and Business Know-How are free and clear of all
Liens, and the Intellectual Property and Business Know-How owned by the Company
or LLC are free of all licenses to third parties. Neither the Company nor LLC
owns or is a party to any License Agreement with respect to any patent or
application therefor. The Intellectual Property owned by the Company or LLC and,
to the knowledge of the Company and LLC, the Intellectual Property licensed from
third parties, is valid and enforceable, all registrations relating to the
Intellectual Property owned by the Company or LLC were validly obtained, and no
such registration has lapsed, expired or been abandoned, or is subject to any
pending or threatened opposition or cancellation proceeding before the United
States Patent and Trademark Office or any other registration authority, except
where such invalidity, unenforceability, lapse, expiration, abandonment or
proceeding would not, individually or in the aggregate, reasonably be expected
to have a material effect on the use by the Company or LLC of such Intellectual
Property. Neither the Company nor LLC knows of any reason why any of the
Company's or LLC's material trademarks or service marks would not be registrable
in any United States jurisdiction. There are no claims pending or, to the
Company's or LLC's knowledge, threatened, and neither the Company nor LLC has
received notice of any claims alleging that the Company's or LLC's activities
infringe upon or constitute the unauthorized use of the proprietary rights of
any third party, or challenging the Company's or LLC's, as applicable, ownership
or the validity or enforceability of the Intellectual Property or the Business
Know-How owned by the Company or the License Agreements. To the Company's and
LLC's knowledge, there are no infringements of the Intellectual Property owned
by the
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Company or the License Agreements by third parties. Neither the Company nor LLC
has entered into any consent, indemnification, forbearance to sue, or settlement
agreement with any third party relating to the Intellectual Property, Business
Know-How or License Agreements, or the intellectual property or business
know-how of any third party.
Section 3.15 Litigation.
(a) There are no claims, actions, suits, proceedings or
investigations pending or threatened by the Company, LLC or by any Related
Entity (with respect to the Business) at law or in equity or before any
Governmental Body or before any arbitration body.
(b) There are no claims, actions, suits, proceedings or
investigations pending or, to the Company's or LLC's knowledge, threatened
against the Company, LLC or any Related Entity (with respect to the Business),
or involving their respective Assets or the Business, at law or in equity or
before any Governmental Body or any arbitration body which, as of the date of
this Agreement, (i) involves a claim against the Company, LLC or such Related
Entity of more than Ten Thousand and No/100 Dollars ($10,000.00); (ii) seeks any
injunctive relief or punitive damages not covered by insurance against the
Company, LLC or any Related Entity; or (iii) individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect, and neither the
Company nor LLC knows or has any reasonable expectation of any basis for any
such claim, action, suit, proceeding or investigation. Other than shareholder
statutory dissenters' rights, if any, there are no pending or threatened claims,
actions, suits, proceedings or investigations which challenge the legality or
validity of the transactions contemplated hereby or seek damages in excess of
One Hundred Thousand and No/100 Dollars ($100,000.00) in connection with the
consummation of the transactions contemplated hereby. To the knowledge of the
Company and LLC, none of the Company, LLC or any Related Entity is a party or
subject to or in default under any material judgment, order, injunction or
decree of any Governmental Body or arbitration tribunal applicable to it or any
of its respective properties, Assets, operations or the Business.
Section 3.16 Insurance.
(a) Schedule 3.16(a) sets forth a complete and accurate list
reasonably identifying all policies of fire, liability, business interruption,
hull and machinery, protection and indemnity, pollution, product liability,
workers' compensation, health and other forms of insurance presently in effect
with respect to the Company and LLC, true copies of which have heretofore been
delivered to Boyd Indiana.
(b) All such policies are valid, outstanding and enforceable
policies in accordance with their terms (except as such enforceability may be
affected by bankruptcy, reorganization, moratorium or similar laws generally
affecting creditors' rights and by general principles of equity) and provide
insurance coverage for the properties, assets and operations of the Company and
LLC covered thereby and of the kinds, in the amounts and against the risks
customarily maintained by organizations similarly situated. The Company has
kept, and the Company and LLC will keep through the Closing Date, the Riverboat
insured under marine (including navigation and port risk), hull, protection and
indemnity, machinery and pollution liability insurance. Neither the Company nor
LLC has been refused any insurance with respect to any
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aspect of the ownership and operations of the Business, nor has the coverage
been limited by any insurance carrier to which it has applied for insurance or
with which it has insurance during the last three (3) years. All premium and/or
club calls respecting each such policy of insurance have been paid through the
end of each respective policy quarter. No insurance or proceeds thereof have
been assigned by the Company or LLC to any Person.
Section 3.17 Labor Matters.
(a) Each of the Company and LLC is, and has at all times been, in
material compliance with all applicable Laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and is not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law, ordinance or regulations.
(b) There is no labor strike, dispute, slowdown, stoppage or lockout
actually pending, or, to the knowledge of the Company and LLC, threatened
against or affecting the Company, LLC or the Business, and during the past three
(3) years there has not been any such action.
(c) No union represents the employees of either the Company or LLC.
(d) Neither the Company nor LLC is a party to or bound by any
collective bargaining or similar agreement with any labor organization, or work
rules or practices agreed to with any labor organization or employee association
applicable to employees of the Company or LLC.
(e) None of the employees of the Company or LLC is represented by
any labor organization in their capacities as employees of the Company or LLC
and, to the knowledge of the Company and LLC, there are no current union
organizing activities among the employees of the Company or LLC, nor does any
question concerning representation exist concerning such employees.
(f) The Company has delivered to Boyd Indiana a copy of all written
personnel policies, rules or procedures applicable to employees of the Company
or LLC.
(g) None of the Company or LLC has received notice of any unfair
labor practice charge or complaint against the Company or LLC pending or
threatened before the National Labor Relations Board or any other Governmental
Body.
(h) Neither the Company nor LLC has received notice of any grievance
arising out of any collective bargaining agreement or other grievance procedure
against either of such entities.
(i) Neither the Company nor LLC has received notice of any charges
with respect to or relating to any of such entities pending before the Equal
Employment Opportunity Commission or any other Governmental Body responsible for
the prevention of unlawful employment practices.
(j) Neither the Company nor LLC has received notice of the intent of
any Governmental Body responsible for the enforcement of labor or employment
laws to conduct an investigation.
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(k) Neither the Company nor LLC has received notice of any material
complaints, lawsuits or other proceedings pending or threatened in any forum by
or on behalf of any present or former employee of such entities, any applicant
for employment or classes of the foregoing alleging breach of any express or
implied contract of employment, any Law governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship.
(l) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) constitute an event under any benefit plan,
policy, arrangement or agreement or any trust or loan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increases in benefits or obligation to
fund benefits with respect to any employee of the Company or LLC. The only
severance agreements or severance policies applicable to the Company or LLC are
the agreements and policies specifically referred to in the Company/LLC
Disclosure Schedule.
Section 3.18 Compliance with WARN Act. Since the enactment of the Worker
Adjustment and Retraining Notification Act of 1988 (the "WARN Act"), none of the
Company, LLC and the Business has effectuated (i) a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of such
entities or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility of any of such entities, nor has any of such entities
been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar Law.
None of the employees of any of the Company, LLC or an Affiliate has suffered an
"employment loss" (as defined in the WARN Act) since January 1, 1993.
Section 3.19 Employee Benefit Plans; ERISA.
(a) Schedule 3.19(a)(1) contains a true and complete list of each
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance or termination pay, hospitalization or other medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan program, agreement or management, whether formal or informal,
written or oral (each, a "Plan"), that is maintained or contributed to at any
time by the Company, LLC or a Related Entity with respect to the Business or,
solely with respect to a Plan that is subject to Section 302 or Title IV of
ERISA, by any other trade or business, whether or not incorporated, which
together with the Company, LLC or a Related Entity would be deemed a "single
employer" within the meaning of Section 4001 of ERISA or Section 414(b), (c),
(m) or (o) of the Code (an "ERISA Affiliate"), or was so maintained or
contributed to within the last six (6) years, for the benefit of any employee,
former employee, consultant, officer or director of the Company or LLC or, if
applicable, any ERISA Affiliate. Schedule 3.19(a)(2) identifies each Plan that
is an "employee benefit plan" within the meaning of Section 3(3) of ERISA (a
"Benefit Plan").
(b) With respect to each Plan, the Company has heretofore delivered
to Boyd Indiana true and complete copies of each of the following documents to
the extent applicable:
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(i) the current version of the Plan (including all
amendments thereto);
(ii) the annual report with respect to each such Plan for the
last two (2) most recently completed plan years for which such a report was
filed;
(iii) the most recent Summary Plan Description, together with
each Summary of Material Modifications distributed since the most recent Summary
Plan Description;
(iv) if the Plan is funded through a trust or any third-party
funding vehicle, the trust or other funding agreement (including all amendments
thereto) and the latest financial statements of the trust or third-party funding
vehicle thereto;
(v) all Contracts relating to any Plan with respect to which
the Company, LLC or any ERISA Affiliate may have any material liability,
including, without limitation, insurance contracts, investment management
agreements, subscription or participation agreements and record keeping or other
servicing or administration agreements;
(vi) the most recent determination letter received from the
IRS with respect to each Benefit Plan intended to qualify under Section 401 of
the Code; and
(vii) any determinations by a Governmental Authority based on
an examination or audit of the Plans.
All reports, returns and similar documents with respect to the Benefit Plans
required to be filed with any Governmental Body or distributed to any Benefit
Plan participant or beneficiary have been duly and timely filed or distributed,
except where failure to do so would not reasonably be expected to have a
Material Adverse Effect and all reports, returns and similar documents actually
filed or distributed were true, complete and correct in all material respects.
(c) No Benefit Plan is a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA and no Benefit Plan is subject to Title IV or
Section 302 of ERISA. Each of the Benefit Plans is, and has always been,
operated in all material respects in accordance with the requirements of all
applicable Laws. Each of the Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code, and each related trust intended to be
tax-exempt under Section 501(a) of the Code, has received a favorable
determination letter from the Internal Revenue Service. No such favorable
determination letter has been revoked, and, to the knowledge of the Company,
revocation has not been threatened. To the knowledge of the Company, no event
has occurred and no circumstances exist that would adversely affect the
tax-qualification of such a Benefit Plan. No Benefit Plan has been amended since
the effective date of its most recent determination letter.
(d) All contributions to, and payments from, the Benefit Plans
required to be made by the Company, LLC or any ERISA Affiliate in accordance
with the terms of the Benefit Plans have been timely made as of the last day of
the most recent plan year thereof ended prior to the date of this Agreement, or
will be timely made in accordance with Section 404(a)(6) of the Code. All
required contributions to, and payments from, the Plans for any period on or
before December 31, 1998 that were not required to be made as of such date were
properly accrued and
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reflected on the Company Balance Sheet and will be properly accrued on a monthly
basis through Closing.
(e) No Plan provides benefits, including, without limitation, death
or medical benefits (whether or not insured), with respect to current or former
employees of the Company, LLC or any ERISA Affiliate for periods extending
beyond their retirement or other termination of service (other than (i) coverage
mandated by applicable law; (ii) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA; (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or an ERISA Affiliate; or (iv) benefits the full cost of which is borne
by the current or former employee (or his beneficiary)).
(f) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Benefit
Plan; none of the Company, LLC or an ERISA Affiliate has incurred any liability
for any excise tax arising under Section 4975 or 4976 of the Code or civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA and, to the
Company's and LLC's knowledge, no fact or event exists that could give rise to
any such liability with respect to any Benefit Plan; there are no pending, or,
to the knowledge of the Company and LLC, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Plans,
or any trusts related thereto or any trustee or administrator thereof, and no
litigation or administrative or other proceeding has occurred or, to the
knowledge of the Company and LLC, is threatened involving any Plan or any trusts
related thereto or any trustee or administrator thereof.
(g) No provision of any Benefit Plan that is an "employee welfare
benefit plan," as such term is defined in Section 3(1) of ERISA (each, a
"Welfare Plan"), limits the ability of the Company, LLC or a Related Entity, as
applicable, to amend or terminate such Welfare Plan at any time after the
Closing Date and there have been no written or, to the Company's or LLC's
knowledge, oral communications to employees, former employees or their
respective dependents by the Company, LLC or a Related Entity to the contrary.
The list of plans in Schedule 3.19(a)(1) discloses whether each Welfare Plan is
(i) unfunded; (ii) funded through a "welfare benefit fund," as such term is
defined in Section 419(e) of the Code, or other funding mechanism; or (iii)
insured.
(h) The consummation of the transactions contemplated by this
Agreement will not (i) except as a result of the termination pursuant to Section
2.7 of the Contracts referred to in Schedule 2.7, (a) entitle any current or
former employee or officer of the Company, LLC or a Related Entity associated
with the Business to severance pay, unemployment compensation or any other
similar payment or (b) accelerate the time of payment vesting or increase the
amount of compensation due any such employee or officer or (ii) result in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code.
(i) No employee of the Company, LLC or a Related Entity with respect
to the Business is a "leased employee" within the meaning of Section 414(n) of
the Code.
(j) With respect to each Benefit Plan,
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(i) no action or claim (other than routine claims for
benefits made in the ordinary course of plan administration for which plan
administrative review procedures have not been exhausted) is pending, or, to the
knowledge of the Company and LLC, threatened or imminent against or with respect
to the Benefit Plan, any employer who is participating (or who has participated)
in any Benefit Plan or any fiduciary (as defined in Section 3(21) of ERISA), of
the Benefit Plan; and
(ii) neither the Company, LLC, any ERISA Affiliate nor any
fiduciary of the Benefit Plan has any knowledge of any facts that could give
rise to any such action or claim.
(k) Each Plan provides that it may be amended or terminated at any
time and, except for benefits protected under Section 411(d) of the Code, all
benefits payable to current employees, terminated employees or any beneficiary
may be amended or terminated by the Company, LLC or the ERISA Affiliate, as
applicable, at any time without liability.
(l) None of the Company, LLC or any ERISA Affiliate has any
liability or is threatened with any liability (whether joint or several) (i) for
any excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the Code or
(ii) to a fine under Section 502 of ERISA.
(m) All of the Benefit Plans, to the extent applicable, are in
compliance with the continuation of group health coverage provisions contained
in Section 4980B of the Code and Sections 601 through 608 of ERISA.
Section 3.20 Environmental Matters.
(a) Each of the Company, LLC and any Related Entity is in compliance
in all material respects with all applicable Environmental Laws concerning,
affecting or relating to the Business or the Real Property, which compliance
includes, but is not limited to, the possession by such entities of, and their
compliance in all material respects with terms and conditions of, all
Governmental Approvals and certificates of financial responsibility required
under applicable Environmental Laws ("Environmental Permits"). None of the
Company, LLC or any Related Entity has received any communication (written or
oral) that alleges that any such entity is not in such compliance, and there are
no circumstances or conditions that under existing Environmental Laws would
reasonably be expected to prevent or interfere with such compliance in all
material respects in the future. All Environmental Permits currently held by the
Company or LLC pursuant to Environmental Laws are identified in Schedule
3.20(a).
(b) There is no Environmental Claim pending or, to the Company's or
LLC's knowledge, threatened against the Company, LLC or any Related Entity or,
to the Company's and LLC's knowledge, pending or threatened against any Person
whose liability for any Environmental Claim the Company, LLC or a Related Entity
has contractually retained or assumed.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents involving the Company, LLC or a Related Entity,
or, to the knowledge of the Company, any other Person, including, without
limitation, the presence, release, emission, discharge or disposal by the
Company, LLC or any other Person of any Materials of
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Environmental Concern (except in compliance with Environmental Laws) at, under
or in the vicinity of any facility currently or formerly owned or operated by
the Company, LLC or a Related Entity, that could form the basis of any material
Environmental Claim against any Person whose liability for any Environmental
Claim the Company, LLC or a Related Entity has contractually retained or
assumed.
(d) Without in any way limiting the generality of the foregoing, (i)
all on-site and off-site locations where the Company, LLC or a Related Entity
has stored, disposed or arranged for the disposal of Materials of Environmental
Concern are identified in Schedule 3.20(d); (ii) all known underground storage
tanks, and the capacity and contents of such tanks, located on property owned or
leased by the Company, LLC or a Related Entity are identified in Schedule
3.20(d); (iii) there is no asbestos contained in, or forming part of any
building, building component, vessel, structure or office space owned or, to the
knowledge of the Company or LLC, leased by the Company, LLC or a Related Entity;
and (iv) no polychlorinated biphenyls (PCBs) are used or stored at any property
owned or, to the knowledge of the Company or LLC, leased by the Company, LLC or
a Related Entity.
(e) All dredging operations and disposal of dredge spoils by or on
behalf of the Company and LLC have been carried out in material compliance with
all applicable Environmental Laws, and the Company and LLC are aware of no
facts, conditions or circumstances, other than conditions imposed by the
Company's or LLC's Environmental Permits or other requirements of Law that have
been specifically applied by a Governmental Body to the Company's or LLC's
dredging operations, that could prevent or restrict in any material manner the
continuation of such dredging in substantially the same manner and at
substantially the same locations as previously carried out.
(f) Each of Company and LLC has provided or otherwise made available
to Boyd Indiana copies or other evidence (as appropriate) of all material
communications, oral or written (whether from a Governmental Body, citizens'
group, employee or other Person), which the Company and LLC has received
regarding (i) alleged or suspected noncompliance of the Real Property or the
Riverboat with any Environmental Laws or Environmental Permits; (ii) alleged or
suspected liability of the Company, LLC or a Related Entity under any
Environmental Law; or (iii) the presence of any Materials of Environmental
Concern or other condition associated with the Riverboat and Real Property which
could give rise to potential liability under Environmental Laws.
(g) There are no Liens on the Real Property which arose pursuant to
or in connection with any Environmental Law or Environmental Claim and no
government actions have been taken or, to the knowledge of the Company or LLC,
threatened to be taken or are in process which could subject the Real Property
to such Liens.
(h) Schedule 3.20(h) contains a list of each environmental report,
study, analysis, test results or similar items in the possession of the Company
or LLC with respect to the environmental condition of the Real Property
(collectively, the "Company Environmental Reports"). The Company has previously
delivered or made available to Boyd Indiana true and complete copies of each
Company Environmental Report. To the Company's and LLC's knowledge, none of the
matters disclosed by the Company Environmental Reports would,
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individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company and LLC have no knowledge of any facts or
circumstances relating to the environmental condition of any Real Property that
would reasonably be expected to result in a Material Adverse Effect.
Section 3.21 No Condemnation or Expropriation. Neither the whole nor any
portion of the Real Property or any other Assets is subject to any governmental
decree or order to be sold or is being condemned, expropriated or otherwise
taken by any public authority, with or without payment of compensation therefor,
nor has any such condemnation, expropriation or taking been proposed.
Section 3.22 Suppliers. Schedule 3.22 contains a true and complete list
of the names and addresses of the twenty-five (25) largest suppliers (indicating
approximate dollar volume for each) of products and services to the Company
during the twelve (12) months ended December 31, 1998, indicating the existing
contractual arrangements, if any, for continued supply from each such firm.
Neither the Company nor LLC has received any notice of, and knows of no
reasonable basis for, any development which threatens to affect adversely its
arrangements with its suppliers that would reasonably be expected to have a
Material Adverse Effect. There are no supply arrangements between the Company or
LLC and the shareholders of the Company or Affiliates of the shareholders of the
Company which are on terms materially more or less favorable to a such entity
than could be obtained by it in transactions with unaffiliated third parties.
Section 3.23 Contracts and Commitments.
(a) None of the Company, LLC or a Related Entity is party to or
bound by any Contract which is material to the Business or the prospects of the
Business or which involves, or is reasonably likely to involve, the expenditure
or receipt by the Company or LLC after the date of this Agreement of more than
Twenty-Five Thousand and No/100 Dollars ($25,000.00). Subject to obtaining any
required consents, the legal enforceability after the Closing by LLC of the
Material Assumed Contracts will not be affected in any material respect by the
Transfer or the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
(b) No material purchase commitment of any of the Company or LLC, or
by which either of them is bound, is materially in excess of the normal,
ordinary and usual requirements of the Business or, to the knowledge of the
Company or LLC, is at an excessive price.
(c) Neither the Company nor LLC is a party to or bound by (i) any
Contract (other than this Agreement) with its shareholders, members or former
shareholders or members, or any Person known to the Company or LLC to be an
Affiliate of a shareholder, member, or former shareholder or member; (ii) any
Contract with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that is not cancelable by the
Company or LLC, as applicable, at will without liability, penalty or premium;
(iii) any Contract providing for the payment of any bonus or commission based on
sales or earnings; (iv) any Contract that contains any severance or termination
or change in control pay liability or obligation; (v) any Contract for the
purchase or sale of any security (other than this Agreement); (vi) any Contract
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for the borrowing of money (or guarantee of indebtedness); (vii) any Contract
for leasing personal property which requires annual payments in excess of Fifty
Thousand and No/100 Dollars ($50,000.00) or the term of any of which exceeds two
(2) years; (viii) any Contract relating to express product or service
warranties; (ix) any Contract containing a covenant not to compete by the
Company, LLC or a Related Entity; (x) any Contract granting a material Lien,
security interest or other material encumbrance on any property or asset of the
Company, LLC or any Related Entity, other than Permitted Liens; (xi) any
Contract providing for exclusive purchases by or from the Company, LLC or any
Related Entity (with respect to the Business) or containing a requirement
purchase obligation; (xii) any Contract with the City or any other Governmental
Body; (xiii) any Contract providing for administration, service, utilization
review, adjustment, claims management or similar functions relating to
insurance, litigation or Plans of the Company, LLC or any Related Entity (with
respect to the Business); or (xiv) any Contract for the sale of any of the
Assets or rights of the Company, LLC or any Related Entity (with respect to the
Business) outside of the ordinary course of business, except as contemplated by
this Agreement.
(d) None of the Company, LLC or a Related Entity (with respect to
the Business) has given any power of attorney (whether revocable or irrevocable)
to any Person that is or may hereafter be in force for any purpose whatsoever.
(e) None of the Company, LLC or a Related Entity (with respect to
the Business) is paying, or has any obligation to pay, any pension, deferred
compensation or retirement allowance to any Person.
(f) Schedule 3.23(f) contains (i) a true and complete list of any
Contract providing for aggregate payments to or by the Company or LLC in excess
of Fifty Thousand and No/100 Dollars ($50,000.00) and any other Contract that is
necessary to operate the Business and (ii) a separate list or indication setting
forth any such Contract in (i) that will be a Material Assumed Contract
("Material Assumed Contract"). In addition to the updating permitted by Section
5.7, upon mutual agreement of the Company and Boyd Indiana, Schedule 3.23(f) may
be amended after the date of this Agreement to add additional agreements as
Material Assumed Contracts. Each Material Assumed Contract of the Company is
valid and binding upon such entity and, to the knowledge of the Company and LLC,
is valid and binding upon each other party thereto, and is in full force and
effect and enforceable by the Company or LLC, as applicable, in accordance with
its terms (except as such enforceability may be affected by bankruptcy,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by general principles of equity). Each of the Company and, after the
Transfer Date as to any Material Assumed Contract, LLC, has performed all
material obligations required to be performed by it under each Material Assumed
Contract to which such entity is a party, and there has been no breach or
default or claim of default by such entity or, to the knowledge of the Company
or LLC by any other party thereto, under any provision thereof and no event has
occurred which, with or without notice, the passage of time or both, would
constitute a default by the Company or, after the Transfer Date as to any
Material Assumed Contract, LLC, or, to the knowledge of the Company and LLC any
other party thereto, under any provision thereof or which would permit
modification, acceleration or termination of any Material Assumed Contract by
any other party thereto or by the Company or LLC, except for such defaults which
in the aggregate would not reasonably be expected to have a Material Adverse
Effect.
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(g) The Construction Contracts are in full force and effect and
enforceable by the Company and, after the Transfer Date, LLC in accordance with
their terms (except as such enforceability may be affected by bankruptcy,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by general principles of equity). Each of the Company and, after the
Transfer Date, LLC has performed all material obligations required to be
performed by it under the Construction Contracts, and there has been no breach
or default or claim of default by the Company, or after the Transfer Date, LLC,
or, to the knowledge of the Company or LLC, by any other party thereto, under
any provision thereof and no event has occurred which, with or without notice,
the passage of time or both, would constitute a default by the Company or LLC
or, to the knowledge of the Company or LLC, any other party thereto, under any
provision thereof or which would permit modification, acceleration or
termination of the Construction Contracts by any other party thereto or by the
Company or LLC. To the knowledge of the Company or LLC, there are no facts or
circumstances that exist which would reasonably be expected to cause the Hotel
Construction Budget to exceed Eighteen Million Six Hundred Ten Thousand Six
Hundred Thirty-Four and No/100 Dollars ($18,610,634.00) (the "Maximum Hotel
Cost"). The Company has full power and authority to assign the Construction
Contracts to LLC pursuant to the Assignment of Contracts.
(h) True, complete and correct copies of each of the Contracts set
forth in Schedule 3.23(f) have heretofore been provided to Boyd Indiana by the
Company.
Section 3.24 Compliance with Applicable Laws.
(a) (i) Each of the Company and LLC and their Affiliates has in the
past complied and is presently complying with all applicable Laws except for
such failures to comply that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; (ii) none of the
Company, LLC or a Related Entity has received notification of any asserted
present or past failure to so comply; and (iii) to the knowledge of the Company
and LLC, each of the Company and LLC is in compliance in all material respects
with all applicable Laws governing or relating to the current or contemplated
casino and gaming activities and operations of the Company and LLC, including
without limitation all Gaming Laws.
(b) To the knowledge of the Company, the Company has and will have
in effect until the Transfer Date, and LLC will have in effect after the
Transfer Date, all Governmental Approvals necessary for them to acquire, own,
lease or operate the Assets and to carry on the Business as now conducted other
than such Governmental Approvals the absence of which would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, and
there has occurred no default under any such Governmental Approval other than
such defaults which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. The Company has obtained and
maintained and will maintain until the Transfer Date, and after the Transfer
Date, LLC will obtain and maintain, in full force and effect all United States
Coast Guard permits and approvals, United States Army Corps of Engineers permits
and approvals and all other material Governmental Approvals, certificates,
licenses and permits necessary to operate (including all matters related to the
cruising schedule and route) and dock the Riverboat in the manner in which it is
currently operated. The Riverboat has been operated in material compliance with
all United States Coast Guard documentation and inspection requirements and the
Riverboat is, as of the Transfer Date entitled to be, documented
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as a vessel of the United States and authorized to engage in the trade in which
the vessel is operating. The Company has complied, and will comply until the
Transfer Date, and has caused, and will cause until the Transfer Date, the
Riverboat to comply, and, after the Transfer Date, LLC will comply and will
cause the Riverboat to comply, in all material respects with all Laws and
Governmental Approvals applicable to the ownership or operation of the
Riverboat.
(c) The Company holds, and will hold until the Transfer Date, and,
after the Transfer Date, LLC will hold, the Gaming License, and the Gaming
License is in full force and effect and has not been revoked or suspended, and
there has occurred no material violation under the Gaming License. The Company
has maintained and will maintain until the Transfer Date, and, after the
Transfer Date, LLC will maintain, at all times reserves for working capital,
capital improvements, replacements and/or contingencies to the extent, and in
the amounts, required by the Gaming Laws, including the cash reserve
requirements thereunder.
(d) Neither the Company nor any Affiliate of the Company has (i)
ever applied for a casino, racing or other gaming license in any state or other
jurisdiction and been denied; (ii) experienced any revocation or failure to
renew any such license; or (iii) not applied for any such license or renewal
after being informed orally or in writing by any regulatory authority in any
state or other jurisdiction, or any representative of such regulatory authority,
that the Company or such Affiliate of the Company, as the case may be, would be
denied such a license or renewal if it were applied for.
(e) The Company has given and will provide Boyd Indiana access to
any of the following in the Company's possession: (i) copies of all material
correspondence between the Indiana Gaming Commission and the Company relating to
the Company's compliance with the rules and regulations of the Indiana Gaming
Commission and the terms of the Gaming License or the transfer to LLC of the
Gaming License; (ii) a true and complete copy of the Company's and LLC's Gaming
Application for an Owner's License filed with the Indiana Gaming Commission
(excluding Personal Disclosure Forms of the Company's shareholders or LLC's
members, as applicable), and any and all amendments, renewals and updates made
thereto; and (iii) all correspondence between the Indiana Gaming Commission and
the LLC. Except as disclosed in such correspondence and such applications,
neither the Company nor LLC is aware of any facts or circumstances relating to
the conduct of the Company or LLC, or any director, officer, employee, member or
shareholder of the Company or LLC that would reasonably be expected to cause the
Indiana Gaming Commission to revoke, suspend or fail to renew the Gaming License
(or transfer the Gaming License to LLC) or take disciplinary action against the
Company, LLC, any Related Entity or any shareholder or equityholder thereof.
(f) Neither Company nor LLC, nor, to the Company's and LLC's
knowledge, any of their Affiliates, has made any payments to any Person in
connection with the Business, which payments violate applicable Law, including
without limitation the Foreign Corrupt Practices Act.
Section 3.25 Bank Accounts. Schedule 3.25 sets forth the names and
locations of all banks in which LLC has a bank account or safe deposit box, if
any, and the names of all Persons authorized to draw thereon or to have access
thereto. At the Closing, the Company and LLC will deliver to Boyd Indiana copies
of all records, if any, including all signature or authorization cards,
pertaining to such bank accounts and safe deposit boxes.
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Section 3.26 Assets Necessary to Business. The Company has and will have
until the Transfer Date, and after the Transfer Date LLC will have, good, valid
and marketable title to all material property and assets, real, personal and
mixed, tangible and intangible, and all leases, licenses and other agreements,
necessary to permit LLC to carry on the Business as presently conducted.
Section 3.27 Commissions. There are no claims for brokerage commissions
or finder's fees incurred by reason of any action taken by any of the Company,
LLC, any Related Entity or any shareholder or member thereof.
Section 3.28 Disclosure of All Material Facts. The Company and LLC have
disclosed to Boyd Indiana in writing in or pursuant to this Agreement all
information requested by Boyd Indiana. No representation or warranty to Boyd
Indiana contained herein, and no statement contained in any certificate,
schedule, list or other writing furnished to Boyd Indiana pursuant to the
provisions of this Agreement, when considered in the context of the other
representations, warranties, statements and information so delivered, contains
any untrue statement of a material fact or omits to state a material fact which
is necessary in order to make the information given by or on behalf of the
Company or LLC to Boyd Indiana or their representatives prior to the Closing not
misleading.
Section 3.29 City Matters.
(a) The transactions contemplated hereby, including the Transfer to
LLC and the sale of the LLC Units to Boyd Indiana, do not and will not violate
or constitute a default under any Contracts between the City and any of the
Company, LLC, any Related Entity or a shareholder or member thereof, including
without limitation, the Development Agreement.
(b) None of the Company, LLC or any Related Entity is, nor will be
as of the Closing Date, in material breach or violation of any such Contract
referenced in Section 3.29(a).
(c) The City has not asserted the existence of any violation, breach
or default under any such Contract referenced in Section 3.29(a). The City has
not made any such assertion with regard to which the assertion (in light of the
likelihood that the City will take further action in connection therewith) or
the alleged violation (in light of the likelihood that the assertion is correct
and the consequences if it is correct) would reasonably be expected to have a
Material Adverse Effect.
(d) The Development Agreement is in full force and effect and
enforceable by the Company until the Transfer, and, after the Transfer, by LLC,
in accordance with its terms except as such enforceability may be affected by
bankruptcy, reorganization, moratorium or similar laws generally affecting
creditor's rights and by general principles of equity. The Company and LLC have
performed all material obligations required to be performed by either of them to
date under the Development Agreement, and there has been no breach or default or
claim of default by the Company or LLC or, to the knowledge of the Company or
LLC, by any other party thereto under any provision thereof, and no event has
occurred which, with or without notice, the passage of time or both, would
constitute a default by the Company or LLC, to the knowledge of the Company or
LLC, any other party thereto under any provision thereof or which would permit
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modification, acceleration or termination of the Development Agreement by any
other party thereto or by the Company or LLC. Through March 31, 1999, the
Company had expended the amount shown on Schedule 3.29(d) on the Hotel. As of
the date of this Agreement, the Company has expended an amount in excess of that
required by Section 2.6 of the Development Agreement relating to land
acquisition, the "On-Site and Off Site Improvement Work" and the "Riverboat
Complex Work" (as such quoted terms are defined in the Development Agreement).
The City has approved the Plans and Specifications and all applicable appeal
periods to such approval have expired. The Company has full power and authority
to assign the Development Agreement to LLC pursuant to the Assignment of
Development Agreement.
Section 3.30 Year 2000. All material software, hardware, systems,
computer systems, equipment and other business processes (collectively, the
"Systems") of or utilized by the Company or LLC in, and material to the
operation of, the Business are Year 2000 Compliant in all material respects. The
Company or LLC has received assurances from the lessors or licensors of all such
systems owned by others and used by the Company or LLC in the Business that such
systems are Year 2000 Compliant in all material respects. "Year 2000 Compliant"
shall mean that the occurrence in or use by any System of dates on or after
January 1, 2000 ("Millennial Dates") will not adversely affect its performance
at any level with respect to date-dependent data, computations, output or other
functions (including, without limitation, calculating, comparing and
sequencing).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BOYD INDIANA AND BGC
Except as set forth in the corresponding subsection of the disclosure
letter delivered to the Company, LLC and each Individual Covenantor at or prior
to the execution of this Agreement (the "Buyer's Disclosure Schedule"), Boyd
Indiana and BGC, jointly and severally, represent and warrant to the Company,
LLC and each Individual Covenantor, as of the date of this Agreement and as of
the Closing Date (unless a contrary date is indicated below), as follows:
Section 4.1 Organization. BGC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Boyd
Indiana is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana.
Section 4.2 Authority. Each of BGC and Boyd Indiana has the corporate
power and authority to execute, deliver and perform this Agreement and the other
instruments and documents required or contemplated hereby. BGC and Boyd Indiana
will each deliver to the Company prior to the Closing a complete and correct
copy, certified by its Secretary, of the resolutions heretofore duly and validly
adopted by its Board of Directors evidencing such authorization (which
resolutions will not have been rescinded prior to and will be in full force and
effect on the date of the Closing). No other corporate act or proceeding on the
part of Boyd Indiana, BGC or their respective shareholders is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Boyd Indiana and BGC pursuant hereto or the transactions
contemplated hereby or thereby.
Section 4.3 Binding Effect, No Violation, Consents. This Agreement
constitutes, and, when executed and delivered, the other documents, instruments
or third party approvals to be executed and delivered by Boyd Indiana and BGC
pursuant hereto will constitute, valid and
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binding agreements of Boyd Indiana and BGC, enforceable in accordance with their
respective terms (except as such enforceability may be affected by bankruptcy,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by general principles of equity), and (assuming receipt of the consents,
approvals and authorizations specifically contemplated by the next sentence)
neither the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Boyd Indiana or BGC pursuant hereto,
nor the consummation by Boyd Indiana and BGC of the transactions contemplated
hereby or thereby will (i) violate or conflict with or result in any breach of
any provision of the Articles of Incorporation or Bylaws of Boyd Indiana or BGC;
(ii) violate or conflict with or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under or will
result in the termination of, or accelerate the performance required by, or
result in the creation of any Lien upon any of the assets under, any Contract to
which Boyd Indiana or BGC is a party or by which its assets or properties may be
bound or affected; or (iii) violate any Law applicable to BGC and Boyd Indiana,
excluding from the foregoing clauses (ii) and (iii) such defaults, rights and
violations which, in the aggregate, would not reasonably be expected to have a
material adverse effect on the ability of Boyd Indiana or BGC to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby. Except for the consents required under the Gaming Laws, the consent of
the City under the Development Agreement and the applicable requirements of the
HSR Act, the consent of the United States Coast Guard to the transfer of the
Riverboat, and the consents of the Army Corps of Engineers and the Indiana
Department of Natural Resources, no Governmental Approval or consent, approval,
authorization or action by, notice to or filings with any other Person is
required in connection with the execution of this Agreement, the other documents
and instruments to be executed and delivered by Boyd Indiana and BGC pursuant
hereto or the consummation by Boyd Indiana and BGC of the transactions
contemplated hereby or thereby, except in the case of consents, approvals,
authorizations, actions or filings where the failure to obtain such consents and
approvals and give such notice or make such filing would not reasonably be
expected to have a material adverse effect on the ability of Boyd Indiana and
BGC to perform their respective obligations under this Agreement or to
consummate the transactions contemplated hereby.
Section 4.4 Litigation. There are no claims, actions, suits, proceedings
or investigations pending or threatened by or against Boyd Indiana or BGC, at
law or in equity or before or by any Governmental Body, other than claims,
actions, suits, proceedings or investigations pending or threatened which
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on the ability of Boyd Indiana and BGC to perform their
obligations under this Agreement or to consummate the transactions contemplated
hereby, and neither Boyd Indiana nor BGC knows or has any reason to know of any
basis for any such claim, action, suit, proceeding or investigation.
Section 4.5 Commissions. There are no claims for brokerage commissions
or finder's fees incurred by reason of any action taken by Boyd Indiana or BGC
in connection with the transactions contemplated by this Agreement.
Section 4.6 Disclosure of All Material Facts. No representation or
warranty of Boyd Indiana or BGC contained herein, and no statement contained in
any certificate, schedule, list or other writing furnished to the Company, LLC
or any Individual Covenantor pursuant to the
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provisions of this Agreement, when considered in the context of the other
representations, warranties, statements and information so delivered, contains
any untrue statement of a material fact or omits to state a material fact which
is necessary in order to make the information given by or on behalf of Boyd
Indiana or BGC to the Company, LLC or any Individual Covenantor, or their
respective representatives prior to the Closing not misleading.
ARTICLE V
COVENANTS OF THE COMPANY AND LLC
Each of the Company and LLC covenants and agrees with Boyd Indiana that,
from the date hereof until the Closing, it will do (or cause to be done) the
following:
Section 5.1 Operation of the Business. Other than as disclosed in
Schedule 5.1, each of the Company and LLC (i) will conduct its respective
business (including, without limitation, the management of Working Capital)
diligently, only in the ordinary course and substantially in the same manner as
heretofore conducted; provided, however, that (A) the Company and LLC may
declare and pay certain cash dividends or cash distributions prior to the
Closing in amounts greater than such entity has paid historically, so long as
the LLC Closing Date Working Capital Amount shall be greater than or equal to
Zero and No/100 Dollars ($0.00) and (B) that the Company and LLC may take such
actions outside the ordinary course of business as required by Law or as
expressly contemplated or required by this Agreement, including the transfer to
LLC of the Assets and the assumption by LLC of the Assumed Liabilities and (ii)
will obtain Boyd Indiana's consent to any business decision reasonably likely to
have a material financial or operational effect on the Business, the Company or
LLC. Without limiting the foregoing, unless Boyd Indiana otherwise consents in
advance in writing and except as disclosed in Schedule 5.1:
(a) The Company and LLC will give prompt notice to Boyd Indiana of
(i) any breach or default (or notice thereof) of any Material Assumed Contract
or (ii) any event that has resulted or would reasonably be expected to result in
a Material Adverse Effect.
(b) The Company and LLC will not incur or guarantee any obligation
or liability (whether absolute, accrued, contingent or otherwise and whether due
or to become due) material to the Business, the Company or LLC or enter into any
Contract that (had such Contract been in existence on the date hereof) would
have been required to be set forth as a Material Assumed Contract on Schedule
3.23(f) or amend any of their respective Articles of Incorporation, Bylaws,
Articles of Organization, operating agreements or other organizational or
governing documents, as applicable.
(c) The Company and LLC will (i) make such capital expenditures as
are necessary to maintain its Assets and Business consistent with past-practice
in accordance with existing commitments and (ii) not make other capital
expenditures except (A) with the prior written consent of Boyd Indiana (which
Boyd Indiana shall not unreasonably withhold with respect to capital
expenditures that do not involve any post-Closing liability to or obligation or
commitment of LLC or Boyd Indiana) ("Approved Capital Expenditures"); or (B) as
required to meet an emergency (it being understood and agreed that the Company
shall promptly notify Boyd Indiana of any such emergency and the emergency
expenditures and other actions to be taken by the Company and LLC in response
thereto).
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(d) Except as set forth in Schedule 5.1(d), neither the Company nor
LLC will pay, discharge or satisfy any material Lien or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due),
other than liabilities shown on the Company Balance Sheet, Excluded Liabilities,
and liabilities incurred after the date thereof in the ordinary course of
business in normal amounts, and no such payment, discharge or satisfaction shall
be effected other than in accordance with the ordinary payment terms relating to
the liability paid, discharged or satisfied.
(e) Neither Company nor LLC will permit or allow any of their
respective properties or assets, real, personal or mixed, tangible or
intangible, to be subjected to any material Lien, except for any Permitted
Liens.
(f) Except as set forth in Schedule 5.1(f), neither the Company nor
LLC will cancel any debts or claims except in the ordinary course of business
and consistent with past practice, or waive any rights of material value or,
except for inventory sold in the ordinary course of business, disposal of
obsolete assets and the transfer of the Assets in accordance with this
Agreement, sell, transfer or convey any of their respective properties or
assets, real, personal or mixed, tangible or intangible, except in the ordinary
course of business consistent with past practice and except for Excluded Assets
and Excluded Liabilities.
(g) Neither the Company nor LLC will dispose of or permit to lapse
any material Intellectual Property other than the transfer to LLC of the
Intellectual Property as contemplated by this Agreement.
(h) Except as provided in Section 3.19, neither the Company nor LLC
will adopt, amend or terminate any Benefit Plan, except as required by law and
will not enter into any employment contract or compensation arrangement of any
kind whatsoever, or change (including, without limitation, any change pursuant
to any bonus, pension, profit-sharing or other plan, commitment, policy or
arrangement) the compensation payable or to become payable to any of their
respective officers, directors, employees or agents, except for such changes
which are in the ordinary course of business and are not material or are
required by law. No ERISA Affiliate will take any of the actions described in
this Section 5.1(h) with respect to any defined benefit pension plan.
(i) None of the Company, LLC or any ERISA Affiliate will make any
pension, retirement, profit-sharing, bonus or other employee welfare or benefit
payment or contribution, other than in the ordinary course of business and
consistent with past practice except that the Company may accelerate bonus and
401(k) plan payments (but not vesting under the 401(k) plan), provided that all
such payments are fully reflected in the computation of the LLC Preliminary
Working Capital Amount.
(j) Neither the Company nor LLC will declare, pay or make, or set
aside for payment or making, any dividend or other distribution (other than cash
dividends or distributions) in respect of its capital stock, Units or other
securities, or directly or indirectly redeem, purchase or otherwise acquire any
of the capital stock or other securities of either of such entities.
(k) LLC will not subdivide or in any way reclassify the LLC Units.
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(l) LLC will not (i) issue, grant or sell any Units or any equity
interest or security or (ii) issue, grant or sell any security, option, warrant,
call, subscription or other right of any kind, fixed or contingent, that
directly or indirectly calls for the issuance, sale, pledge or other disposition
of any equity interest or security.
(m) Neither Company nor LLC will make any change in any accounting
principles, practices or methods, including their principles, practices or
methods relating to calculation of reserves for receivables.
(n) Other than the transfer of the Assets referred to in Section 2.1
and the termination of the Contracts referred to in Section 2.7, in each case in
accordance with this Agreement, neither the Company nor LLC will pay, loan, or
advance any amount to or in respect of, or sell, transfer or lease any property
or assets (real, personal or mixed, tangible or intangible) to, or enter into
any transaction with or for the benefit of, any of their respective officers,
directors or managers or any Affiliate of any of their respective officers,
directors, managers or any of the shareholders or members or any Affiliate of
any of its shareholders or members.
(o) Neither the Company nor LLC will enter into any lease of real
property or material lease of personal property (other than, in the case of
leases that would otherwise expire and that constitute an Assumed Contract,
renewals thereof or the entering into of a replacement lease as provided in
Section 5.1(p)), without Boyd Indiana's consent, provided that, if the Company
does not enter into such a lease (including any such renewal) as a result of
Boyd Indiana's refusal to consent to such lease, the failure to enter into such
lease will not be deemed to constitute a violation of this Section 5.1.
(p) Except as provided in Section 3.23, neither the Company nor LLC
will terminate or amend, or fail to perform any of its material obligations or
cause any material breach under, any Assumed Contract. In the event that an
Assumed Contract is scheduled to terminate prior to the Closing Date, the
Company will notify Boyd Indiana and will consult with Boyd Indiana as to
whether such a contract or program should be renewed. If it is determined that
any such Assumed Contract should be renewed, the Company and LLC will exercise
all commercially reasonable efforts to renew such Assumed Contract.
(q) Each of the Company and LLC will use all commercially reasonable
efforts to preserve intact the existing relationships with its suppliers,
customers and employees and others with which it has business relationships and
shall continue marketing programs, billboard advertisements, promotions,
advertising, level of complementary rooms and benefits, player tournaments and
events, bus programs and similar activities in the ordinary course of business
consistent with past practice. In that regard, the Company and LLC will not
curtail marketing expenditures from historic levels, and will preserve billboard
leases, marketing contracts and bus programs. In the event a billboard,
marketing contract or bus program is subject to renewal, the Company will notify
Boyd Indiana and will consult with Boyd Indiana as to whether such a contract or
program should be renewed. The Company and LLC will permit Boyd Indiana, in
consultation and cooperation with the representatives of such entities, to
contact suppliers, customers and employees. The Company agrees to work with Boyd
Indiana to facilitate a transition marketing program that will insure sufficient
marketing programs exist for the operation of the Business by Boyd Indiana and
LLC after the Closing Date (the "Transition
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Marketing Program"). Beginning not later than sixty (60) days prior to the
estimated Closing Date, the Company and Boyd Indiana will implement such
marketing programs, surveys, promotions, advertising and similar activities
reasonably requested by Boyd Indiana in connection with the Transition Marketing
Program, and Boyd Indiana will pay all out-of-pocket expenses of implementing
the Transition Marketing Program to the extent such expenses are in excess of
historical level expenditures.
(r) Each of the Company and LLC will maintain (or replace with
substantially similar coverage or increased coverage as required by the Gaming
Commission) the insurance referred to in Schedule 3.16(a).
(s) Each of the Company and LLC will duly comply in all material
respects with all Laws applicable to such entity and its properties, operations,
business and employees, except for failures to comply that in the aggregate
would not reasonably be expected to have a Material Adverse Effect. The Company
and LLC will maintain at all times reserves for working capital, capital
improvement, replacements and/or contingencies to the extent, and in the
amounts, required by all applicable Gaming Laws. The Company, and LLC after the
transfer of the Assets, will own and operate the Riverboat at all times in
material compliance with its United States Coast Guard marine document and all
applicable stability letters. The Company, and LLC after the transfer of the
Assets, will maintain the Riverboat in good working order, subject to ordinary
wear and tear, in accordance with the past practice of the Company. The Company,
and LLC after the transfer of Assets, will comply, and cause the Riverboat to
comply, in all material respects with all Laws or Governmental Approvals
applicable to the ownership or operation of the Riverboat, except for failures
to comply that in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
(t) Neither the Company nor LLC will change any of the Company's
current policies or practices relating to the extension of credit to customers
or the collection from customers of receivables arising from gaming operations.
Section 5.2 Access. The Company and LLC will permit Boyd Indiana and
their authorized representatives at all reasonable times, and upon reasonable
notice, to have access to and to examine all premises, properties, and Books and
Records and other information of the Company and LLC (including the right to
make extracts therefrom or copies thereof), and will cooperate with Boyd Indiana
in their investigation of the Company and LLC. Each of the Company and LLC will
permit representatives of Boyd Indiana to consult with its management personnel
concerning all financial and operational matters relating to the Company, LLC or
the Business and will make available its management personnel to consult with
such representatives. The Company and LLC will promptly furnish to Boyd Indiana
all existing surveys and title and lien searches, examinations, binders and
commitments as are reasonably available. The Company and LLC will promptly
furnish to Boyd Indiana such other documents relevant to the transaction
contemplated hereby as may reasonably be requested from time to time.
Section 5.3 Existence. Except as expressly contemplated by and in
accordance with Section 2.1, the Company and LLC will take such action as may be
necessary to maintain, preserve, renew and keep in full force and effect each
such entity's existence (corporate or otherwise), rights and franchises and will
not amend its Articles of Incorporation or Bylaws,
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Articles of Organization, operating agreement or other applicable organizational
or governing document.
Section 5.4 Consents. The Company and LLC shall use their reasonable
best efforts to, at the expense of the parties as provided in Section 13.2,
obtain prior to the Closing all material consents, other than Governmental
Approvals which are governed by Section 5.5, necessary to the consummation of
the transactions contemplated hereby, including, without limitation, such other
material non-governmental consents as Boyd Indiana or their counsel shall
reasonably determine to be necessary, including any required consents to the
assignment of the Material Assumed Contracts. All such consents shall be in
writing, and executed counterparts thereof shall be delivered to Boyd Indiana
promptly after receipt thereof by the Company or LLC but in no event later than
immediately prior to the Closing.
Section 5.5 Governmental Approvals. Each of the Company and LLC will, at
the expense of the parties as provided in Section 13.2, respectively, as
promptly as practicable, make any required governmental filings, including
filings pursuant to the Gaming Laws and the HSR Act, obtain any required
Governmental Approvals, including the consent of the City and those Governmental
Approvals set forth in Section 8.7, and comply with any applicable governmental
waiting periods, notification or other procedures required to be complied with
by it in connection with the transactions contemplated by this Agreement,
including the Transfer, other then any failures to do the foregoing that
individually, or in the aggregate, would not reasonably be likely to have a
Material Adverse Effect.
Section 5.6 Performance. The Company and LLC will perform all acts to be
performed by them pursuant to this Agreement and will refrain from taking or
omitting to take any action that would violate the Company's or LLC's
representations and warranties hereunder or render them inaccurate in any
material respect as of the date hereof or the Closing Date or that in any way
would prevent or materially adversely affect the consummation of the
transactions contemplated hereby. The Company and LLC will use all commercially
reasonable efforts to satisfy or cause to be satisfied all the conditions to the
obligations of Boyd Indiana set forth in Article VIII.
Section 5.7 Updating of Information. Each of the Company and LLC shall
have the continuing obligation to supplement or amend, within a reasonable
period of time prior to the Closing Date, the Company/LLC Disclosure Schedule
and other Schedules being delivered by it concurrently with the execution of
this Agreement and annexed hereto with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in the Schedules and, except as
set forth in the following proviso, any such supplement or amendment shall be
deemed to modify the applicable representation and warranty made by the Company
or LLC hereunder; provided, however, that such supplement or amendment of the
Company/LLC Disclosure Schedule or Schedules shall not modify the
representations and warranties made by the Company or LLC hereunder (i) for
purposes of satisfying the condition set forth in Section 8.1 or for the
purposes of Article XII to the extent that such matter was known or should
reasonably have been expected to have been known by the Company or LLC on the
date of this Agreement or (ii) for the purposes of Article XII to the extent the
matter arose after the date of this Agreement and any liability
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associated therewith is reflected (but only to the extent reflected) in the
computation of the LLC Closing Date Working Capital Amount.
Section 5.8 Tax Status. The status of the Company as an S corporation
and of LLC as a Disregarded Entity for federal and state Income Tax purposes
will be maintained.
Section 5.9 Monthly Financial Statements; Weekly Gaming Revenue Reports;
Employment Information Updates.
(a) The Company and LLC will deliver to Boyd Indiana promptly after
they become available and in any case within thirty (30) days after the end of
each calendar month, an unaudited balance sheet of each of the Company and LLC
as of the end of such month and unaudited statements of income of each of the
Company and LLC for the one (1) month period then ending and the period since
January 1, 1999. Such balance sheets and statements of income of the Company
shall be in the form currently prepared by the Company. All such balance sheets
and statements of income shall be prepared in good faith, consistent with prior
periods and derived from the books and records of the Company and LLC.
(b) The Company and LLC will deliver to Boyd Indiana, promptly after
they become available and in any case within five (5) days after the end of each
week, reports setting forth the gross gaming win of the Company or LLC, as
applicable, during such week. Such reports shall be prepared in good faith,
consistent with prior periods and derived from the Books and Records of the
Company and LLC.
(c) The Company and LLC will deliver to Boyd Indiana monthly reports
setting forth all hirings of, terminations of and resignations by employees of
the Company or LLC, as applicable, which reports shall specify (i) the age,
gender and race (if known) of each employee; (ii) the date of termination or
resignation; and (iii) the stated reason or cause (if known) for such
termination or resignation.
Section 5.10 Other Transactions. Except as expressly contemplated by
this Agreement, from the date of this Agreement to the Closing, none of the
Company, LLC or (to the extent within the control of the Company or LLC) any of
their Affiliates shall, nor shall they permit any of their respective officers,
directors, stockholders, equityholders or other representatives to, directly or
indirectly, encourage, solicit, initiate or participate in discussions or
negotiations with, or provide any information or assistance to, any person or
group (other than Boyd Indiana and their representatives) concerning any merger,
sale of securities, sale of substantial assets or similar transaction involving
any of the Company or LLC. In the event that any of the Company, LLC or any of
their Affiliates receives a proposal relating to any such transaction, the party
receiving such a proposal shall promptly notify Boyd Indiana of such proposal.
Section 5.11 Owner's Affidavits. The Company shall deliver to the title
insurance companies issuing the Title Policy to LLC such customary owner's
affidavits as reasonably requested by Boyd Indiana or the Title Company as will
enable the Title Company to issue the Title Policy in the form set forth in
Section 2.1(a) above.
Section 5.12 Confidentiality of Information. Each of the BGC and Boyd
Indiana, on the one hand, and the Company, LLC and the Individual Covenantors,
on the other hand, and their
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respective representatives and employees, shall keep strictly confidential and
shall not disclose or use, except as required by Law, for any purpose other than
this Agreement and the transactions contemplated hereby, any and all
confidential and proprietary information ("Confidential Information") disclosed
by any of the parties (an "Informing Party") to any other party (an "Informed
Party") or learned by the Informed Party from the premises, properties,
personnel, books and records or Contracts to which it is given access. Each
party shall limit disclosure of Confidential Information to its representatives,
lenders and potential financing sources, financial advisors and employees on a
need to know basis. The term "Confidential Information" does not include the
generalized know-how with respect to the gaming business or methods of operation
that are common in the industry or generally known to the public or employees of
Persons engaged in restaurant, hotel, gambling, casino, riverboat or gaming
operations or information which (i) is or becomes generally available to the
public other than as a result of a disclosure by the Informed Party or its
representatives; (ii) was available to the Informed Party on a non-confidential
basis prior to its disclosure to the Informed Party by the Informing Party or
its representatives; or (iii) becomes available to the Informed Party on a
non-confidential basis from a source other than the Informing Party or its
representatives; provided, however, that such source is not bound by a
confidentiality agreement with the Informing Party or its representatives. This
Section 5.12 shall supersede the Confidentiality Agreement dated April 5, 1999,
between BGC and the Company. Each of the parties shall ensure that its
representatives and employees comply with this Section 5.12. This Section 5.12
shall survive Closing; provided, however, that Confidential Information relating
to the Business and LLC shall be deemed Confidential Information of Boyd Indiana
as of Closing.
Section 5.13 Shareholder Meeting. The Company shall call a meeting of
its shareholders to be held as promptly as practicable for the purpose of voting
upon the approval of this Agreement and the transactions contemplated
thereunder, including the Transfer, and the actions of the Company in connection
with such shareholders' meeting, including all disclosures made to shareholders
in connection therewith, shall comply with applicable law. The Company will,
through its Board of Directors, recommend to its shareholders approval of such
matters. Each individual or entity executing this Agreement, to the extent such
individual is a shareholder of the Company, agrees to vote all of such Person's
shares of Company stock in favor of this Agreement and the transactions
contemplated hereby, including the Transfer.
Section 5.14 Governmental Transfer Approvals. The Company shall, at the
expense of the parties as provided in Section 13.2, use its commercially
reasonable efforts to obtain any and all Governmental Approvals necessary to
permit the Transfer, and the change of control in LLC upon the purchase and sale
of the LLC Units to Boyd Indiana, including, but not limited to, the consents
set forth in Sections 2.2 and 8.7 hereof. All such consents shall be in writing,
and executed counterparts thereof shall be delivered to Boyd Indiana promptly
after receipt by the Company or LLC, but in no event later than immediately
prior to the Closing.
Section 5.15 LLC Organization Documents. The Company has provided to
Boyd Indiana drafts of the Articles of Organization, operating agreement and
other organizational documents and related filings of LLC and permitted Boyd
Indiana to comment on such documents prior to their being finalized.
Section 5.16 Indebtedness. LLC will not have any Indebtedness as of the
Closing Date.
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Section 5.17 Employees. Upon execution of this Agreement, the Company
and Boyd Indiana shall hold joint meetings with all employees of the Company to
provide preliminary information relating to this transaction, and thereafter,
the Company shall provide Boyd Indiana with access to all employees of the
Company upon the terms and conditions set forth in this Agreement. Without
limiting the foregoing, Boyd Indiana shall be entitled to conduct one-on-one
meetings with all employees of the Company employed by the Company on or after
the date of this Agreement at such times as Boyd Indiana shall reasonably
request and at space provided by the Company at the Owned Property or at such
other location as shall be reasonably acceptable to Boyd Indiana. In connection
therewith, the Company shall provide Boyd Indiana with access to complete
personnel files of all employees of the Company employed by the Company on or
after the date of this Agreement. Upon execution of this Agreement, the Company
shall also provide Boyd Indiana with space at the Owned Property upon which Boyd
Indiana shall be entitled to establish an information center to be staffed and
equipped by Boyd Indiana at its sole cost and expense. Boyd Indiana shall also
be entitled to make, at Boyd Indiana's sole cost and expense, general
distributions to all employees of newsletters, company brochures and other
information relating to this transaction or to BGC and the operations of it and
its subsidiaries. Such distributions may include distributions through the
information center or by direct mail to the employees. In consideration of the
resignations, effective as of the Closing Date, of those employees associated
with its Chicago office listed on Schedule 5.17, Boyd Indiana will make the
resignation payments set forth in Schedule 5.17. The Company will also terminate
the existing employment agreement with Joseph McQuaid, effective on the Closing
in exchange for the termination payment to be made to Mr. McQuaid by Boyd
Indiana as described in Schedule 5.17. The Company will also terminate the
employment agreement with Kevin Larson, effective as of the Closing Date, in
consideration of Boyd Indiana's undertaking to agree to the transition
employment arrangement and severance payment with Mr. Larson described in
Schedule 5.17.
Section 5.18 Potential Land Transfer. In the event that at any time
prior to the Transfer Date, the Company obtains fee title to all of that certain
real property located in the City of Michigan City, County of La Porte, State of
Indiana and more particularly described on Schedule 5.18 (the "Potential Land"),
then the Company shall have the right to transfer the Potential Land to LLC on
the terms and conditions set forth herein. Immediately following the acquisition
of the Potential Land by the Company, the Company shall provide Boyd Indiana
with written notice thereof (the "Notice of Acquisition"). Upon Boyd Indiana's
receipt of the Notice of Acquisition, the Company Closing Payment shall
automatically be increased by the amount of the Potential Land Price and,
subject to the terms and conditions of this Section 5.18, Boyd Indiana shall be
obligated to accept the Potential Land as part of the Owned Property. Boyd
Indiana shall have a period (the "Potential Land Inspection Period") of sixty
(60) days after Boyd Indiana's receipt of the Notice of Acquisition, but in no
event later than two (2) days prior to the Closing Date, to approve or
disapprove the Potential Land and make such inspections, conduct such testing
and investigate all other matters relating to the Potential Land as Boyd
Indiana's consultants deem advisable including, but not limited to, reviewing
the state of title and conducting environmental investigations. Boyd Indiana's
right to disapprove the Potential Land pursuant to this Section 5.18 shall be
limited to the existence of one or more title encumbrance or environmental
matters that, in the aggregate, materially decreases the value of the Potential
Land. On or before the last day of the Potential Land Inspection Period, Boyd
Indiana shall deliver written notice to the Company of its approval or
disapproval of the Potential Land. In the event that Boyd Indiana
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approves the Potential Land, then (a) the Potential Land shall be deemed to be
added to the Owned Property for purposes of this Agreement and (b) the Permitted
Liens shall be deemed to be modified to include those exceptions to title set
forth on the Potential Land Title Commitment. In the event that Boyd Indiana
disapproves the Potential Land pursuant to the criteria set forth above, then
the Company shall not transfer the Potential Land to LLC as part of the Owned
Property. In the event that the Company has not acquired title to the Potential
Land prior to the Transfer Date, then the Company shall execute and deliver to
Boyd Indiana in accordance with Section 2.2(u), the Potential Land Transfer
Agreement substantially in the form attached hereto as Exhibit 5.18, which
provides that in the event that the Company acquires title to the Potential Land
at any time during the period that is two (2) years after the Closing Date, then
LLC will pay to the Company the Potential Land Price and LLC will have the
obligation to accept the Potential Land subject to LLC's disapproval of the
Potential Land based upon the criteria set forth above.
Section 5.19 Insurance. To the extent that the Company continues to
carry any insurance policies with the Business or the Assets after the Closing,
the Company will take such steps to name LLC and Boyd Indiana as additional
insureds under such policies to the extent permitted by law.
ARTICLE VI
COVENANTS OF BOYD INDIANA
Boyd Indiana covenants and agrees with the Company and LLC that from the
date hereof until the Closing:
Section 6.1 Performance. Boyd Indiana will perform all acts to be
performed by it pursuant to this Agreement and will refrain from taking or
omitting to take any action that would violate their representations and
warranties hereunder or render them inaccurate as of the date hereof or the
Closing Date or that in any way would prevent or adversely affect the
consummation of the transactions contemplated hereby. Boyd Indiana will use all
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions to the obligations of the Company and LLC relating to Boyd Indiana
set forth in Article IX.
Section 6.2 Governmental Filings. Boyd Indiana will, as promptly as
practicable, make any required governmental filings required of Boyd Indiana,
including filings pursuant to the Gaming Laws and the HSR Act, obtain any
required Government Approvals and comply with any applicable governmental
waiting periods or notification or other procedures required to be complied with
by them in connection with the transactions contemplated by this Agreement. Boyd
Indiana's filings with the Indiana Gaming Commission in connection with the
transactions contemplated hereby shall be true, complete and correct in all
material respects.
Section 6.3 Employee Termination Payments. Subject to the satisfaction
of the conditions set forth in Section 5.17, Boyd Indiana agrees to make the
employee termination and severance payments to the individuals listed in
Schedule 5.17 as described therein.
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ARTICLE VII
ENVIRONMENTAL MATTERS
Section 7.1 Site Access. Prior to the execution hereof, Boyd Indiana has
conducted a Phase I Environmental Assessment of the Real Property ("Buyer's
Phase I Environmental Investigation") to determine, among other things, whether
and to what extent Materials of Environmental Concern are present at, on or
under the Real Property. Schedule 7.1 sets forth certain environmental
conditions and other matters disclosed by Buyer's Phase I Environmental
Investigation (the "Known Environmental Conditions").
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BOYD INDIANA
The obligation of Boyd Indiana to purchase the LLC Units at the Closing
is subject to the satisfaction or waiver by Boyd Indiana of the following
conditions on or before the Closing Date:
Section 8.1 Representations and Warranties Correct. Each representation
and warranty of the Company and LLC made herein, and the statements contained in
the Exhibits, Company/LLC Disclosure Schedule and Schedules hereto or in any
instrument or certificate delivered by the Company or LLC pursuant to this
Agreement shall be true and correct in all material respects (except for
representations and warranties or applicable subsections or portions thereof
already qualified as to materiality, in which case such representations and
warranties or applicable subsections or portions thereof shall be true and
correct), in each case as of the date made and, except to the extent such
representation, warranty or statement expressly provides that it relates solely
to the date hereof or an earlier date, at and as of the Closing Date, with the
same force and effect as though made at and as of the Closing Date; provided,
however, that any representation or warranty that is modified after the date of
this Agreement by an amendment to the Company/LLC Disclosure Schedule that
qualifies under Section 5.7 as a modification of the original representation and
warranty for the purposes of this Section 8.1 ("Permitted Modification") shall
be deemed to be made, as so modified, as of the date the representation and
warranty was originally made and/or as of the Closing Date, as the case may be
(depending upon when the matter or matters covered by the Permitted Modification
arose), unless the matter or matters described in the Permitted Modification,
when combined with all other Permitted Modifications, has had or would
reasonably be expected to have, a Material Adverse Effect.
Section 8.2 Performance; No Default. Each of the Company and LLC will
have performed and complied in all material respects with all the obligations,
agreements and conditions required by this Agreement to be performed or complied
with by them at or prior to the Closing.
Section 8.3 Delivery of Certificate. Each of the Company and LLC shall
have delivered to Boyd Indiana a certificate, dated the Closing Date, executed
by an executive officer, certifying to the fulfillment of the conditions set
forth in Sections 8.1 and 8.2.
Section 8.4 Opinion of Counsel to the Company. The Company will have
delivered to Boyd Indiana an opinion of Bell, Boyd & Lloyd, special counsel to
the Company, dated the Closing Date, containing the opinions set forth on
Exhibit 8.4.
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Section 8.5 Good Standing Certificates. Boyd Indiana shall have received
the following certificates for each of the Company and LLC, in form and
substance reasonably satisfactory to Morrison & Foerster LLP, counsel to Boyd
Indiana: (a) from the Secretary of State of its state of organization evidencing
its continued existence and its good standing as a corporation or limited
liability company organized under the laws of such state; and (b) from each
jurisdiction in which it is qualified or licensed to do business as a foreign
corporation or a limited liability company, evidencing its continued good
standing as a corporation or limited liability company as licensed or qualified,
except for any jurisdictions in which such failures to be in good standing,
individually and in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect.
Section 8.6 Consents. Boyd Indiana shall have received executed
counterparts of the consents required, if any, to the assignment of the Material
Assumed Contracts, all of which consents shall be in form and substance
reasonably satisfactory to Boyd Indiana.
Section 8.7 Governmental Approvals. All Governmental Approvals
(including, without limitation, approval from the Indiana Gaming Commission, the
consent of the City, the consent of the United States Coast Guard to the
transfer of the Riverboat as required by applicable Laws and all required
consents and approvals to the transfer of the Liquor Assets) from, and all
declarations, filings and registrations with, any Governmental Body required to
consummate the transactions contemplated by this Agreement (other than any of
the foregoing which, if not obtained or made, would not, individually or in the
aggregate, reasonably be expected to limit in any material way LLC's ability to
operate the Business and the Assets after the Closing) shall have been obtained
or made without the imposition of any material conditions, and all applicable
waiting periods under the HSR Act shall have expired or been terminated.
Section 8.8 Absence of Litigation. There shall be no suit, action or
other proceeding pending or threatened seeking to enjoin, restrain, hinder or
delay the Transfer or the purchase and sale of the LLC Units, or the other
transactions contemplated hereby, or to impose limitations on the ability of
Boyd Indiana to acquire or hold, or exercise full rights of ownership of the LLC
Units, or to prohibit Boyd Indiana or any of their Affiliates from effectively
controlling in any material respects the Business or the business or operations
of LLC, at law or in equity by any Governmental Body, nor shall any injunction
or order of any such entity be in effect as of the Closing which restrains or
prohibits the Transfer, the purchase and sale of the LLC Units, or the other
transactions contemplated hereby.
Section 8.9 FIRPTA Certificate. Boyd Indiana shall have received from
the Company the FIRPTA Affidavit. Notwithstanding anything to the contrary set
forth herein, if the Company fails to provide Boyd Indiana with such affidavit,
Boyd Indiana shall be entitled to withhold the requisite amounts from the LLC
Purchase Price payments in accordance with Section 1445 of the Code.
Section 8.10 Termination of Certain Contracts. Boyd Indiana shall have
received evidence (in form and substance satisfactory to Boyd Indiana) as to the
termination of the Contracts referred to in Section 2.7 and the release of Boyd
Indiana, BGC and LLC from any liability, restriction or required performance
thereunder.
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Section 8.11 Post-Closing Escrow Agreements. The Company shall have duly
executed and delivered to Boyd Indiana the Company Escrow Agreement
substantially in the form of Exhibit 12.3.
Section 8.12 RPTA Certificate. Not later than thirty (30) days prior to
the Closing, the Company shall have delivered to Boyd Indiana an environmental
disclosure statement duly executed and acknowledged by all applicable parties as
required under the Indiana Responsible Property Transfer Law (Indiana Code
13-7-22.5 through 13-7-22.15).
Section 8.13 Shareholder/Member Approval. The shareholders of the
Company shall have approved this Agreement and the transactions contemplated
hereunder, including the Transfer, and Boyd Indiana shall have received evidence
(in form and substance satisfactory to Boyd Indiana) of such approval.
Section 8.14 Performance of the Obligations. Each of the Company and LLC
shall have performed all of its duties and obligations in all material respects
required to be performed prior to the Closing pursuant to this Agreement,
including the Transfer contemplated by Article II.
Section 8.15 Condition of Real Property and Assets. The Real Property
and the Assets shall be in substantially the same condition as such existed as
of the date of this Agreement, normal wear and tear and weathering excepted, and
the number of live gaming devices (including gaming tables) and electronic
gaming devices (including slot machines) shall be substantially the same as the
number shown on Schedule 3.13(c).
Section 8.16 Release of Liens. All existing deeds of trust or other
Liens on the Owned Property (other than the Permitted Liens) shall be in a
position to be released of record concurrently with the Closing.
Section 8.17 Title Policy. The Title Company shall be irrevocably
committed to issue to LLC the Title Policy in the form provided in Section
2.1(a).
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligation of the Company to sell the LLC Units at the Closing is
subject to the satisfaction or waiver by the Company of the following conditions
on or before the Closing Date:
Section 9.1 Representations and Warranties Correct. Each representation
and warranty of Boyd Indiana and BGC made herein, and the statements contained
in the Exhibits, Buyer's Disclosure Schedule and Schedules hereto or in any
instrument or certificate delivered by Boyd Indiana pursuant to this Agreement
shall be true and correct in all material respects (except for representations
and warranties or applicable subsections or portions thereof already qualified
as to materiality, in which case such representations and warranties or
applicable subsections or portions thereof shall be true and correct), in each
case as of the date made and, except to the extent such representation, warranty
or statement expressly provides that it relates solely to the date hereof or an
earlier date, at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date.
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Section 9.2 Performance; No Default. Boyd Indiana and BGC will have
performed and complied in all material respects with all the obligations,
agreements and conditions required by this Agreement to be performed or complied
with by them at or prior to the Closing.
Section 9.3 Delivery of Certificate. Boyd Indiana and BGC shall have
delivered to the Company a certificate, dated the Closing Date, executed by an
executive officer, certifying to the fulfillment of the conditions set forth in
Sections 9.1 and 9.2.
Section 9.4 Opinion of Counsel to BGC and Boyd Indiana. BGC will have
delivered to the Company an opinion of McDonald, Carano, Wilson, McCune, Bergin,
Frankovich & Hicks, counsel to BGC, dated the Closing Date, containing the
opinions set forth on Exhibit 9.4(a), and Boyd Indiana will have delivered an
opinion of Bose, McKinney & Evans, local counsel to Boyd Indiana, dated the
Closing Date, containing the opinions set forth on Exhibit 9.4(b).
Section 9.5 Governmental Approvals. All Governmental Approvals
(including, without limitation, approval from the Indiana Gaming Commission)
from, and all declarations, filings and registrations with, any Governmental
Body required to consummate the transactions contemplated by this Agreement
(other than any of the foregoing which, if not obtained or made, would not,
individually or in the aggregate, reasonably be expected to limit in any
material way LLC's ability to operate the Business and the Assets after the
Closing) shall have been obtained or made without the imposition of any material
conditions, and all applicable waiting periods under the HSR Act shall have
expired or been terminated.
Section 9.6 Absence of Litigation. There shall be no suit, action or
other proceeding pending or threatened seeking to enjoin, restrain, hinder or
delay the Transfer or the purchase and sale of the LLC Units, or the other
transactions contemplated hereby, at law or in equity before any Governmental
Body, nor shall any injunction or order of any such entity be in effect as of
the Closing which restrains or prohibits the Transfer or the purchase and sale
of the LLC Units, or the other transactions contemplated hereby.
Section 9.7 Shareholder Approval. The shareholders of the Company shall
have approved this Agreement and the transactions contemplated hereunder,
including the Transfer.
ARTICLE X
ADDITIONAL COVENANTS
Section 10.1 Asset Purchase/Purchase Price Allocation.
(a) The Company and Boyd Indiana agree that the acquisition of the
LLC Units by Boyd Indiana shall be treated for all Income Tax purposes as a
purchase by Boyd Indiana of the Assets of the Company, other than the Excluded
Assets, and an assumption by Boyd Indiana of the Assumed Liabilities (not
including the Excluded Liabilities). The Company and Boyd Indiana shall report
for Income Tax purposes the purchase by Boyd Indiana of the LLC Units pursuant
to this Agreement consistent with the treatment described in the preceding
sentence and shall take no position inconsistent therewith in any Income Tax
Return, any proceeding before any Income Tax authority or otherwise.
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(b) In connection with the purchase by Boyd Indiana of the LLC Units
pursuant to this Agreement, not later than the Closing, the Company and Boyd
Indiana shall act together in good faith to determine and agree upon the proper
allocations for Income Tax purposes (the "Allocations") of the LLC Purchase
Price (including the Assumed Liabilities) among the assets of LLC (in accordance
with Section 1060 of the Code and the Treasury Regulations promulgated
thereunder and Schedule 10.1 attached hereto). The Company and Boyd Indiana
shall (i) be bound by such determinations and such Allocations for purposes of
determining any Income Taxes; (ii) prepare and file their Income Tax Returns,
including filing a timely Form 8594, on a basis consistent with such
determinations and such Allocations; and (iii) take no position inconsistent
with such determinations and Allocations on any applicable Income Tax Return, in
any Income Tax proceeding before any Income Tax authority or otherwise. In the
event that any such allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other party hereto
concerning resolution of the dispute. To the extent that the additional
Contingent Purchase Price Payment is made, or the LLC Purchase Price is
otherwise adjusted in accordance with the terms of this Agreement, Boyd Indiana
and the Company agree, if necessary, to revise and amend the Allocations and IRS
Form 8594.
Section 10.2 Noncompetition.
(a) For a period of three (3) years following the Closing, without
the written consent of Boyd Indiana, none of the Company, any Individual
Covenantor or any Affiliates of the foregoing Persons shall, directly or
indirectly, through equity ownership or otherwise, own, operate or make an
Investment (collectively, "Engage" or an "Engagement") in a business engaged in
one or more or all of riverboat, land-based, barge or dockside casino-style
gaming anywhere in the State of Indiana (other than riverboat gaming on the Ohio
River watershed) or in the State of Michigan within 250 miles of the Riverboat
(a "Gaming Business"); provided, however, this Section 10.2 shall not apply to
(i) existing Engagements by the Individual Covenantors or their Affiliates as
set forth in Schedule 10.2; (ii) Investments in publicly traded companies in
which the Company and its Affiliates, in the aggregate, do not own and,
following such Investment, will not own, more than ten percent (10%) of the
voting securities; or (iii) passive Investments made following the date hereof
with the written consent of Boyd Indiana, which consent shall not be
unreasonably withheld.
(b) For a period of three (3) years following the Closing, none of
the Company, any Individual Covenantor or any Affiliates of the foregoing
Persons shall, directly or indirectly, solicit, induce or encourage any employee
or consultant or group of employees or consultants who are then employed or
retained by Boyd Indiana, LLC, or any of their Affiliates (other than the
employees identified in Schedule 10.2(b) of the Company/LLC Disclosure Schedule)
to leave the faithful employment of or terminate consultation with any of Boyd
Indiana, LLC or their Affiliates; provided this shall not impinge on any general
solicitation of employees directed to the public at large (as opposed to
solicitations directed at employees of Boyd Indiana, LLC or their Affiliates),
in any newspaper, or radio or television broadcast or other media whose
principal areas of circulation, impact, reception, electronic delivery or
subscription are not in the geographical areas covered by the non-compete
covenant in Section 10.2(a).
Section 10.3. Construction of the Hotel.
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(a) Workmanlike Manner. Prior to the Closing, the Company shall
oversee and diligently pursue the construction and development of the Hotel in a
good and workmanlike manner in accordance with the Plans and Specifications, as
modified pursuant to Section 10.3(b), and shall timely pay all costs and
expenses incurred in connection with the construction and development of the
Hotel (the "Construction Costs") to the extent such costs are incurred prior to
the Closing Date. The Company shall provide Boyd Indiana with copies of all
applications for payment and related back-up documentation, proof of payment,
and unconditional lien releases to the extent available and such other evidence
as reasonably requested ("Evidence of Payment") with respect to the Construction
Costs paid by it. From and after the Closing, LLC shall oversee and diligently
pursue the construction and development of the Hotel in a good and workmanlike
manner in accordance with the Plans and Specifications as modified pursuant to
Section 10.3(b) and shall pay for all Construction Costs incurred on and after
the Closing Date up to the LLC Maximum Construction Cost Amount. LLC shall
provide the Company with Evidence of Payment with respect to the Construction
Costs paid by it. To the extent that the actual amount of the Construction Costs
incurred by LLC on and after the Closing Date, exceeds the LLC Maximum
Construction Cost Amount, then LLC shall provide the Company with written notice
of such excess amount and, within five (5) calendar days after receipt of
written notice from LLC, there shall be released from the Company Escrowed Funds
and delivered by wire transfer immediately available funds to the account or
accounts specified by Boyd Indiana, an amount equal to such excess amount. As
provided further in Section 10.3(j), to the extent that the Actual Completion
Cost Amount is less than the sum of the LLC Maximum Construction Cost Amount
plus any additional amounts paid to LLC pursuant to this Section 10.3(a), then
LLC shall pay to the Company the amount of the difference in accordance with
Section 10.3(j).
(b) Contracts. The Company until the Transfer Date and LLC from and
after the Transfer Date and after the Closing Date shall submit to Boyd Indiana
copies of all change orders and requests for information relating to the
construction and development of the Hotel immediately upon their receipt
thereof. Boyd Indiana reserves the right, at its option, to approve in advance
all Contracts or work orders arising after the date of this Agreement with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the construction and development
of the Hotel. Boyd Indiana shall have the right to require prior to and after
the Closing Date modifications and changes to the Plans and Specifications and
the relevant Contracts, in Boyd Indiana's sole and absolute discretion subject,
however, to the limitations of applicable Contracts and Governmental Approvals;
provided that incremental costs of effecting such changes (the "Incremental
Construction Costs") shall be taken into account through the definition of the
"LLC's Maximum Completion Cost Amount." The Company until the Transfer Date and
LLC after the Transfer Date shall amend the Plans and Specifications and the
relevant Contracts to the extent requested by Boyd Indiana and shall take such
other steps as are necessary to implement all change orders required by Boyd
Indiana. All change orders to modify or amend the Plans and Specifications or
the relevant Contracts shall be subject to the prior approval of Boyd Indiana in
its sole and absolute discretion. The Company until the Transfer Date and LLC
after the Transfer Date shall not amend the Construction Contracts, the Plans
and Specifications or any relevant Contracts without the written approval of
Boyd Indiana in its sole and absolute discretion.
(c) Inspections. Boyd Indiana shall have the right, but not the
obligation, to inspect and monitor the construction and development of the Hotel
pursuant to this Section 10.3(c). The
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Company until the Transfer Date and LLC after the Transfer Date shall permit
Boyd Indiana and Boyd Indiana's agents and representatives (including Boyd
Indiana's engineer, architect or inspector) to enter onto the Real Property
during normal business hours and without interference with construction activity
to inspect the progress of the construction and development of the Hotel and all
materials being used in connection therewith and to examine all plans and
drawings other than the Plans and Specifications relating to such construction
and development of the Hotel and the financial and other Books and Records
relating to the costs incurred by the Company or LLC in connection therewith.
The Company, and LLC after the Transfer Date, shall use all commercially
reasonable efforts to cause all contractors and subcontractors to cooperate with
Boyd Indiana or Boyd Indiana's representatives or such other persons described
above in connection with inspections described in this Section 10.3(c). If Boyd
Indiana in good faith determines that any work or materials do not conform,
individually or in the aggregate, in all material respects to the approved Plans
and Specifications or sound building practice, or otherwise depart from the
requirements of this Agreement, Boyd Indiana may require the Company to
diligently resolve such matters through the dispute resolution process set forth
in the Construction Contracts, which includes, but is not limited to,
consultation with the architect and, under certain circumstances, the suspension
of construction activities. In such event, the Company until the Transfer Date
and LLC after the Transfer Date shall promptly correct, or cause to be
corrected, the work to Boyd Indiana's reasonable satisfaction. In no event will
any inspection by Boyd Indiana constitute a representation that there has been
or will be compliance with the Plans or Specifications or that the construction
is free from defective materials or workmanship. The Company, and LLC after the
Transfer Date, shall provide Boyd Indiana upon its request with copies of all
applications for payment and related back-up documents, building permits,
building department inspection reports, evidence of payment, lien releases and
any correspondence in connection with the construction and development of the
Hotel.
(d) Lien-Free Completion. The construction of the Hotel up to the
Closing Date, and all materials, equipment, fixtures, or any other item
comprising a part of the Hotel up to the Closing Date shall be constructed,
installed or completed, as applicable, free and clear of all mechanic's,
materialman's or other Liens to the extent such Liens relate to the activities
of the Company or LLC or any of their agents, consultants, employees or
invitees, except for the Permitted Liens.
(e) Compliance with Laws. The construction and development of the
Hotel shall comply in all material respects with all applicable Laws and
applicable insurance requirements, including applicable building codes, special
use permits, Environmental Laws and requirements of insurance underwriters.
(f) Insurance Requirements. The Company shall provide or cause to be
provided workmen's compensation insurance, builder's risk, and public liability
insurance, and such other insurance to the extent required under applicable
Laws, in connection with the construction and development of the Hotel. All such
policies shall be in form and amount reasonably satisfactory to Boyd Indiana and
shall name each member of the Boyd Indiana Group and LLC as an additional
insured.
(g) Hotel Construction Budget. Schedule 10.3(g) sets forth the
budget for the construction and development of the Hotel in accordance with the
Plans and Specifications (the
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"Hotel Construction Budget") and in the column entitled "Construction Expense"
the committed amounts with respect to each line item set forth in such Schedule
for the construction and development of the Hotel pursuant to the Plans and
Specifications. Schedule 10.3(g) sets forth in the column entitled "Construction
Expense" the amount that each contractor referred to in such Schedule has agreed
to charge, or that the Company or the Contractor has estimated, for all of its
services to be provided in connection with the construction and development of
the Hotel.
(h) Calculation of Company's Estimated Construction Cost Amount. On
the date which is ten (10) days prior to the Closing Date, the Company shall
prepare and submit to Boyd Indiana, a statement (the "Preliminary Construction
Costs Statement"), which statement shall be reasonably satisfactory to Boyd
Indiana and shall set forth in line item detail the amount (the "Company's
Estimated Construction Cost Amount") equal to the sum of the costs actually
incurred by Company as of such date, plus the estimated amount of the costs to
be incurred prior to the Closing Date to complete the Hotel up to the Maximum
Hotel Cost, plus the Incremental Construction Costs together with all Evidence
of Payment.
(i) Calculation of Company's Actual Construction Cost Amount.
(i) Within fifteen (15) calendar days after the Closing
Date, the Company shall revise the Preliminary Construction Costs Statement to
reflect all amounts set forth thereon as of the Closing Date (the "Company's
Construction Costs Statement"). Within twenty (20) days following the delivery
of Company's Construction Costs Statement, LLC may deliver to the Company a
written statement (the "Buyer's Construction Costs Statement") setting forth
with reasonable specificity any disagreement with the Company's Construction
Costs Statement. During such twenty (20) day period, LLC shall be permitted to
review the working papers of the Company and its auditors relating to the
Company's Construction Costs Statement and all other Evidence of Payment. If LLC
fails to object on or prior to such twentieth (20th) day, then all of the
amounts set forth on the Company's Construction Costs Statement shall be deemed
to have been finally determined for purposes of calculating the Company's Actual
Construction Cost Amount.
(ii) If LLC does submit Buyer's Construction Costs Statement
on or prior to such twentieth (20th) day, any amounts contained in the Buyer's
Construction Costs Statement which are not disputed by the Company's
Construction Costs Statement shall be deemed to have been finally determined for
purposes of calculating the Company's Actual Construction Cost Amount. For a
period of fifteen (15) days, LLC and the Company shall attempt to resolve in
good faith any dispute or disagreement between the Company's Construction Costs
Statement and Buyer's Construction Costs Statement. During such fifteen (15) day
period, the LLC shall be permitted to review the working papers of the Company
and the Company's auditors relating to Buyer's Construction Costs Statement. Any
amounts resolved by such attempts shall be deemed to have been finally
determined for purposes of calculating the Company's Actual Construction Cost
Amount.
(iii) At the end of such fifteen (15) day period, the
Accounting Firm shall be deemed appointed by the parties hereto to finally
determine the Company's Actual Construction Cost Amount. Within ten (10) days
thereafter, the Company shall submit to the Accounting Firm the Company's
Construction Costs Statement and any supporting evidence and statements
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which it deems necessary to verify and support the Company's Construction Costs
Statement, and LLC shall submit to the Accounting Firm Buyer's Construction
Costs Statement and any supporting evidence and statements which it deems
necessary to verify and support Buyer's Construction Costs Statement. Neither
party may revise the amounts claimed on its respective construction costs
statement prior to submission to the Accounting Firm except to reflect amounts
finally determined pursuant to Section 10.3(i)(i) or (ii). Based solely upon the
foregoing submissions, the Accounting Firm shall make a final, binding and
unappealable determination of the matters in dispute and of the Company's Actual
Construction Cost Amount, which the parties agree shall be conclusively binding
upon all parties; provided, however, that (A) the Accounting Firm must choose
either the Company's Actual Construction Cost Amount set forth on the Company's
Construction Costs Statement or the Company's Actual Construction Cost Amount
set forth on Buyer's Construction Costs Statement (in each case relying without
modification upon any portions of the Company's Actual Construction Cost Amount
resolved pursuant to Section 10.3(i)(ii)) and may not choose any other amount
and (B) the Accounting Firm may not make any determination with respect to any
matter not in dispute between the Company's Construction Costs Statement and
Buyer's Construction Costs Statement; provided further, however, that any
determination by the Accounting Firm shall not be final, binding and
nonappealable, and shall be without effect, if it does not comply with the
foregoing proviso. The party whose Construction Costs Statement is not selected
is the "Losing Party" for purposes of Section 10.3(i) and shall pay all fees,
charges and expenses for the services of the Accounting Firm (including the
fees, charges and expenses of any experts used by the Accounting Firm) plus any
reasonable fees and expenses of enforcement of a determination of the Accounting
Firm. In addition, the Losing Party shall reimburse (in cash) all reasonable
attorneys' fees, charges and expenses and reasonable accountant's fees, charges
and expenses incurred by the other party in connection with the dispute (all of
the foregoing, for purposes of this Section 10.3(i), the "Fees"). The Accounting
Firm shall be instructed to make its final determination within twenty (20) days
of the submissions to the Accounting Firm referred to above and, in any case, as
soon as practicable after such submissions. Within five (5) days of the
Accounting Firm's determination of the Company's Actual Construction Cost
Amount, the Accounting Firm shall deliver to LLC and the Company a statement
(the "Final Construction Costs Statement") setting forth the Company's Actual
Construction Cost Amount and describing in reasonable detail how the Company's
Actual Construction Cost Amount was determined. Within ten (10) days after the
final determination by the Accounting Firm, the party entitled to receive the
Fees shall submit a statement setting forth its Fees incurred and the Accounting
Firm, within ten (10) days after such submission, will make a final, binding and
unappealable determination of the amount of such Fees and award such amounts to
such party.
(iv) Any final determination and award of Fees shall be in
writing and shall state the reasons upon which it is based. Judgment upon the
award shall be entered in any court having jurisdiction thereof. The provisions
of Section 10.3(i) shall constitute the exclusive and sole means for resolving
those disputes, disagreements, controversies or claims between LLC and the
Company with respect to the Company's Actual Construction Cost Amount.
(v) To the extent the Company's Actual Construction Cost
Amount as set forth on the Final Construction Costs Statement is (A) greater
than the Company's Estimated Construction Cost Amount, LLC shall, within two (2)
business days of LLC's receipt of the final determination of the Company's
Actual Construction Cost Amount, deliver by wire transfer
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immediately available funds to the liquidation account or accounts of the
Company and specified by the Company, an amount equal to such difference or (B)
less than Company's Estimated Construction Cost Amount, within two (2) business
days of the Company's receipt of the final determination of the Company's Actual
Construction Cost Amount, there shall be released from the Company Escrowed
Funds and delivered by wire transfer immediately available funds to the account
or accounts specified by LLC, an amount equal to such difference, in either case
plus interest on such amount at the Interest Rate for, the period commencing on
(and including) the Closing Date to (but excluding) the date of payment as well
as the amount of any Fees to be borne by LLC as a Losing Party under this
Section 10.3(i).
(j) Calculation of Actual Completion Cost Amount.
(i) In the event that the Hotel has not been completed in
accordance with the Plans and Specifications prior to the Closing Date, within
fifteen (15) calendar days after the Completion Date, LLC shall prepare and
submit to the Company a statement (the "LLC's Completion Costs Statement")
setting forth the actual amount of the Construction Costs incurred by LLC from
and after the Closing Date. Within twenty (20) days following the delivery of
LLC's Completion Costs Statement, the Company may deliver to LLC a written
statement (the "Company's Construction Costs Statement") setting forth with
reasonable specificity any disagreement with the LLC's Completion Costs
Statement. During such twenty (20) day period, the Company shall be permitted to
review the working papers of LLC and its auditors relating to the LLC's
Completion Costs Statement and all other Evidence of Payment. If the Company
fails to object on or prior to such twentieth (20th) day, then all of the
amounts set forth on the LLC's Completion Costs Statement shall be deemed to
have been finally determined for purposes of calculating the Actual Completion
Cost Amount.
(ii) If the Company does submit the Company's Completion
Costs Statement on or prior to such twentieth (20th) day, any amounts contained
in the LLC's Completion Costs Statement which are not disputed by the Company's
Completion Costs Statement shall be deemed to have been finally determined for
purposes of calculating the Actual Completion Cost Amount. For a period of
fifteen (15) days, LLC and the Company shall attempt to resolve in good faith
any dispute or disagreement between the Company's Completion Costs Statement and
LLC's Completion Costs Statement. During such fifteen (15) day period, LLC shall
be permitted to review the working papers of the Company and the Company's
auditors relating to Company's Completion Costs Statement. Any amounts resolved
by such attempts shall be deemed to have been finally determined for purposes of
calculating the Actual Completion Cost Amount.
(iii) At the end of such fifteen (15) day period, the
Accounting Firm shall be deemed appointed by the parties hereto to finally
determine the Actual Completion Cost Amount. Within ten (10) days thereafter,
the Company shall submit to the Accounting Firm the Company's Completion Costs
Statement and any supporting evidence and statements which it deems necessary to
verify and support the Company's Completion Costs Statement, and LLC shall
submit to the Accounting Firm LLC's Completion Costs Statement and any
supporting evidence and statements which it deems necessary to verify and
support LLC's Completion Costs Statement. Neither party may revise the amounts
claimed on its respective construction costs statement prior to submission to
the Accounting Firm except to reflect amounts finally
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determined pursuant to Section 10.3(j)(i) or (ii). Based solely upon the
foregoing submissions, the Accounting Firm shall make a final, binding and
unappealable determination of the matters in dispute and of the Actual
Completion Cost Amount, which the parties agree shall be conclusively binding
upon all parties; provided, however, that (A) the Accounting Firm must choose
either the Actual Completion Cost Amount set forth on the Company's Completion
Costs Statement or the Actual Completion Cost Amount set forth on LLC's
Completion Costs Statement (in each case relying without modification upon any
portions of the Actual Completion Cost Amount resolved pursuant to Section
10.3(j)(ii)) and may not choose any other amount and (B) the Accounting Firm may
not make any determination with respect to any matter not in dispute between the
Company's Completion Costs Statement and LLC's Completion Costs Statement;
provided further, however, that any determination by the Accounting Firm shall
not be final, binding and nonappealable, and shall be without effect, if it does
not comply with the foregoing proviso. The party whose Completion Costs
Statement is not selected is the "Losing Party" for purposes of Section 10.3(j)
and shall pay all fees, charges and expenses for the services of the Accounting
Firm (including the fees, charges and expenses of any experts used by the
Accounting Firm) plus any reasonable fees and expenses of enforcement of a
determination of the Accounting Firm. In addition, the Losing Party shall
reimburse (in cash) all reasonable attorneys' fees, charges and expenses and
reasonable accountant's fees, charges and expenses incurred by the other party
in connection with the dispute (all of the foregoing, for purposes of this
Section 10.3(j), the "Fees"). The Accounting Firm shall be instructed to make
its final determination within twenty (20) days of the submissions to the
Accounting Firm referred to above and, in any case, as soon as practicable after
such submissions. Within five (5) days of the Accounting Firm's determination of
the Actual Completion Cost Amount, the Accounting Firm shall deliver to LLC and
the Company a statement (the "Final Completion Costs Statement") setting forth
the Actual Completion Cost Amount and describing in reasonable detail how the
Actual Completion Cost Amount was determined. Within ten (10) days after the
final determination by the Accounting Firm, the party entitled to receive the
Fees shall submit a statement setting forth its Fees incurred and the Accounting
Firm, within ten (10) days after such submission, will make a final, binding and
unappealable determination of the amount of such Fees and award such amounts to
such party.
(iv) Any final determination and award of Fees shall be in
writing and shall state the reasons upon which it is based. Judgment upon the
award shall be entered in any court having jurisdiction thereof. The provisions
of Section 10.3(j) shall constitute the exclusive and sole means for resolving
those disputes, disagreements, controversies or claims between LLC and the
Company with respect to the Actual Completion Cost Amount.
(v) To the extent the Actual Completion Cost Amount as set
forth on the Final Completion Costs Statement is (A) less than the sum of the
LLC's Maximum Completion Cost Amount plus any amounts paid to LLC pursuant to
Section 10.3(a) above, LLC shall, within two (2) business days of LLC's receipt
of the final determination of the Actual Completion Cost Amount, deliver by wire
transfer immediately available funds to the liquidation account or accounts of
the Company and specified by the Company, an amount equal to such difference or
(B) greater than the sum of the Company's LLC's Maximum Completion Cost Amount
plus any amounts paid to LLC pursuant to Section 10.3(a) above, within two (2)
business days of the Company's receipt of the final determination of the Actual
Completion Cost Amount, there shall be released from the Company Escrowed Funds
and delivered by wire transfer immediately
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available funds to the account or accounts specified by LLC, an amount equal to
such difference, in either case plus interest on such amount at the Interest
Rate for, the period commencing on (and including) the Closing Date to (but
excluding) the date of payment as well as the amount of any Fees to be borne by
LLC as a Losing Party under this Section 10.3(j).
Section 10.4. Flynn Guaranty. Boyd Indiana will use its reasonable best
efforts to obtain the release by Travelers' Casualty and Insurance Company of
America ("Travelers") of the guaranty of the Kevin F. Flynn June, 1992
Non-Exempt Trust and the Brian J. Flynn June, 1992 Non-Exempt Trust ("Flynn
Guaranty") of the outstanding surety bond issued by Travelers to the Gaming
Commission, by substituting Boyd Indiana's or BGC'S guaranty for the Flynn
Guaranty. In the event that the Flynn Guaranty is not so released by Travelers,
Boyd Indiana shall indemnify and hold harmless the Kevin F. Flynn June, 1992
Non-Exempt Trust and the Brian J. Flynn June, 1992 Non-Exempt Trust from any
claims, demands, actions or causes of action, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and
attorneys' fees and expenses as a result of any claim against the Flynn Guaranty
made after the Closing Date.
Section 10.5. Bonds. Boyd Indiana shall replace the Company's bond to
the Indiana Gaming Commission and guaranty to the City described in Schedule
10.5 with its own bond and guaranty and provide to the Company reasonably
satisfactory evidence of the replacement of the Company's bond and guaranty with
Boyd Indiana's bond and guaranty.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
Section 11.1 Termination of Agreement. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written consent of Boyd Indiana and the Company;
(b) by Boyd Indiana, if there has been a material violation in or
breach by any of the Company's, any of the Individual Covenantor's or LLC's
agreements, representations or warranties contained herein which has not been
waived by Boyd Indiana in writing;
(c) by the Company, if there has been a material violation or breach
by Boyd Indiana of any of the agreements, representations or warranties
contained herein which has not been waived by the Company in writing;
(d) by Boyd Indiana or the Company if the Closing shall not have
occurred on or before December 31, 1999; provided, however, that neither Boyd
Indiana nor the Company shall be entitled to terminate this Agreement pursuant
to this Section 11.1(d) if such party's (including, in the case of the Company
and LLC, any of the shareholders of the Company and members of LLC) knowing or
willful breach of this Agreement has prevented the consummation of the
transactions contemplated hereby; or
(e) by Boyd Indiana if any of the conditions to the obligations of
Boyd Indiana set forth in Article VIII shall have become incapable of
fulfillment and shall not have been waived by Boyd Indiana in writing, or by the
Company if any of the conditions to the obligations of the
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Company set forth in Article IX shall have become incapable of fulfillment and
shall not have been waived by the Company in writing; provided, however, that
neither Boyd Indiana nor the Company shall be entitled to terminate this
Agreement pursuant to this Section 11.1(e) if such party (including, in the case
of the Company and LLC, any of the shareholders of the Company or members of
LLC) is in breach in any material respect of its representations, warranties,
covenants or agreements contained in this Agreement.
Section 11.2 Effect of Termination. In the event of termination of this
Agreement by either Boyd Indiana or the Company as provided in Section 11.1,
this Agreement shall forthwith become void and of no further force and effect
(other than this Section 11.2, Section 5.12, Section 13.2, Section 13.8 and
Section 13.10) and there shall be no liability on the part of Boyd Indiana, the
Company or LLC (or their respective shareholders, members, officers, directors,
employees, Affiliates or representatives) to one another, except for any
liability of the breaching party for any breaches of this Agreement prior to the
time of such termination.
ARTICLE XII
SURVIVAL; ESCROWS; INDEMNIFICATION
Section 12.1 Survival of Representations. All representations and
warranties contained in this Agreement shall survive the Closing and any
investigation at any time made by or on behalf of any party hereto for the
Claims Period; provided, however, that the representations and warranties
contained in Section 3.9 (Tax Matters), the indemnification for which shall not
be limited to the Escrowed Funds to the extent provided in Section 12.4, shall
survive the Closing until the expiration of the applicable statute of
limitations associated with the matters set forth therein; and provided,
further, that the representations and warranties contained in Section 3.1
(Ownership of LLC Units), Section 3.4 (Capitalization), the indemnification for
which shall not be limited to the Escrowed Funds to the extent provided in
Section 12.4 and Section 12.15, shall survive the Closing indefinitely. All
covenants and agreements in this Agreement relating to periods after the Closing
Date shall survive the Closing indefinitely (except as provided therein).
Section 12.2 [Intentionally Omitted].
Section 12.3 Company Escrow. At the Closing, the Company, Boyd Indiana
and Harris Trust and Savings Bank or another escrow agent selected by Boyd
Indiana and reasonably satisfactory to the Company ("Escrow Agent") shall enter
into an escrow agreement (the "Company Escrow Agreement") substantially in the
form of Exhibit 12.3. Pursuant to Section 1.6, Boyd Indiana will place into the
escrow account established under the Company Escrow Agreement (the "Company
Escrow Account") the Company Escrowed Funds to be held by the Escrow Agent
pursuant to the terms of this Agreement during the Claims Period, subject to the
final determination of each Company Escrow Statement submitted hereunder with
respect to the Company Escrow Account and further subject to any amounts held in
the Company Escrow Account as reasonable reserves for any Indemnifiable Losses
from pending Company Indemnification Events during the Claims Period. The fees
and expenses of the Escrow Agent under the Company Escrow Agreement shall be
paid by Boyd Indiana annually and fifty percent (50%) of all such fees and
expenses shall be deemed Company Reimbursable Losses which are includable on
Company Escrow Statements pursuant to Section 12.9. For purposes of this
Agreement, the term "Company Escrowed Funds" shall include any interest or other
income earned with respect thereto.
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Section 12.4 Indemnification by the Company for Certain Matters.
(a) Subject to the limitations contained in Section 12.4(b), the
Company hereby agrees to indemnify, defend and hold harmless the Boyd Indiana
Group, from and after the Closing, for, from and against each Company General
Indemnification Event, each Company Tax Indemnification Event and each Company
Specified Indemnifiable Loss.
(b) The Company's liability under Section 12.4(a) shall be limited
as follows:
(i) Except with respect to Company Specified Indemnifiable
Losses, the Boyd Indiana Group's monetary recourse shall be limited to the
Company Escrowed Funds and the Boyd Indiana Group shall have no monetary
recourse against the Company in the event the Company Escrowed Funds are
insufficient to reimburse Boyd Indiana or other members of the Boyd Indiana
Group for all Company General Indemnification Events or Company Tax
Indemnification Events, subject to Boyd Indiana's offset rights described in
subparagraph (iv) below.
(ii) The Boyd Indiana Group's monetary recourse against the
Company with respect to all Company Specified Indemnifiable Losses asserted
against, resulting to, imposed upon or incurred by the Boyd Indiana Group (or
any member thereof), shall include recourse against the Company Escrowed Funds
and recourse against the Company; provided, however, that the Boyd Indiana
Group's monetary recourse against the Company in excess of the Company's
Escrowed Funds shall not exceed the LLC Purchase Price (taking into account any
Company Escrowed Funds recovered by the Boyd Indiana Group with respect to such
Specified Indemnifiable Loss).
(iii) The Boyd Indiana Group shall have no monetary recourse
against the Company or the Company Escrowed Funds with respect to any Company
General Indemnification Event or any Company Tax Indemnification Event to the
extent that (A) the Boyd Indiana Group has already fully recovered the
applicable Company Reimbursable Loss from a third party, or (B) the applicable
Company Reimbursable Loss arises by reason of or results from a breach of a
representation or warranty that has expired at the time a claim for
indemnification is made.
(iv) The Boyd Indiana Group shall have no recourse against
the Company Escrowed Funds for any Company Reimbursable Losses (other than
Company Specified Indemnifiable Losses) until the aggregate amount of such
Company Reimbursable Losses under this Article XII exceeds One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00); provided that all such Company
Reimbursable Losses (including those included in the One Hundred Fifty Thousand
and No/100 Dollars ($150,000.00) amount) shall be recoverable from the Company
Escrowed Funds once the One Hundred Fifty Thousand and No/100 Dollars
($150,000.00) amount has been exceeded.
(v) Notwithstanding the other provisions of this Section
12.4, in the event that the Maximum Company Escrow Amount on the date provided
for in Section 12.3 exceeds the amount of Company Escrowed Funds in the Company
Escrow Account on that date, the amount of such excess may be offset against the
amount of any Contingent Purchase Price Payment
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otherwise payable to the Company under Section 1.7 to the extent such excess has
not been satisfied by recourse permitted under Section 12.4(b).
(c) Subject to the provision in clause (i) of this Section 12.4(c),
the parties hereto acknowledge and agree that in connection with each Company
Specified Indemnifiable Loss, the Boyd Indiana Group (or any member thereof)
shall have the right to pursue any and all remedies in equity or at law,
including, without limitation, the following remedies:
(i) bring an action at law for any and all losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and attorneys' fees and expenses (individually and collectively,
"Losses") asserted against, resulting to, imposed upon or incurred by the Boyd
Indiana Group (or any member thereof), directly or indirectly, by reason of or
resulting from each Company Specified Indemnifiable Loss; provided, however,
that in the case of a Company Specified Indemnifiable Loss of the type described
in clause (e) of that defined term, the Boyd Indiana Group shall first seek
recourse against the Company Escrowed Funds; and
(ii) take recourse pursuant to this Article XII for Company
Reimbursable Losses asserted against, resulting to, imposed upon or incurred by
the Boyd Indiana Group (or any member thereof), directly or indirectly, by
reason of or resulting from each Company Specified Indemnifiable Loss against
the Company Escrowed Funds.
(d) Except as provided in Section 12.4(b), the indemnification
provisions of this Article XII shall provide the sole and exclusive monetary
remedy to the Boyd Indiana Group, following the Closing, with respect to or in
connection with any breach by the Company or LLC of any of their respective
representations, warranties, covenants or agreements contained herein, and
(except as set forth above) the Boyd Indiana Group shall have no monetary
recourse against the Company in the event the Company Escrowed Funds are
insufficient to reimburse Boyd Indiana or other members of the Boyd Indiana
Group for Company Reimbursable Losses.
Section 12.5 Indemnification of the Company by Boyd Indiana. Boyd
Indiana hereby agrees to indemnify, defend and hold harmless the Company, from
and after the Closing, for, from and against any and all Indemnifiable Losses
asserted against, resulting to, imposed upon or incurred by the Company directly
or indirectly, by reason of or resulting from any breach of any agreement,
covenant, representation or warranty of Boyd Indiana or BGC contained herein or
made pursuant to this Agreement, or any facts or circumstances constituting such
a breach, or any Environmental Claim concerning the Real Property arising from
the acts or omissions of LLC from and after the Closing. The Company shall have
no recourse against Boyd Indiana under this Section 12.5 for any Indemnifiable
Losses (other than Boyd Indiana's payment obligations under Sections 1.6, 1.7,
1.8, 2.8, 5.18, 10.3(i), 10.3(j) 10.4, 10.5 13.2 and 13.3) until the aggregate
amount of such Indemnifiable Losses under this Section 12.5 exceeds One Hundred
Fifty Thousand and No/100 Dollars ($150,000.00); provided that all such
Indemnifiable Losses (including those included in the One Hundred Fifty Thousand
and No/100 Dollars ($150,000.00) amount) shall be recoverable from Boyd Indiana
once the One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) amount has
been exceeded.
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Section 12.6 Company Tax Indemnification Matters.
(a) Boyd Indiana shall indemnify, defend and hold the Company
harmless, at any time after the Closing, for, from and against any and all
Indemnifiable Losses, asserted against, resulting to, imposed upon or incurred
by the Company, directly or indirectly, by reason of or resulting from any and
all Taxes imposed upon LLC or the Company with respect to (i) any Post-Closing
Taxes for any Post-Closing Periods; (ii) any Straddle Taxes for any Straddle
Period, but only with respect to the portion of such Straddle Period beginning
on the day after the Closing Date and in the manner provided for in Section
12.6(b); and (iii) any Taxes incurred as a result of transactions that occur on
the Closing Date but after the Closing (other than any Taxes incurred in
connection with the Transfer in excess of any portion agreed to be paid by Boyd
Indiana pursuant to Section 13.3, the Excluded Assets or the Excluded
Liabilities).
(b) For purposes of determining the amount of Straddle Taxes for or
which relate to a Straddle Period, the Closing Date shall be treated as the last
day of a taxable period, and the portion of any such Straddle Tax that is
allocable to the taxable period that is so deemed to end on and include the
Closing Date: (i) in the case of Straddle Taxes that are either (x) based upon
or related to receipts (other than Income Taxes) or (y) imposed in connection
with any sale or other transfer or assignment of property (real or personal,
tangible or intangible), shall be deemed equal to the amount which would be
payable if the period for which such Straddle Tax is assessed ended on and
included the Closing Date and (ii) in the cases of Straddle Taxes other than
Straddle Taxes described in clause (i) hereof, shall be computed on a per diem
basis.
(c) If a notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination, suit, dispute or other claim (a "Tax Claim")
shall be delivered, sent, commenced or initiated to or against a member of the
Boyd Indiana Group by any taxing authority with respect to Taxes for which the
Company or Boyd Indiana Group is entitled to indemnification from the other,
Boyd Indiana shall promptly notify the Company in writing of the Tax Claim. If a
Tax Claim with respect to Taxes for which the Company or Boyd Indiana Group is
entitled to indemnification from the other shall be delivered, sent, commenced
or initiated to or against the Company by the relevant taxing authority, the
Company shall promptly notify Boyd Indiana in writing of such Tax Claim.
(d) The Company may assume and control the defense of a Tax Claim at
the Company's own cost and expense and with its own counsel if the Company
notifies Boyd Indiana of its intent to do so within thirty (30) calendar days of
receipt of notice of the asserted Tax liability (but not less than five (5) days
before the due date of any protest or other claim in respect thereof) and
acknowledges in writing, in form and substance satisfactory to Boyd Indiana,
that such Tax Claim involves only Straddle Taxes for which the Company is
responsible pursuant to Section 12.4(a). If the Company elects to assume the
defense of any such Tax Claim, notwithstanding anything to the contrary
contained herein, (i) the Company shall consult with Boyd Indiana and shall not
enter into any settlement with respect to any such Tax Claim without Boyd
Indiana's prior written consent (which shall not be unreasonably withheld) if
the effect of such settlement would be to materially increase the liability for
Taxes of Boyd Indiana or LLC under this Section 12.6 for periods after the
Closing Date; (ii) the Company shall keep Boyd Indiana informed of all material
developments and events relating to such Tax Claim; and
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(iii) Boyd Indiana shall have the right to participate, at its own cost and
expense, in (but not to control) the defense of such Tax Claim.
(e) If the Company (i) does not timely assume control of a Tax Claim
involving only Straddle Taxes for which the Company is responsible pursuant to
this Section 12.6; or (ii) where notice is received by the Company of a Tax
Claim with respect to Straddle Taxes of the Company, does not provide Boyd
Indiana with the notice of a Tax Claim involving Taxes for which Boyd Indiana is
entitled to indemnification pursuant to Section 12.4(a), Boyd Indiana shall have
the full right to contest such Tax Claim and shall be entitled to settle or pay
in full such Tax Claim (in its sole discretion) and thereafter pursue its right
to indemnification under Section 12.4 without prejudice.
(f) With respect to any Tax Claim involving Taxes for which both
Boyd Indiana and the Company are responsible, Boyd Indiana and the Company shall
attempt to separate such Tax Claim into two (2) Tax Claims, one (1) involving
only Straddle Taxes for which Boyd Indiana is solely responsible and another
involving only Straddle Taxes for which the Company is solely responsible
pursuant to Sections 12.4(a) and 12.6(a); provided, however, that, if the
Company agrees, Boyd Indiana shall control the defense of such Tax Claim without
separation, and Section 12.6(e) shall apply to such Tax Claim. If Boyd Indiana
and the Company do not succeed in separating such Tax Claim, each shall
cooperate reasonably in the defense of such Tax Claim, neither Boyd Indiana nor
the Company shall take any action with respect to such Tax Claim without the
other's written consent (which shall not be unreasonably withheld), and Boyd
Indiana and the Company shall agree as to any settlement or compromise of such
Tax Claim.
(g) For purposes of determining whether and when a Company Tax
Indemnification Event has taken place, a Company Tax Indemnification Event shall
be deemed to occur immediately after the occurrence of the Indemnifiable Loss
which constitutes the Company Tax Indemnification Event.
(h) Boyd Indiana shall pay to the Company any amount which Boyd
Indiana agrees is payable pursuant to Section 12.6(a) within ten (10) days after
receipt of written notice from the Company of a Indemnifiable Loss giving rise
to an obligation of the Company. If Boyd Indiana and the Company cannot agree on
the amount payable by Boyd Indiana with respect to such noticed Indemnifiable
Loss, either party may commence legal proceedings to resolve any such dispute
after the expiration of such ten (10) day period following the Company's notice
of Indemnifiable Loss.
Section 12.7 Preparation and Filing of LLC Tax Returns.
(a) The Company shall cause the LLC to prepare and file (in each
case, at the Company's cost and expense and in a manner consistent with past
practice) on a timely basis all Tax Returns of LLC for all Pre-Closing Periods,
which Tax Returns are due (giving effect to any extensions thereto) on or before
the Closing Date. Boyd Indiana shall cause LLC to pay all Taxes shown to be due
and payable thereon that are Excluded Taxes and the Company shall pay all Taxes
shown to be due and payable thereon in excess of, or other than, Excluded Taxes.
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(b) Following the Closing Date, Boyd Indiana shall cause LLC to
prepare and file (in each case, at Boyd Indiana's cost and expense and in a
manner consistent with past practice) on a timely basis all Tax Returns of LLC
other than those provided for in Section 12.7(a). Subject to Section 12.4(a) and
Section 12.6 Boyd Indiana shall cause the LLC to pay all Taxes shown to be due
and payable thereon. With respect to Tax Returns for Straddle Periods, no later
than ten (10) Business Days before such Tax Returns are filed, Boyd Indiana
shall provide drafts of such Tax Returns to the Company for its reasonable
review.
Section 12.8 Defense of Claims By the Company and Boyd Indiana.
(a) Except as otherwise provided in this Agreement or as provided in
Section 12.8(c), the appropriate member of the Boyd Indiana Group will control
the defense or settlement of all claims, actions or proceedings made or brought
by any Person or group who is not a party to this Agreement ("Independent Party
Claims") which may give rise to a Company Reimbursable Loss constituting a
Company Indemnification Event giving rise to a claim for indemnification under
Section 12.4. Boyd Indiana shall provide notice of any such claim, action or
proceeding to the Company, which shall be entitled to participate, through
counsel selected by it, at the Company's expense, in the defense of such claim.
Boyd Indiana shall consult with the Company prior to settling any such claim (if
such settlement will be satisfied, in part or in whole, from Company Escrowed
Funds) and will not settle such claim to the extent it involves a Company
Reimbursable Loss in excess of Ten Thousand and No/100 Dollars ($10,000.00)
without the consent of the Company, which consent will not be unreasonably
withheld.
(b) In addition, if the Independent Party Claim represents a claim
in connection with any pre-Closing Date action or event arising in the ordinary
course of business which is either (i) covered by insurance or (ii) would have
been handled prior to the Closing Date by the Company's personnel, the matter
will be handled by LLC's personnel under Section 12.8(b) so long as no out of
pocket costs are incurred by LLC or Boyd Indiana in connection with the defense
thereof. The Company hereby authorizes Boyd Indiana to settle any Independent
Party Claim under this Section 12.8(b), subject to the same limitations of the
third sentence of Section 12.8(a), and any amounts paid in settlement of any
Independent Party Claim under this Section 12.8(b) will be paid by the Company
upon receipt of a release of such claim, or to the extent the Company fails to
pay such amounts, such amounts will be treated as a Company Specified
Indemnifiable Loss.
(c) In the event of an Independent Party Claim relating to a
criminal action or civil fraud by any of the Company or LLC, or relating to any
of the other events giving rise to an obligation of the Company to indemnify the
Boyd Indiana Group pursuant to Section 12.4, Boyd Indiana will provide the
Company with notice of such claim. The Company may, by giving written notice to
Boyd Indiana, elect to assume at its own expense the defense of such Independent
Party Claim if the Company acknowledges in writing its obligation to indemnify
Boyd Indiana pursuant to this Agreement with respect to (and in the full amount
provided for by this Agreement) such Independent Party Claim and the Independent
Party Claim involved seeks (and continues to seek) primarily monetary damages;
provided, however, that counsel selected by the Company shall be reasonably
satisfactory to Boyd Indiana. Boyd Indiana will defend in good faith any
Independent Party Claim as to which it has so assumed the defense under this
Section 12.8. Notwithstanding the Company's election to assume the defense, the
Boyd Indiana
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Group shall have the right to employ separate counsel (including local counsel),
and the Company will pay the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the Company would present
such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both a member of the Boyd
Indiana Group and the Company and the member of the Boyd Indiana Group shall
have reasonably concluded that there may be legal defenses available to it
and/or other members of the Boyd Indiana Group which are different from or
additional to those available to the Company (in which case, if such member of
the Boyd Indiana Group notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action on behalf of such member of the Boyd
Indiana Group); (iii) the Company shall not have employed counsel reasonably
satisfactory to the member of the Boyd Indiana Group to represent the member of
the Boyd Indiana Group within thirty (30) days after notice of the institution
of such action; or (iv) the Company shall authorize the member of the Boyd
Indiana Group to employ separate counsel at the expense of the Company. Without
obtaining a complete and unconditional release of the Boyd Indiana Group from
all liability in respect of such Independent Party Claim, the Company will not
enter into any settlement of such Independent Party Claim without the consent of
the Boyd Indiana Group, which consent shall not be unreasonably withheld.
Notwithstanding the above, the Boyd Indiana Group, during the period the Company
is determining whether to elect to assume the defense of a matter covered by
this Section 12.8(c) (which period shall not exceed thirty (30) days), may take
such reasonable actions as are necessary to preserve any and all rights with
respect to such matter, without such actions being construed as a waiver of the
Boyd Indiana Group's rights to defense and indemnification pursuant to this
Section 12.8(c) and Section 12.4.
Section 12.9 Company Escrow Statements.
(a) During the Claims Period or within thirty (30) days after the
end of the Claims Period, Boyd Indiana may at any time or from time to time
deliver, on behalf of the Boyd Indiana Group, to the Company a statement (a
"Company Escrow Statement") setting forth with reasonable specificity the amount
and nature of Indemnifiable Losses from Company Indemnification Events incurred
or allocated during the Claims Period (whether or not liquidated during the
Claims Period), together with such invoices, bills, statements and other
documentation as shall reasonably verify the amounts so claimed. If Boyd Indiana
does not submit any Company Escrow Statement during the period referred to in
the preceding sentence, the amount of Company Reimbursable Losses shall be
deemed to be Zero and No/100 Dollars ($0.00).
(b) On or prior to the fifteenth (15th) day following the delivery
of a Company Escrow Statement, the Company may deliver to Boyd Indiana a written
statement (a "Company Disputing Escrow Statement") setting forth with reasonable
specificity any disagreement with any of the amounts contained in a Company
Escrow Statement which could affect the necessity or amount of any release of
Company Escrowed Funds to any member of the Boyd Indiana Group pursuant to
Section 12.10. If the Company does not submit a Company Disputing Escrow
Statement on or prior to such fifteenth (15th) day then such Company Escrow
Statement shall be deemed to have been finally determined for purposes of this
Agreement. If the Company does submit a Company Disputing Escrow Statement on or
prior to such fifteenth (15th) day, any amounts contained in such Company Escrow
Statement which are not disputed by the Company
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Disputing Escrow Statement shall be deemed to have been finally determined for
purposes of this Agreement.
(c) For a period of ten (10) days, Boyd Indiana and the Company
shall attempt to resolve in good faith any dispute or disagreement between a
Company Escrow Statement and a Disputing Escrow Statement. Amounts contained on
a Company Escrow Statement and resolved by such attempts shall be deemed to have
been finally determined for purposes of this Agreement. After such ten (10) day
period, either party may commence legal proceedings to resolve any such dispute.
Section 12.10 Release of Company Reimbursable Losses. After a Company
Escrow Statement is finally determined as provided in Section 12.9, Boyd Indiana
and the Company shall jointly submit such Company Escrow Statement to the Escrow
Agent. Within ten (10) days of the receipt of each such Company Escrow
Statement, the Escrow Agent shall record the total dollar amount of Company
Reimbursable Losses on the books and records of the Escrow Agent and shall
deliver by wire transfer of immediately available funds to the account or
accounts specified by Boyd Indiana an aggregate amount equal to the Company
Reimbursable Losses shown on such Company Escrow Statement together with the pro
rata portion of the interest and earnings on the Company Escrowed Funds.
Section 12.11 Release of Escrowed Funds to the Company.
(a) Within two (2) business days of the latest to be made of the
payment (or release from escrow) of (i) the adjustment amount related to the
final determination of the LLC Closing Date Working Capital Amount or (ii) the
final determination of the Actual Completion Cost Amount, the Escrow Agent shall
record the total dollar amount of the positive difference ("Initial Company
Escrow Release Amount"), if any, resulting from the subtraction of (x) the sum
of any Company Escrowed Funds delivered under clauses (i) and (ii) above from
(y) the sum of Three Million Five Hundred Thousand and No/100 Dollars
($3,500,000.00) and the Escrow Adjustment Amount. The Escrow Agent shall
promptly deliver by wire transfer of immediately available funds to the
liquidation account or accounts specified by the Company an aggregate amount
equal to the Initial Company Escrow Release Amount, together with the pro rata
portion of the interest and earnings on the Company Escrowed Funds.
(b) To the extent the amount of Company Escrowed Funds in the
Company Escrow Account after the last day for delivery by Boyd Indiana pursuant
to Section 12.9(a) of a Company Escrow Statement is greater than the Maximum
Company Escrow Amount, the Escrow Agent shall record the total dollar amount of
such excess on the books and records of the Escrow Agent and shall deliver on,
or as promptly as practicable after, the thirty first (31st) day following the
expiration of the Claims Period, by wire transfer of immediately available funds
to the liquidation account or accounts specified by the Company an aggregate
amount equal to such excess, together with the pro rata portion of the interest
and earnings on the Company Escrowed Funds.
(c) In the event that, at the time of the release to the account or
accounts specified by the Company pursuant to Section 12.11(b) there remain any
amount of Company Escrowed Funds with respect to (i) Company Escrow Statements
which have not yet been resolved
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pursuant to Sections 12.4 and 12.9 or (ii) indemnity payments for Company
Reimbursable Losses that have not yet been made to Boyd Indiana, the Escrow
Agent shall promptly following the resolution of all such pending
indemnification matters, deliver by wire transfer of immediately available funds
to the liquidation account or accounts specified by the Company an aggregate
amount equal to the remaining Company Escrowed Funds, if any, together with the
pro rata portion of the interest and earnings on such remaining Company Escrowed
Funds.
Section 12.12 Environmental Remediation Matters. To the extent that an
Indemnifiable Loss includes claims arising from the obligation to conduct
environmental investigation and/or remediation or response, Indemnifiable Losses
for environmental investigation and/or remediation activities shall be limited
to those activities required by Law and arising from or related to the release,
threatened release or response, as those terms are defined in Environmental Law,
of any Materials of Environmental Concern or the violation of any Environmental
Law.
Section 12.13 Subrogation. Upon an Indemnifying Party making any payment
to an Indemnitee pursuant to this Article XII, such Indemnifying Party will, to
the extent of such payment, be subrogated to all rights of such Indemnitee
against any third party in respect of the Indemnifiable Loss to which the
payment relates; provided, however, that, until such Indemnitee recovers full
payment of its Indemnifiable Loss, any and all claims of the Indemnifying Party
against any such third party on account of said payment are hereby made
expressly subordinated and subjected in right of payment to the Indemnitee's
rights against such third party. Without limiting the generality of any other
provision, the Indemnitee and the Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
Section 12.14 Adjustment to Purchase Price. Except to the extent
otherwise provided by law, the parties hereto covenant and agree that each party
shall treat each payment, if any, made to or by it pursuant to this Article XII
as an adjustment to the LLC Purchase Price.
Section 12.15. Liquidation of Company. Boyd Indiana acknowledges that
the Board of Directors of the Company has adopted a Plan of Liquidation to
voluntarily liquidate promptly following the Closing and to distribute proceeds
of such liquidation to its shareholders all in accordance with applicable
requirements of Indiana law. The Plan of Liquidation shall appoint a
representative or representatives to act on behalf of the Company for the
purposes of this Agreement following such a liquidation, including receiving any
payments hereunder following such liquidation. The liability of shareholders who
receive such proceeds in liquidation of the Company with respect to obligations
of the Company under this Agreement shall be subject to any applicable
limitations under the corporate dissolution laws of the State of Indiana;
provided that in the event (i) Boyd Indiana's enforcement against the Company or
the shareholders of a claim governed by Section 12.4(b)(ii) for one or more
Company Specified Indemnifiable Losses is barred by reason of the expiration of
the limitation period under Ind. Code Section 23-1-45-7(c) or other applicable
Indiana law, and (ii) any Individual Covenantor had knowledge that the
representation or warranty giving rise to such claim was not true and correct in
all material respects as of the date given or made, each Individual Covenantor
hereby severally waives the benefit of the limitation period under Ind. Code
Section 23-1-45-7(c) or other applicable Indiana law limiting recourse against
the Company or its shareholders by reason of the Company's dissolution and
severally agrees that he shall be fully and primarily liable for, and severally
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agrees to pay and perform the full (as opposed to only a pro rata) amount of,
the Company's indemnification obligations under Section 12.4 with respect to
such claim, up to an aggregate maximum amount of Four Million and No/100 Dollars
($4,000,000) per each Individual Covenantor for all such claims, as and to the
same extent that the Company would be liable for such indemnification if the
Company had not been dissolved, provided that an Individual Covenantor shall be
obligated to pay for any Company Reimbursable Losses hereunder only to the
extent such Company Reimbursable Losses shall not already have been fully paid
by one or more other Individual Covenantors.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Remedies Cumulative. Except as herein expressly provided
(including the provisions of Section 12.4), the remedies provided herein shall
be cumulative and shall not preclude assertion by any party hereto of any other
rights or the seeking of any other remedies against any other party hereto.
Section 13.2 Expenses. Except as otherwise expressly provided in
Schedule 13.2, the Company and LLC, and Boyd Indiana and BGC shall each pay its
own legal, accounting and other miscellaneous expenses incident to this
Agreement.
Section 13.3 Transfer Taxes. All transfer, sales, use, documentary or
other similar Taxes arising out of or related to the sale of the LLC Units or
the Transfer pursuant to this Agreement shall be borne fifty percent (50%) by
the Company and fifty percent (50%) by Boyd Indiana. In the event that the
Company pays the full amount of such taxes prior to Closing, they shall be
reimbursed by Boyd Indiana for fifty percent (50%) of such amount not later than
the Closing.
Section 13.4 Press Releases and Announcements. After the date of this
Agreement and prior to the Closing, no party to this Agreement will directly or
indirectly make or cause to be made any public announcement or disclosure, or
issue any notice with respect to this Agreement or the transactions contemplated
by this Agreement without the prior consent of the other parties to this
Agreement; provided, however, the Company may disclose such information, upon
the prior consultation with Boyd Indiana of the means of such disclosure and the
specific items to be disclosed to (i) the City and the applicable gaming
authorities in the State of Indiana and (ii) employees and vendors, and Boyd
Indiana may disclose such information, upon the prior consultation with the
Company of the means of such disclosure and the specific items to be disclosed,
to the applicable gaming authorities in the States of Illinois, Louisiana,
Mississippi, Nevada and New Jersey; and provided further, that any party to this
Agreement may make any public announcement or disclosure which is required by
law or regulation (in which case the disclosing party shall to the extent
practicable advise the other parties to this Agreement and provide them with a
copy of such proposed disclosure prior to making the disclosure).
Section 13.5 Entire Agreement. This Agreement and the Disclosure
Schedules, Exhibits and Schedules and other writings referred to herein or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to their subject matter. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to its subject matter.
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Section 13.6 Amendment, Extension and Waiver. This Agreement may not be
amended except by an instrument in writing signed on behalf of all of the
parties hereto. Any agreement on the part of a party hereto to any extension or
waiver under this Section 13.6 shall be valid only if set forth in an instrument
in writing signed on behalf of such party. Except as expressly provided in this
Agreement, no delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
Section 13.7 Headings. The article and section headings contained herein
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
Section 13.8 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement will
be in writing and will be given by hand delivery, certified or registered mail,
return receipt requested, facsimile (with a copy also sent by hand delivery or
air courier, which shall not alter the time at which the facsimile notice is
deemed received) or air courier to the parties at the addresses set forth below.
Such notices shall be deemed given: at the time personally delivered, if
delivered by hand with receipt acknowledged; at the time received, if sent by
certified or registered mail; upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip that the number of
pages constituting the notice have been transmitted without error, if faxed; and
the first Business Day after timely delivery to the courier, if sent by air
courier specifying next day delivery.
If to the Company or (prior to the Closing) LLC:
Blue Chip Casino, Inc.
120 N. LaSalle, Suite 3300
Chicago, Illinois 60602
Attention: Kevin F. Flynn and Walter P. Hanley, Esq.
Telephone: (312) 456-7280
Fax: (312) 456-0708
With a copy (which shall not constitute notice) given in the manner
prescribed above to:
Bell, Boyd & Lloyd
Three First National Plaza, Suite 3300
70 West Madison Street
Chicago, Illinois 60602-4207
Attention: John T. McCarthy, Esq.
Telephone: (312) 372-1121
Fax: (312) 372-2098
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If to LLC after the Closing:
c/o Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada 89109
Attention: Ellis Landau
Brian A. Larson, Esq.
Telephone: (702) 792-7200
Fax: Mr. Landau: (702) 792-7313
Mr. Larson: (702) 792-7335
With a copy (which shall not constitute notice) given in the manner
prescribed above to:
Morrison & Foerster LLP
19900 MacArthur Boulevard, Suite 1200
Irvine, California 92612-2445
Attention: Robert M. Mattson, Jr., Esq.
Telephone: (949) 251-7500
Fax: (949) 251-0900
If to Boyd Indiana or BGC:
Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada 89109
Attention: Ellis Landau
Brian A. Larson, Esq.
Telephone: (702) 792-7200
Fax: Mr. Landau: (702) 792-7313
Mr. Larson: (702) 792-7335
With a copy (which shall not constitute notice) given in the manner
prescribed above to:
Morrison & Foerster LLP
19900 MacArthur Boulevard, Suite 1200
Irvine, California 92612-2445
Attention: Robert M. Mattson, Jr., Esq.
Telephone: (949) 251-7500
Fax: (949) 251-0900
Section 13.9 Assignment. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors, legal
representatives and assigns, but this Agreement may not be assigned by any party
without the written consent of the other parties; provided, however, that (i)
Boyd Indiana may assign all or any portion of their respective rights hereunder
without the prior written consent of the other parties hereto to an Affiliate of
Boyd Indiana, but such assignment shall not relieve Boyd Indiana of their
respective obligations hereunder and (ii) the Company may adopt and effect the
Plan of Liquidation provided for in
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Section 12.15 in connection with the liquidation of the Company. Any attempted
assignment in violation of this Section 13.9 shall be void.
Section 13.10 Applicable Law. This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of Indiana
applicable to agreements made and to be performed entirely within such State,
without giving effect to the conflict of laws provisions thereof.
Section 13.11 Words in Singular and Plural Form. Words used in the
singular form in this Agreement shall be deemed to import the plural, and vice
versa, as the sense may require.
Section 13.12 Further Assurances; Antitrust Notification.
(a) Each of the Company, LLC, BGC and Boyd Indiana will use all
commercially reasonable efforts to do or cause to be done all things necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement. Without limiting the foregoing, the Company and Boyd Indiana and BGC
will reasonably cooperate, and will cause their respective Affiliates, officers,
employees, agents, auditors and representatives reasonably to cooperate, in (i)
preparing and filing all Tax Returns (including amended returns and claims for
refund), including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits with
respect to all taxable periods relating to Taxes and (ii) providing to each
other all information and customary consents pertinent to the transactions
contemplated by this Agreement, including information as to their, if
applicable, ownership structure, corporate structure, officers and directors,
shareholders and members' identity, financing, transfers of interest and other
information, as shall be required by any Governmental Body with jurisdiction
over such parties in connection with the consummation of the transactions
contemplated hereby or with respect to any federal or state securities law
requirements in any jurisdiction in which such parties have an interest.
(b) Each of the Company, LLC, Boyd Indiana and BGC (and any
shareholder or member thereof, as required) will as promptly as practicable, but
in no event later than ten (10) business days following the execution and
delivery of this Agreement, file or cause to be filed with the FTC and the DOJ
the notification and report form required for the transactions contemplated
hereby and any supplemental information requested in connection therewith
pursuant to the HSR Act. Any such notification and report form and supplemental
information will be in substantial compliance with the requirements of the HSR
Act. Each of Boyd Indiana, BGC, LLC and the Company will furnish to the others
such necessary information and reasonable assistance as the others may request
in connection with the preparation of any filing or submission which is
necessary under the HSR Act. Each of the Company, LLC, Boyd Indiana and BGC will
keep each other apprised of the status of any communications with, and inquiries
or requests for additional information addressed to the entity that filed a
notification and report form as an acquired or acquiring person from, the FTC or
the DOJ and shall comply or cause its respective filing person to comply
promptly with any such inquiry or request. Each of the Company, LLC, Boyd
Indiana and BGC will use commercially reasonable efforts to obtain any clearance
required under the HSR Act for the purchase and sale of the LLC Units.
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Section 13.13 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Section 13.14 No Third-Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person,
other than the parties hereto and such assigns, any legal or equitable rights
hereunder. All references herein to the enforceability of agreements with third
parties, the existence or non-existence of third-party rights, the absence of
breaches or defaults by third parties, or similar matters or statements, are
intended only to allocate rights and risks between the Parties and were not
intended to be admissions against interests, give rise to any inference or proof
of accuracy, be admissible against any Party by any non-Party, or give rise to
any claim or benefit to any non-Party.
Section 13.15 Severability. If any provision of this Agreement or the
application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof (or the remaining portion thereof) or the application
of such provision to any other persons or circumstance.
Section 13.16 Consent to Jurisdiction. Boyd Indiana irrevocably submits
to the non-exclusive jurisdiction of (i) the circuit court of the State of
Illinois, Cook County, and (ii) the United States District Court for the
Northern District of Illinois, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
The Company and LLC irrevocably submits to the non-exclusive jurisdiction of (i)
the circuit court of the State of Nevada, Clark County, and (ii) the United
States District Court for the Nevada District, for the purposes of any suit,
action or other proceeding arising out of this Agreement or any transaction
contemplated hereby. Boyd Indiana, the Company and LLC each further agrees that
service of any process, summons, notice or document by United States registered
mail to Boyd Indiana's, the Company's or LLC's respective address shall be
effective service of process for any action, suit or proceeding in Illinois or
Nevada with respect to any matters to which it has submitted to jurisdiction in
such jurisdiction as set forth above in this Section 13.16. Boyd Indiana
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or other proceeding arising out of this Agreement or the
transactions contemplated hereby in (x) the circuit court of the State of
Illinois, Cook County, or (y) the United States District Court for the Northern
District of Illinois, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
The Company and LLC irrevocably and unconditionally waive any objection to the
laying of venue of any action, suit or other proceeding arising out of this
Agreement or the transactions contemplated hereby in (i) the circuit court of
the State of Nevada, Clark County, or (ii) the United States District Court for
the Nevada District, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
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ARTICLE XIV
DEFINITIONS
"Accounting Firm" shall mean PricewaterhouseCoopers LLP or its
successor.
"Actual Completion Cost Amount" shall mean the amount calculated
pursuant to Section 10.3(j) above.
"Actual Construction Cost Amount" shall mean the amount calculated
pursuant to Section 10.3(i) above.
"Affiliate" shall have the meaning defined in the rules and regulations
of the Securities and Exchange Commission under the Securities Act of 1933, as
amended, as of the date of this Agreement.
"Agreement" shall mean this Unit Purchase Agreement, including the
Exhibits, Disclosure Schedules and Schedules thereto, as they may be amended
from time to time.
"Allocations" shall have the meaning ascribed to such term in Section
10.1(b).
"Approved Capital Expenditures" shall have the meaning ascribed to such
term in Section 5.1(c).
"Assets" means all of the tangible and intangible assets and rights of
every nature, kind and description, wherever located, relating to or used in the
Business, but not including the Excluded Assets. The Assets shall include, but
are not limited to, the following (except to the extent constituting Excluded
Assets): (i) all Tangible Personal Property owned by the Company and existing on
the Transfer Date; (ii) all of the accounts receivable of the Company at the
Transfer Date; (iii) cash, cash equivalents and securities of the Company on
hand as of the Transfer Date; (iv) prepaid taxes, prepaid insurance, prepaid
deposits and all other prepaid expenses and all deferred charges of the Company
existing on the Transfer Date, except any prepayment relating to an Excluded
Liability; (v) all of the Company's right, title and interest in and under the
Assumed Contracts (except as otherwise provided in Section 2.8); (vi) all
customer and supplier lists, mailing lists, databases related thereto, marketing
studies, and analyses of any kind whether performed by or on behalf of the
Company, and all catalogs, brochures and handbooks existing on the Transfer
Date; (vii) all of the Company's right, title and interest in and to the
Intangibles of the Company, including all Governmental Approvals, excluding
those Governmental Approvals the transfer of which is prohibited by law; (viii)
all of the Company's right, title and interest to the Real Property (which
includes the Hotel) existing on the Transfer Date; (ix) all of the Company's
right, title and interest in and to the Riverboat; (x) all rights under the
Equipment Leases existing on the Transfer Date; and (xi) the originals or, if
not available, copies of all of the Books and Records, provided that the Company
shall be entitled to retain copies of any such materials the originals of which
have been delivered to Boyd Indiana.
"Assignment Arrangement" shall have the meaning ascribed to such term in
Section 2.8.
"Assignment of Contracts" shall have the meaning ascribed to such term
in Section 2.1(e).
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"Assignment of Development Agreement" shall have the meaning ascribed to
such term in Section 2.1(g).
"Assignment of Governmental Approvals and Intangibles" shall have the
meaning ascribed to such term in Section 2.1(f).
"Assignment of Leases" shall have the meaning ascribed to such term in
Section 2.1(b).
"Assumed Contracts" shall mean those Contracts of the Company set forth
in Schedule 2.1(e). Upon mutual agreement by the Company and Boyd Indiana,
Schedule 2.1(e) may be amended after the date of this Agreement to add
additional agreements as Assumed Contracts.
"Assumed Liabilities" means only the following liabilities (excluding
any Excluded Liabilities) of the Company: (i) liabilities relating directly or
indirectly to the Business or the Assets and set forth on Schedule 14.1; (ii)
liabilities arising from and after the Closing Date under the Assumed Contracts;
(iii) accrued accounts payable of the Business arising in the ordinary course of
Business to the extent reflected in the LLC Working Capital Statement; (iv)
accrued liabilities of the Business to the extent reflected in the LLC Working
Capital Statement arising in the ordinary course of business; and (v)
liabilities arising out of events or occurrences occurring from and after the
Closing Date and related to the operation of the Assets or the Business after
the Closing Date.
"Benefit Plan" shall have the meaning ascribed to such term in Section
3.19(a).
"BGC" means Boyd Gaming Corporation, a Nevada corporation.
"Bill of Sale (Tangible Personal Property)" shall have the meaning
ascribed to such term in Section 2.1(d).
"Bill of Sale (Riverboat)" shall have the meaning ascribed to such term
in Section 2.1(c).
"Books and Records" means all books, documents, records, articles,
bylaws, organizational documents, minutes, consents, resolutions, financial and
operating data, and other similar items pertaining to the use, management,
acquisition, development or operation of the Business (including, without
limitation, all deeds, title policies, surveys, environmental reports, soils
studies, architectural plans and renderings, engineering studies, plans or
reports, mechanical and other plans, copies of Governmental Approvals, files,
writing papers and data in the possession of the independent public accountants,
internal audit reports, management letters from independent public accountants
with respect to the systems of internal control, notebooks, and other data
relating to the Business, whether in tangible form or in the form of intangible
computer storage media); provided, however, that Books and Records shall not
include any document or other materials (i) the disclosure of which would waive
the attorney-client privilege of the Company or attorney work product as to the
Company and (ii) which relate solely to Excluded Liabilities.
"Boyd Indiana" shall have the meaning ascribed to such term in the
Preamble.
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"Boyd Indiana Group" means, at any time after the Closing, Boyd Indiana,
BGC, LLC, or any of their respective Affiliates.
"Business" shall have the meaning ascribed to such term in the Preamble.
"Business Day" means any day (other than a Saturday or Sunday) on which
banks are permitted to be open and transact business in the City of Chicago,
Illinois.
"Business Know-How" means all books, records, technology, formulas,
know-how, quality control records, records relating to the adoption and use of
the Intellectual Property, marketing plans, sales records and histories, market
research data, promotional advertising and marketing materials, radio and
television commercials, print advertisements, customer lists, designs, films,
photography, mechanical art, color separations, prints, plates, and graphic
materials, and inventory records, used in or necessary to conduct the Business
as currently conducted, in any jurisdiction in which any of the Company or LLC
operates or does business.
"Buyer's Computed Amount" shall have the meaning ascribed to such term
in Section 1.7(b).
"Buyer's Computed Amount Statement" shall have the meaning ascribed to
such term in Section 1.7(b).
"Buyer's Construction Costs Statement" shall have the meaning ascribed
to such term in Section 10.3(i)(i).
"Buyer's Disclosure Schedule" shall have the meaning ascribed to such
term in Article IV.
"Buyer's Phase I Environmental Investigation" shall have the meaning
ascribed to such term in Section 7.1(a).
"Buyer's LLC Working Capital Amount" shall have the meaning ascribed to
such term in Section 1.8(b).
"Buyer's LLC Working Capital Statement" shall have the meaning ascribed
to such term in Section 1.8(b).
"City" means the City of Michigan City, Indiana and any political
subdivision or governmental authority thereof.
"City Consent" shall have the meaning ascribed to such term in Section
2.2(q).
"Claims Period" shall mean the period beginning on the Closing Date and
ending twelve (12) months after the Closing Date.
"Closing" shall have the meaning ascribed to such term in Section 1.3.
"Closing Date" means the date on which the Closing occurs.
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"Code" means the Internal Revenue Code of 1986, as amended, and
reference to any section of the Code shall refer to that section as in effect at
the date or, if such section has been modified, corresponding provisions of
subsequent Federal tax law in effect at the relevant time.
"Company" shall have the meaning ascribed to such term in the Preamble.
"Company Balance Sheet" shall have the meaning ascribed to such term in
Section 3.6.
"Company's Actual Construction Cost Amount" shall have the meaning
ascribed to such term in Section 10.3(i).
"Company Closing Payment" means (a) Two Hundred Fifty-One Million and
No/100 Dollars ($251,000,000.00) plus Company's Estimated Construction Cost
Amount; minus (b) the Company Escrowed Funds; minus (c) to the extent the LLC
Preliminary Working Capital Amount is less than Zero and No/100 Dollars ($0.00),
the amount of such shortfall; minus (d) the replacement cost of that number of
electronic gaming devices, if any, equal to the positive difference between the
number of slot machines shown in Schedule 3.13(c) and the number of slot
machines owned by LLC on the Closing Date; plus (e) to the extent the LLC
Preliminary Working Capital Amount is greater than Zero and No/100 Dollars
($0.00), the amount of such excess; plus (f) to the extent applicable pursuant
to Section 5.18, the Potential Land Price.
"Company's Computed Amount Statement" shall have the meaning ascribed to
such term in Section 1.7(b).
"Company Disputing Escrow Statement" shall have the meaning ascribed to
such term in Section 12.9(b).
"Company Environmental Reports" shall have the meaning ascribed to such
term in Section 3.20(h).
"Company Escrow Account" shall have the meaning ascribed to such term in
Section 12.3.
"Company Escrow Agreement" means the Escrow Agreement among Boyd
Indiana, the Company and the Escrow Agent substantially in the form of Exhibit
12.3.
"Company Escrow Statement" shall have the meaning ascribed to such term
in Section 12.9(a).
"Company Escrowed Funds" means the portion of the Company Closing
Payment reserved from time to time in the Company Escrow Account, which amount
initially shall equal Seven Million and No/100 Dollars ($7,000,000.00) plus the
Escrow Adjustment Amount.
"Company Financial Statements" shall have the meaning ascribed to such
term in Section 3.6.
"Company General Indemnification Event" means any Company Reimbursable
Losses asserted against, resulting to, imposed upon or incurred by any member of
the Boyd Indiana
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Group, directly or indirectly, during the applicable period of survival of such
agreement, covenant, representation or warranty by reason of or resulting from
(i) a breach of any agreement, covenant, representation or warranty of the
Company or LLC contained in or made pursuant to this Agreement, or any facts or
circumstances constituting such a breach or (ii) Excluded Environmental Matters.
"Company Indemnification Event" means either a Company General
Indemnification Event or a Company Tax Indemnification Event.
"Company Reimbursable Losses" means all Indemnifiable Losses which are
finally determined to be allocable to the Company pursuant to Section 12.9.
"Company/LLC Disclosure Schedule" shall have the meaning ascribed to
such term in Article III.
"Company Construction Costs Statement" shall have the meaning ascribed
to such term in Section 10.3(i)(i).
"Company Specified Indemnifiable Loss" means each Indemnifiable Loss
asserted against, resulting to, imposed upon or incurred by any member of the
Boyd Indiana Group, directly or indirectly, by reason of or resulting from (a)
any and all criminal action or civil fraud of the Company or LLC, or any
shareholder or member thereof on or prior to the Closing Date; (b) any breach of
Section 3.1 (Ownership), Section 3.4 (Capitalization), Section 3.9(a) (Tax
Matters), Section 3.27 (Commissions) or Section 5.8 (Tax Status) (as it relates
to the Company or LLC); (c) any willful failure by the Company or LLC to
disclose to the Boyd Indiana Group herein any breach or any representation or
warranty to Boyd Indiana contained herein of which breach (or any facts or
circumstances constituting such a breach) the Company or LLC has actual
knowledge as of the date hereof or on or prior to the Closing Date; (d) any
Excluded Asset, Excluded Liability, breach by the Company of its obligations to
transfer the Assets to LLC as set forth in Article II or breach of any of their
covenants, agreements and obligations hereto relating to the Excluded Assets or
the Excluded Liabilities; or (e) the amount of any fees owed by the Company as
the Losing Party under Section 1.8(d) or any shortfall pursuant to Section
1.8(f).
"Company Tax Indemnification Event" means any and all Indemnifiable
Losses asserted against, resulting to, imposed upon or incurred by any member of
the Boyd Indiana Group, directly or indirectly, by reason of or resulting from
any and all Taxes imposed upon LLC, the Company or the Company's shareholders to
the extent not reserved for on the LLC Closing Date Working Capital Statement,
other than Excluded Taxes, (a) with respect to any Pre-Closing Periods; (b) with
respect to any Straddle Periods but only with respect to the portion of such
Straddle Period ending on the close of the Closing Date and in the manner
provided in Section 12.6(b); or (c) as to the Company, with respect to any
period (or portion thereof) after the Closing Date. Without limiting the
generality of the foregoing, a "Company Tax Indemnification Event" may arise
from (i) the failure of the Company to be an S corporation, the failure of LLC
to be a limited liability company or a Disregarded Entity or the termination of
the Company's status as an S corporation or LLC's status as a limited liability
company or a Disregarded Entity; (ii) the imposition of any Taxes on the Company
for any taxable period in which the Company's election of subchapter S status
was in effect (including but not limited
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to those Taxes described in Sections 1374 and 1375 of the Code); or (iii) the
imposition of any Taxes on LLC as a result of the retention by the Company of
the Excluded Assets or Excluded Liabilities described in Section 2.1.
"Company's Actual Construction Cost Amount" shall be the amount
calculated pursuant to Section 10.3(i) above.
"Company's Estimated Construction Cost Amount" shall be the amount set
forth on the Preliminary Construction Costs Statement.
"Company's Working Capital Statement" shall have the meaning ascribed to
such term in Section 1.8(b).
"Completion Date" means the date upon which all invoices for costs and
expenses incurred for labor, services, equipment or materials provided in
connection with the construction and development of the Hotel in accordance with
the Plans and Specifications have been paid in full and Company and LLC has
received an unconditional lien release for the invoiced amount from any and all
contractors, subcontractors, suppliers or materialmen who provided such labor,
services, equipment or materials, which releases the Company or LLC, as
applicable, shall diligently pursue.
"Computed Amount" means the combined earnings before interest, taxes,
depreciation and amortization of the Riverboat, Hotel and related facilities,
and before the cost of the Management Agreement (or any successor thereto) but
after the cost of all other consulting and management agreements, as reflected
in the financial statements of LLC prepared in accordance with GAAP,
consistently applied from period to period in accordance with BGC's normal
practice including allocation of overhead and payment for services of
Affiliates. There shall not be deducted in the computation of earnings any
amount actually offset from the Contingent Purchase Price Payment or any expense
for which Boyd Indiana are reimbursed (i) under Section 12.4 from the Company
Escrowed Funds or by the Company directly or (ii) from insurance proceeds.
"Computed Amount Statement" shall have the meaning ascribed to such term
in Section 1.7(d).
"Confidential Information" shall have the meaning ascribed to such term
in Section 5.12.
"Construction Contracts" means collectively that certain (i) Standard
Form of Agreement dated February 8, 1999 by and between the Company and Walsh
Construction Company of Illinois, as amended, (ii) Owner Representative Letter
Agreement dated October 14, 1998 between the Company and James McHugh
Construction Company and (iii) Standard Form of Agreement between the Company
and Aria Group Architects Inc. dated May 22, 1998.
"Construction Costs" shall have the meaning ascribed to such term in
Section 10.3(a).
"Consumable Items" means all food stuffs and alcoholic or nonalcoholic
beverages which are located on the Riverboat premises as of the Closing Date,
which shall be inventoried in accordance with previous practices at the
Riverboat.
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"Contingent Purchase Price Payment" shall have the meaning ascribed to
such term in Section 1.7(a).
"Contract" or "Contracts" means any agreement or understanding, whether
written or oral, including, without limitation, any commitment, letter of
intent, mortgage, indenture, note, guarantee, lease, license, contract, deed of
trust, option agreement, right of first refusal, security agreement, development
agreement, operating agreement, management agreement, service agreement,
partnership agreement, purchase, sale or other agreement, together with any
amendments thereto.
"Contractor" means Walsh Construction Company of Illinois.
"Contractor Estoppel Certificate" shall have the meaning ascribed to
such term in Section 2.2(r).
"Deed" shall have the meaning ascribed to such term in Section 2.1(a).
"Deferred Company Closing Payment" means the Company Closing Payment
minus the Initial Company Closing Payment.
"Delivery" shall mean for purposes of Section 2.2, the actual delivery
to Boyd Indiana or their authorized agents, as applicable, of those items
required to be delivered pursuant to Section 2.2 immediately prior to the
Closing; provided, however, that to the extent that the items set forth in
Sections 2.2(g), 2.2(i), 2.2(k), 2.2(m), 2.2(n), 2.2(o) and 2.2(p) are located
at the Real Property, such items shall remain at the Real Property unless
physically delivered to Boyd Indiana at the Closing and shall be deemed to be
delivered to Boyd Indiana upon Boyd Indiana's receipt of a certificate duly
executed by the Company certifying that all of such items are located at the
Real Property and providing detailed information as to where such items are
situated.
"Development Agreement" means the Riverboat Gaming Development
Agreement, dated as of June 10, 1997, by and between the City (acting through
the City's Board of Public Works and Safety), the Michigan City Port Authority
and the Company.
"Disregarded Entity" shall have the meaning ascribed to such term in
Section 3.9(l).
"DOJ" shall mean the United States Department of Justice.
"Engage" and "Engagement" shall have the meanings ascribed to such terms
in Section 10.2(a).
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup and removal costs, governmental enforcement and
response costs, natural resources damaged, property damages, economic loss,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, discharge or release or threatened discharge or release into the
environment, of any Materials of Environmental Concern at any location, whether
or not owned or operated by the Company or
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LLC or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign Laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata), navigable waters, waters of
contiguous and exclusive economic zones, ocean waters and international waters,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened discharge or releases of Materials of
Environmental Concern or the dredging, handling and disposal of river sediments,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"Environmental Permits" shall have the meaning ascribed to such term in
Section 3.20(a).
"Equipment Leases" means all interest as lessee under all oral or
written leases and rental agreements required to be accounted for as operating
leases under GAAP relating to the equipment, vehicles and furniture used in
connection with the operation, management and use of the Business as listed on
Schedule 2.1(e).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning ascribed to such term in
Section 3.19(a).
"Escrow Adjustment Amount" means the difference, if any, between (a) the
amount that is one hundred twenty-five percent (125%) of the Estimated
Completion Cost Amount less (b) Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00).
"Escrow Agent" shall have the meaning ascribed to such term in Section
12.3.
"Estimated Completion Cost Amount" means the amount as of the Closing
Date of the estimated cost to complete the Hotel in accordance with the Plans
and Specifications free and clear of all Liens (except for the Permitted Liens),
which amount shall be determined by Boyd Indiana immediately prior to the
Closing in the same manner as a reasonably prudent construction contractor.
"Evidence of Payment" shall have the meaning ascribed to such term in
Section 10.3(h).
"Excluded Assets" means those (a) assets of the Company set forth on
Schedule 14.2, which Schedule shall be prepared by the Company and agreed to by
Boyd Indiana and attached hereto on the date of this Agreement; (b) all
Contracts of the Company that are not Assumed Contracts; (c) all Books and
Records relating exclusively to the Excluded Assets or the Excluded Liabilities;
and (d) the originals of the Articles of Incorporation, Bylaws, corporate
resolutions, minute books and stock transfer ledgers of the Company.
"Excluded Environmental Matters" shall have the meaning ascribed to such
term in subparagraph (c) of the definition of Excluded Liabilities.
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"Excluded Liabilities" means any liability of the Company which is not
an Assumed Liability and is not specifically covered by any of the exclusions
set forth in subparagraphs (a) through (o) below. Excluded Liabilities include,
without limitation, the following:
(a) Tort and Product Liabilities. Any liability (other than a
liability arising in the ordinary course of the Business to the extent reflected
as a current liability on the LLC Closing Date Working Capital Statement) with
respect to the Business arising from accidents, occurrences, misconduct,
negligence, breach of fiduciary duty, or statements made or omitted to be made
prior to the Closing Date, whether or not covered by workers' compensation or
other forms of insurance in effect either at the time of the accident,
occurrence, or relevant conduct or at the time at which the claim with respect
thereto is made, or claims for injuries, property damage, or other losses
arising with respect to the operation of the Business prior to the Closing Date.
(b) Employee and Agent Liabilities. Any liability with respect to
the Business arising from tort, contract, or otherwise to employees or agents of
the Company, or persons asserting claims on their behalf, or in respect of their
condition, injury, or death, in any case arising from or related to a condition
in existence or any act or omission occurring prior to the Closing Date, whether
or not covered by workers' compensation or other forms of insurance in effect
either at the time of the accident, act, omission, or relevant conduct or at the
time at which the claim with respect thereto is made, including any liability
relating to (i) any claim relating to an employee, employment compensation,
benefits, and similar matters; (ii) the termination of employment of any
employee of the Company prior to the Closing Date; (iii) any claim for any
injury suffered, illness contracted, condition developed, or exposure received,
by any employee or agent of the Company (including liability incurred after the
Closing Date for the pre-Closing portion of any such pre-existing injury,
illness, condition, or exposure); or (iv) any claim based on alleged
discrimination, harassment, or violation of any Law.
(c) Environmental Liabilities. Any liability for Environmental
Claims and all Losses of any kind or nature whatsoever in connection with or
arising from (i) the presence of any Materials of Environmental Concern on, in,
under, emitted from, or affecting all or any portion of the Assets prior to the
Closing Date (or any condition resulting therefrom) or (ii) the transportation
or presence at any other location of Materials of Environmental Concern relating
to the Business prior to the Closing Date (or any condition resulting
therefrom), including any such Losses incurred as a result of any natural
resource damages, or any violation of Environmental Laws or any investigation,
site monitoring, containment, clean-up, removal, restoration, or other remedial
work, excluding in the cases of (i) and (ii) any matter described therein
relating to the ownership or operation of the Real Property prior to the
Company's ownership thereof and as to which matter either the Company has no
knowledge as of the Closing Date or such matter is a Known Environmental
Condition ("Excluded Environmental Matters").
(d) Certain Liabilities Related to Contracts. Any liability (other
than a liability arising in the ordinary course of the Business to the extent
reflected as a current liability on the LLC Closing Date Working Capital
Statement) of the Company arising out of a breach occurring prior to the Closing
of any provision of a Contract, and any misrepresentation or omission to make
any statement prior to the Closing Date related to any Contract.
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(e) Litigation Liabilities. Any liability (other than a liability
arising in the ordinary course of the Business to the extent reflected as a
current liability on the LLC Closing Date Working Capital Statement) for any
claim, or arising in any legal proceeding, relating to the Business, to the
extent relating to any act, omission, event, occurrence, or condition before the
Closing Date, whether or not asserted, pending, or threatened before the Closing
Date, including but not limited to Sterling Pasha, et al. v. City of Michigan
City, et al. filed on June 2, 1997 in Indiana Superior Court, Michigan City,
County of Laporte, Case No. 46D02-9812-CP172A.
(f) Liabilities for Violation of Law. Any liability of the Company
for any failure to comply with, or any violation of any law relating to the
Business, which failure or violation occurred or was alleged to have occurred
prior to the Closing Date.
(g) Liabilities for Infringement. Any liability of the Company to
the extent relating to periods before the Closing Date for any infringement of
the rights of any other Person relating to the use of the Intellectual Property,
or any rights of any other Person relating to the Intellectual Property pursuant
to any license, sublicense, or agreement.
(h) Liabilities Related to Excluded Assets. Any liability of the
Company under a Contract which is an Excluded Asset.
(i) Liabilities to Affiliates. Any liability (other than a liability
arising in the ordinary course of the Business to the extent reflected as a
current liability on the LLC Closing Date Working Capital Statement) of the
Company to any shareholder or Affiliate of the Company, other than liabilities
arising after the Closing Date under Assumed Contracts.
(j) Insured Liabilities. Any liability to the extent the Company is
covered by insurance.
(k) Tax Liabilities. Any liability of the Company for Taxes,
including without limitation (i) any liability for Taxes on the Transfer, (ii)
any liability for Taxes on the transfer of the LLC Units; (iii) any liabilities
for Taxes attributable to the assets or operations of the Company for any period
prior to the Closing Date; and (iv) any liability for the Taxes of any other
Person, whether as a transferee or successor, by contract, or otherwise, in each
case other than Excluded Taxes.
(l) Indebtedness. All liabilities of the Company for borrowed money,
including indebtedness under its Senior Subordinated Discount Notes due 2002.
(m) Employee Benefit Plan. Any liability related to any Plan of the
Company or any other employee benefit plan currently or previously maintained or
contributed to by any ERISA Affiliate other than (i) liabilities to the extent
reflected as a current liability on the LLC Closing Date Working Capital
Statement and (ii) liabilities arising on or after the Closing Date in
connection with any Plan constituting an Assumed Contract.
(n) Liabilities from Prior Operation of the Business. To the extent
not specifically included in any of the foregoing provisions of this definition,
all liabilities incurred in connection with the operation of the Business up to
the Closing Date, including, without limitation any and all loan documents
executed by the Company or LLC as obligor, unless any such liability or
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obligation (i) has been specifically identified as an Assumed Liability
hereunder or (ii) arose in the ordinary course of the Business prior to the
Closing Date and is reflected as a current liability in the LLC Closing Date
Working Capital Statement (but only to the extent so reflected).
(o) Commissions. Any liability for claims for brokerage commissions
or finder's fees incurred by reason of any action taken by any of the Company,
LLC, any Related Entity or any shareholder or member thereof.
"Excluded Taxes" means with respect to the Company and LLC those Taxes
that would have been reserved for on a Closing Date LLC Balance Sheet if a
Closing Date LLC Balance Sheet had been prepared on a basis consistent with the
Company Balance Sheet (provided, however, such Excluded Taxes shall not include
Taxes resulting to the Company or its shareholders from the sale of the LLC
Units hereunder or from the Transfer).
"Evidence of Payment" shall have the meaning ascribed to such term in
Section 10.3(a) above.
"FF&E" means all furniture, fixtures and equipment owned or leased by
the Company or LLC or otherwise used in connection with the Business, including,
without limitation, floor coverings, pictures, all furniture located within the
Riverboat and the Real Property, including, without limitation, all Operating
Equipment and all other equipment used in the operation of the casino, kitchens,
dining rooms, bars, cleaning equipment, office equipment, machinery, vehicles,
computers and other data processing hardware, special lighting and other
equipment of a like nature, with such additions and deletions as may occur in
the ordinary course of business; provided that "FF&E" shall not include any
Excluded Asset or any item owned by a vendor, lessor or service provider.
"FIRPTA Affidavit" shall have the meaning ascribed to such term in
Section 2.2(h).
"Final Construction Costs Statement" shall have the meaning ascribed to
such term in Section 10.3(i)(iii).
"Final Completion Costs Statement" shall have the meaning ascribed to
such term in Section 10.3(j)(iii).
"Flynn Guaranty" shall have the meaning ascribed to such term in Section
10.4.
"Foreign Corrupt Practices Act" means the Foreign Corrupt Practices Act
of 1977, as amended.
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" means generally accepted accounting principles.
"Gaming Business" shall have the meaning ascribed to such term in
Section 10.2(a).
"Gaming Laws" means the Indiana Riverboat Gambling Act (IC 4-33-1-1, et
seq.) and the rules and regulations promulgated thereunder.
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"Gaming License" means the license currently held by the Company to own
and operate a riverboat gambling facility and related amenities issued under the
Gaming Laws.
"Governmental Approvals" shall mean any:
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, filing, franchise, notice, variance, right, designation, rating,
registration, qualification or authorization that is or has been issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Law; or
(b) right under any Contract with any Governmental Body that relates
to or is used in the Business, including, without limitation, the Development
Agreement.
"Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, taxing authority, unit, body or Person and any
court or other tribunal);
(d) multinational organization or body; or
(e) individual, Person, or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.
"Hotel" means the Blue Chip Casino Hotel, a hotel currently under
construction, which will include 188 guest rooms, together with meeting rooms,
restaurants and other facilities as currently configured in its Plans and
Specifications as of the date of this Agreement as modified pursuant to Section
10.3(b).
"Hotel Construction Budget" shall have the meaning ascribed to such term
in Section 10.3(g).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"including" means including, without limitation.
"Income Tax" or "Income Taxes" means any federal, state, local or
foreign income, franchise or similar Tax.
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"Incremental Construction Costs" shall have the meaning set forth in
Section 10.3(b).
"Indebtedness" shall mean indebtedness of LLC as of the Closing Date for
borrowed money.
"Indemnifiable Losses" means any and all claims, demands, actions or
causes of action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, Taxes, interest, penalties and reasonable
attorneys' fees and expenses.
"Indemnitee" means any Person or group entitled to indemnification under
this Agreement.
"Indemnifying Party" means any person or group required to provide
indemnification under this Agreement.
"Independent Party Claims" shall have the meaning ascribed to such term
in Section 12.8(a).
"Individual Covenantor" shall have the meaning ascribed to such term in
the Preamble.
"Initial Company Closing Payment" means 20% of the Company Closing
Payment.
"Initial Company Escrow Release Amount" shall have the meaning ascribed
to such term in Section 12.11(a).
"Informed Party" shall have the meaning ascribed to such term in Section
5.12.
"Informing Party" shall have the meaning ascribed to such term in
Section 5.12.
"Intangibles" means all of the Company's interest in all intangible
rights and property relating to the Business, the Riverboat or the Hotel
including, without limitation, all Intellectual Property, warranties,
guaranties, utility or street improvement bonds, telephone exchange numbers, and
Governmental Approvals, including without limitation, building permits and
certificates of occupancy, as applicable, service contracts, agreements, the
Liquor Licenses, the Gaming License and all other licenses and approvals for the
Riverboat or the Hotel.
"Intellectual Property" means all, registered and unregistered,
trademarks, service marks trade names, corporate names, company names,
fictitious business names, trade styles, trade dress, logos, and other source or
business identifiers, patents, copyrights, proprietary formulas, recipes,
technology, know-how and other trade secrets and all other intellectual property
used in or necessary to conduct the Business as currently conducted, and all
registrations and recordings thereof, all applications for registration pending
therefor, all extensions and renewals thereof, all goodwill associated
therewith, and all proprietary rights therein; provided that Intellectual
Property shall not be deemed to include (a) the generalized know-how of
employees and directors of the Company and LLC with respect to the gaming
business or methods of operation which are common to the industry or known
generally to the public or employees, or directors of companies, persons or
entities engaged in restaurant, hotel, gaming, casino, riverboat or gaming
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operations, and (b) non-patented devices or equipment purchased or leased from
third parties and used in the operation of the Business.
"Interest Rate" means the prime rate in effect from time to time as
reported in The Wall Street Journal.
"Investment" in any Person means any direct or indirect loan, advance or
other extension of credit, or capital contribution to, or purchase or
acquisition of capital stock or indebtedness or similar instrument of, or equity
investment in, such person.
"IRS" means the Internal Revenue Service.
"Jones Act" means 46 U.S.C. Section 688, as amended.
"Known Environmental Conditions" shall have the meaning ascribed to such
term in Section 7.1(a).
"Laws" shall mean all laws (whether statutory or otherwise), rules,
regulations, orders, writs, injunctions, ordinances, judgments or decrees of all
governmental authorities (federal, state, local or otherwise) including, but not
limited to, all Gaming Laws, the Federal Occupational Safety and Health Act and
all Laws relating to the safe conduct of business and environmental protection
and conservation, the Civil Rights Act of 1964 and Executive Order 11246
concerning equal employment opportunity obligations of federal contractors, the
Americans with Disabilities Act of 1990 and any applicable health, sanitation,
fire, safety, labor, zoning and building laws and ordinances.
"Leased Property" means each parcel of real property and each interest
in real property leased in connection with the Business by the Company, or LLC,
as applicable, as more particularly described on Schedule 3.10(b).
"Leases" means all of those certain leases set forth on the list
attached hereto as Schedule 3.11(a) concerning the Leased Property.
"License Agreements" shall have the meaning ascribed to such term in
Section 3.14(a).
"Liens" means all mortgages, pledges, security interests, liens,
charges, options, conditional sales agreements, claims, restrictions, covenants,
easements, rights of way, title defects or other encumbrances or restrictions of
any nature whatsoever, except to the extent any of the foregoing constitute a
non-monetary lien that does not result in a Material Adverse Effect, or arose
from or through Boyd Indiana or BGC.
"Liquor Assets" means the Liquor Licenses, together with the inventory
of alcoholic beverages in or for the Riverboat.
"Liquor Licenses" means all those certain "off sale," "portable bar" and
other alcoholic beverage licenses issued by Governmental Bodies pursuant to
which the sale of alcoholic beverages is permitted in the restaurants, bars,
function rooms and guest rooms located in the Riverboat and to be located in the
Hotel.
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"LLC" shall mean Blue Chip Casino, LLC, an Indiana limited liability
company.
"LLC Closing Date Working Capital Amount" shall have the meaning
ascribed to such term in Section 1.8(b).
"LLC Closing Date Working Capital Statement" shall have the meaning
ascribed to such term in Section 1.8(d).
"LLC Maximum Construction Cost Amount" means the difference, if any,
between (a) the sum of the Maximum Hotel Cost plus the Incremental Construction
Costs, and (b) the Company's Actual Construction Cost Amount.
"LLC Preliminary Working Capital Amount" shall have the meaning ascribed
to such term in Section 1.8(a).
"LLC Purchase Price" shall mean the sum of the Company Closing Payment,
the Company Escrowed Funds and the amount payable under the LLC Contingent
Purchase Price Payment, if applicable.
"LLC Units" shall mean membership Units in LLC.
"Losses" shall have the meaning ascribed to such term in Section
12.4(c).
"Management Agreement" means that certain Management Agreement dated as
of October 30, 1996, between the Company and Towerton Company, LLC, a Delaware
limited liability company formerly named Blue Chip Management Company, LLC,
concerning the management of the Riverboat.
"Material Adverse Effect" means a material adverse effect on or change
in, directly or indirectly, (a) the business, property, condition, financial
position, prospects (financial or other) or operations of the Company or LLC,
the Assets or the Business or (b) on the ability of either the Company or LLC to
perform their respective obligations under this Agreement or to consummate the
transactions contemplated by this Agreement; provided, however, that no change,
effect, occurrence, action, activity or impact relating to (i) the possibility,
legal status or existence of existing competitive, potentially competitive, or
additional casino gaming, riverboat gaming, hotel or other activities similar in
nature to any portion of the Business by or through Native American tribes or
others or (ii) changes in Law, including changes in Tax Laws or rates, shall be
deemed to constitute a Material Adverse Effect.
"Material Assumed Contract" shall have the meaning ascribed to it in
Section 3.23(f).
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products,
including, without limitation, oil as defined in the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 et seq., and any material or substance that is designated
as a hazardous material, contaminant, pollutant or hazardous substance under the
Federal Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Section 9601 et seq., the Federal Water Pollution Control Act, 33
84
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U.S.C. Section 1221 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., or any other Environmental Law.
"Maximum Company Escrow Amount" as of the date of determination shall
mean an amount equal to the sum of the amount of all Company Indemnifiable
Losses claimed by Boyd Indiana on Company Escrow Statements which have not yet
been resolved pursuant to Section 12.4 and Section 12.9 (to the extent not
resolved) plus the amount of all Company Reimbursable Losses with respect to
which indemnity payments have not yet been made to Boyd Indiana (in each case
together with the applicable pro rata portion of the interest and the Company
Escrowed Funds, as applicable).
"Maximum Hotel Cost" shall have the meaning ascribed to such term in
Section 3.23(g).
"Measurement Period" shall have the meaning ascribed to such term in
Section 1.7(a).
"Millennial Dates" shall have the meaning ascribed to such term in
Section 3.30.
"Notice of Acquisition" shall have the meaning ascribed to such term in
Section 5.18.
"Noncompetition Covenant Payment" shall mean the sum of One Million and
No/100 Dollars ($1,000,000.00).
"Operating Equipment" means all items owned or leased by the Company or
LLC and used in the Business, including in the operation or maintenance of the
Riverboat and the Real Property, or otherwise used in connection with the
Business, including, without limitation, all specialized casino equipment, such
as slot machines, cards, poker chips, gaming devices, dice, baccarat chips,
gaming tables, pneumatic stools, drop buckets, cans and racks, tokens, token
racks, card shuffler devices and accessories, change sorters, pit stands,
counting equipment, roulette table covers, casino and game table signage, cage
and game tables supplies, and all other gaming equipment relating to the
Business, and including, without limitation, food service preparation utensils,
chinaware, glassware, silverware and hollowware, food and beverage service
equipment, uniforms and the supply of and also including consumable supplies for
housekeeping, engineering, accounting and office use, together with paper
supplies and miscellaneous general supply items.
"Owned Property" means all real property owned in fee by the Company or
LLC and each non-fee interest (other than a leasehold interest) owned by the
Company or LLC in any real property and more particularly described in Schedule
3.10(a) (excluding, however, Parcels LIII and LV through LX, inclusive, to the
extent that the Company or any of its Affiliates does not hold fee title to such
Parcels as of the date of this Agreement and excluding Parcel XXXXVIII, the
Channel Property and the Peninsula), and any and all improvements, rights and
appurtenances located thereon or relating thereto, such as the Hotel, but
excluding the Untitled Property.
"parties" shall have the meaning ascribed to such term in the Preamble
to this Agreement.
"Permitted Liens" means (i) liens for current Taxes not yet due; (ii)
purchase money security interests granted to any lessor under any Equipment
Leases or any leased items set forth
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on Schedule 3.13(c); and (iii) those exceptions to title set forth in the
mark-up to the body of that certain Title Commitment No. 99-1816 issued by Title
Company and dated May 3, 1999, a copy of which is attached as Exhibit 14.1, as
supplemented pursuant to Section 5.18.
"Permitted Modification" shall have the meaning ascribed to such term in
Section 8.1.
"Person" means any individual, corporation, limited liability
corporation, joint stock company, joint venture, partnership, unincorporated
association, Governmental Body, country, state or political subdivision thereof,
trust or other entity.
"Plans and Specifications" means all of those certain plans and
specifications concerning the construction of the Hotel and the construction and
installation of the FF&E within the Hotel, as approved by Boyd Indiana and set
forth on Schedule 14.4, and those certain plans and specifications for the
furnishing of certain Tangible Personal Property that is necessary to the
service and operation of the Hotel as a fully stocked hotel, including but not
limited to, furnishings, fixtures, equipment and supplies for each guest room,
conference room, administrative office and all common areas of the Hotel, and
all items necessary to fully service and operate the Hotel, including, but not
limited to, those items set forth on Schedule 14.4.
"Plan" shall have the meaning ascribed to such term in Section 3.19(a).
"Post-Closing Periods" shall mean any taxable period beginning after the
Closing Date.
"Post-Closing Taxes" shall mean Taxes imposed during Post-Closing
Periods.
"Potential Land Inspection Period" shall have the meaning ascribed to
such term in Section 5.18.
"Potential Land" shall have the meaning ascribed to such term in Section
5.18.
"Potential Land Price" means Two Hundred Forty Thousand and No/100
Dollars ($240,000.00).
"Potential Land Transfer Agreement" shall have the meaning ascribed to
such term in Section 5.18.
"Potential Land Title Commitment" shall mean the title commitment issued
by Title Company and approved by Boyd Indiana that covers the Potential Land.
"Pre-Closing Periods" shall mean any taxable period ending on or before
the Closing Date.
"Pre-Closing Taxes" shall mean Taxes imposed during Pre-Closing Periods.
"Preliminary Construction Costs Statement" shall have the meaning
ascribed to such term in Section 10.3(h).
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"Purchase Price" shall mean the sum of the Company Closing Payment and
the Company Escrowed Funds, subject to adjustment in accordance with Section
1.8.
"Real Property" means the Owned Property, the Untitled Property and the
Leased Property.
"Related Entity" means (i) any subsidiary of the Company or (ii)
Towerton Company, LLC, a Delaware limited liability company.
"Riverboat" means that certain vessel named "Blue Chip Casino," home
port of Michigan City, Indiana and number D1056331, with all its components,
duly documented in the name of the Company under the laws of the United States,
together with all its engines, boilers, machinery, masts, boats, anchors,
cables, chains, rigging, tackle, apparel, furniture, capstans, outfit, tools,
pumps, gears, furnishings, appliances, fittings, spare and replacement parts and
all other appurtenances thereto appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not on board, and also any and all
additions, improvements and replacements hereinafter made in or to such vessel
or any part thereof, including all items and appurtenances as aforesaid.
"Straddle Periods" shall mean any taxable period beginning before the
Closing Date and ending after the Closing Date.
"Straddle Taxes" shall mean Taxes (other than Income Taxes) with respect
to a Straddle Period.
"Subsidiary" or "Subsidiaries" means as to any Person, a corporation,
limited liability corporation, partnership or other entity of which shares of
stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other managers of such corporation,
limited liability corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, or of which a majority
in equity ownership interest is held, by such Person.
"Systems" shall have the meaning ascribed to such term in Section 3.30.
"Tangible Personal Property" means all items of tangible personal
property owned or leased by the Company or LLC which relate to the Business,
including: (a) FF&E including, without limitation, Operating Equipment; (b)
Consumable Items; (c) Liquor Assets (other than Liquor Licenses); (d) inventory
and supplies; (e) accounting, inventory control and other business related
software used by the Company in connection with its operation of the Business
and existing on the Transfer Date; and (f) all such other items of tangible
personal property which are located at, and used in the operation of, the
Business.
"Tax Claim" shall have the meaning ascribed to such term in Section
12.6(c).
"Taxes" means all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, gaming, property,
sales, withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees
87
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and charges, including estimated taxes, imposed by the United States or any
taxing authority (domestic or foreign), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to any such taxes, charges, fees, levies or other
assessments.
"Tax Return" or "Tax Returns" means any return, report or other document
or information required to be supplied to a taxing authority in connection with
Taxes.
"Title Company" means Lawyers Title Insurance Company.
"Transition Marketing Program" shall have the meaning ascribed to such
term in Section 5.1(q).
"Title Policy" shall have the meaning ascribed to such term in Section
2.1(a).
"Transfer Date" shall mean the date on which the Company consummates the
Transfer. References to time periods "after the Transfer Date" or word to
similar effect shall, unless otherwise provided, mean the time period, if any,
after the Transfer Date but prior to the Closing Date.
"Transfer" shall have the meaning ascribed to such term in Section 2.1.
"Travelers" shall mean Traveler's Casualty and Insurance Company of
America.
"Units" shall mean membership units in a limited liability company.
"Untitled Property" shall mean all of that certain real property as more
particularly described on Schedule 14.3.
"Walsh Construction Contract" means the Standard Form of Agreement dated
February 8, 1999 by and between the Company and Walsh Construction Company of
Illinois, as amended.
"WARN Act" shall have the meaning ascribed to such term in Section 3.18.
"Welfare Plan" shall have the meaning ascribed to such term in Section
3.19(g).
"Working Capital" shall have the meaning ascribed to such term in
Section 1.8(a) hereof and Schedule 1.8(a).
"Year 2000 Compliant" shall have the meaning ascribed to such term in
Section 3.30.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by a duly authorized officer of the Company, LLC,
Boyd Indiana, BGC and each of the Individual Covenantors as of the day and year
first above written.
BLUE CHIP CASINO, INC. INDIVIDUAL COVENANTORS
By: /s/ KEVIN F. FLYNN /s/ KEVIN F. FLYNN
-------------------------------- ----------------------------------------
Name: Kevin F. Flynn Name: Kevin F. Flynn
Title: Chief Executive Officer
BLUE CHIP CASINO, LLC ----------------------------------------
Name: Brian J. Flynn
By: /s/ KEVIN F. FLYNN
--------------------------------
Name: Kevin F. Flynn ----------------------------------------
Title: Chief Executive Officer Name: Donald Flynn
BOYD GAMING CORPORATION
----------------------------------------
By: /s/ WILLIAM S. BOYD Name: Robert W. Flynn
--------------------------------
Name: William S. Boyd
Title: Chairman and
Chief Executive Officer
BOYD INDIANA, INC.
By: /s/ WILLIAM S. BOYD
--------------------------------
Name: William S. Boyd
Title: President
89
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by a duly authorized officer of the Company, LLC,
Boyd Indiana, BGC and each of the Individual Covenantors as of the day and year
first above written.
BLUE CHIP CASINO, INC. INDIVIDUAL COVENANTORS
By:
-------------------------------- ----------------------------------------
Name: Name: Kevin F. Flynn
-------------------------------
Title: /s/ BRIAN J. FLYNN
----------------------------- ----------------------------------------
Name: Brian J. Flynn
BLUE CHIP CASINO, LLC
/s/ DONALD FLYNN
By: ----------------------------------------
-------------------------------- Name: Donald Flynn
Name:
-------------------------------
Title: ----------------------------------------
----------------------------- Name: Robert W. Flynn
BOYD GAMING CORPORATION
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
BOYD INDIANA, INC.
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by a duly authorized officer of the Company, LLC,
Boyd Indiana, BGC and each of the Individual Covenantors as of the day and year
first above written.
BLUE CHIP CASINO, INC. INDIVIDUAL COVENANTORS
By:
-------------------------------- ----------------------------------------
Name: Name: Kevin F. Flynn
-------------------------------
Title:
----------------------------- ----------------------------------------
Name: Brian J. Flynn
BLUE CHIP CASINO, LLC
By: ----------------------------------------
-------------------------------- Name: Donald Flynn
Name:
------------------------------- /s/ ROBERT W. FLYNN
Title: ----------------------------------------
----------------------------- Name: Robert W. Flynn
BOYD GAMING CORPORATION
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
BOYD INDIANA, INC.
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
89
<PAGE> 1
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT,
dated as of June 30, 1999
among
BOYD GAMING CORPORATION
as the Borrower,
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
CANADIAN IMPERIAL BANK OF COMMERCE,
as L/C Issuer and Administrative Agent,
WELLS FARGO BANK, N.A.,
as Swingline Lender and Syndication Agent, and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Documentation Agent
LEAD ARRANGER AND BOOK RUNNER:
CIBC WORLD MARKETS CORP.
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.................................................. 1
1.1. Defined Terms........................................................... 1
1.2. Use of Defined Terms.................................................... 25
1.3. Cross-References........................................................ 25
1.4. Accounting and Financial Determinations................................. 26
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES....................................... 26
2.1. Commitments............................................................. 26
2.1.1. Term Loan Commitment.................................................... 26
2.1.2. Revolving Loan Commitment............................................... 26
2.1.3. Swing Loan Commitment................................................... 26
2.1.4. Lenders Not Permitted or Required To Make Loans......................... 27
2.2. Reduction of Commitment Amounts......................................... 27
2.2.1. Optional................................................................ 27
2.2.2. Mandatory Reductions From Net Proceeds.................................. 28
2.2.3. Scheduled Commitment Reductions......................................... 29
2.2.4. Post Default Application................................................ 30
2.3. Borrowing Procedure..................................................... 30
2.3.1. Revolving Loans and Term Loans.......................................... 30
2.3.2. Swing Loans............................................................. 31
2.4. Continuation and Conversion Elections................................... 31
2.5. Funding................................................................. 32
2.6. Notes; Register......................................................... 32
2.7. Letter of Credit Procedure.............................................. 33
2.8. Designation of Debt..................................................... 34
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES........................................ 34
3.1. Repayments and Prepayments.............................................. 34
3.1.1. Payment Terms........................................................... 34
3.1.2. Special Swing Loan Provisions........................................... 35
3.1.3. Post Default Application of Payments.................................... 37
3.2. Interest Provisions..................................................... 37
3.2.1. Rates................................................................... 37
3.2.2. Post-Maturity Rates..................................................... 38
3.2.3. Payment Dates........................................................... 38
3.3. Fees.................................................................... 38
3.3.1. Unused Fee.............................................................. 38
3.3.2. Upfront Fees............................................................ 39
3.3.3. Letter of Credit Fees................................................... 39
3.3.4. Agent's Fees............................................................ 39
3.4. Agreement to Repay Letter of Credit Drawings
with Revolving Loans.................................................... 39
3.5. Letter of Credit Participations......................................... 40
3.6. Existing Letters of Credit.............................................. 41
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ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS..................................... 42
4.1. Eurodollar Rate Lending Unlawful........................................ 42
4.2. Deposits Unavailable.................................................... 42
4.3. Increased Costs, etc.................................................... 42
4.4. Funding Losses.......................................................... 43
4.5. Increased Capital Costs................................................. 43
4.6. Taxes................................................................... 44
4.7. Payments, Computations, etc............................................. 45
4.8. Sharing of Payments..................................................... 46
4.9. Setoff.................................................................. 47
4.10. Use of Proceeds......................................................... 47
4.11. Discretion of Lenders as to Manner of Funding........................... 47
4.12. Substitution............................................................ 48
ARTICLE V
CONDITIONS TO BORROWING.......................................................... 48
5.1. Initial Borrowing....................................................... 48
5.1.1. Resolutions, etc........................................................ 48
5.1.2. Delivery of Notes....................................................... 49
5.1.3. Guaranty................................................................ 49
5.1.4. Security Agreement...................................................... 49
5.1.5. Deeds of Trust.......................................................... 50
5.1.6. Surveys................................................................. 51
5.1.7. Environmental Audit..................................................... 51
5.1.8. First Preferred Ship Mortgages.......................................... 51
5.1.9. Consents, etc........................................................... 51
5.1.10. Insurance Coverages..................................................... 52
5.1.11. Hazardous Materials Indemnity........................................... 52
5.1.12. Solvency................................................................ 52
5.1.13. Opinions of Counsel..................................................... 53
5.1.14. Closing Fees, Expenses, etc............................................. 53
5.1.15. Loan Documents.......................................................... 53
5.2. All Borrowings.......................................................... 53
5.2.1. Compliance with Warranties, No Default, etc............................. 53
5.2.2. Borrowing Request....................................................... 54
5.2.3. Satisfactory Legal Form................................................. 54
ARTICLE VI
REPRESENTATIONS AND WARRANTIES................................................... 55
6.1. Organization, etc....................................................... 55
6.2. Due Authorization, Non-Contravention, etc............................... 55
6.3. Government Approval, Regulation, etc.................................... 55
6.4. Validity, etc........................................................... 56
6.5. Financial Information................................................... 56
6.6. No Material Adverse Effect.............................................. 56
6.7. Litigation, etc......................................................... 57
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6.8. Subsidiaries............................................................ 57
6.9. Ownership of Properties................................................. 57
6.10. Compliance.............................................................. 57
6.11. Pension and Welfare Plans............................................... 58
6.12. Environmental Warranties................................................ 58
6.13. Regulations U and X..................................................... 59
6.14. Taxes................................................................... 59
6.15. Accuracy of Information................................................. 59
6.16. Year 2000 Compliance.................................................... 60
ARTICLE VII
COVENANTS........................................................................ 60
7.1. Affirmative Covenants................................................... 60
7.1.1. Financial Information, Reports, Notices, etc............................ 60
7.1.2. Compliance with Laws, etc............................................... 63
7.1.3. Construction and Maintenance of Properties, Etc......................... 63
7.1.4. Insurance............................................................... 64
7.1.5. Books and Records....................................................... 66
7.1.6. Environmental Covenant.................................................. 66
7.1.7. Maintenance of Existence................................................ 67
7.1.8. Gaming and Liquor Licenses.............................................. 67
7.1.9. Accuracy of Information................................................. 67
7.1.10. Significant Subsidiaries................................................. 67
7.1.11. Use of Proceeds.......................................................... 68
7.1.12. Further Agreements....................................................... 68
7.2. Negative Covenants....................................................... 68
7.2.1. Business Activities...................................................... 68
7.2.2. Indebtedness............................................................. 68
7.2.3. Liens.................................................................... 69
7.2.4. Financial Condition...................................................... 71
7.2.5. Investments.............................................................. 72
7.2.6. Restricted Payments...................................................... 72
7.2.7. Capital Expenditures..................................................... 73
7.2.8. Consolidation, Merger, etc............................................... 74
7.2.9. Asset Dispositions, etc.................................................. 74
7.2.10. Transactions with Affiliates............................................. 74
7.2.11. Negative Pledges, etc.................................................... 75
7.2.12. Amendments or Waivers of Certain Documents............................... 75
7.2.13. Subsidiaries............................................................. 76
7.2.14. Fiscal Year.............................................................. 76
7.2.15. Rental Obligations....................................................... 76
7.2.16. Limitation on Indebtedness............................................... 76
7.2.17. Limitation on Restricted Payments........................................ 78
ARTICLE VIII
EVENTS OF DEFAULT................................................................ 80
8.1. Listing of Events of Default............................................ 80
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8.1.1. Non-Payment of Obligations.............................................. 80
8.1.2. Breach of Warranty...................................................... 80
8.1.3. Non-Performance of Certain Covenants and
Obligations............................................................. 81
8.1.4. Non-Performance of Other Covenants and
Obligations............................................................. 81
8.1.5. Default on Other Indebtedness........................................... 81
8.1.6. Judgments............................................................... 81
8.1.7. Pension Plans........................................................... 81
8.1.8. Change of Control....................................................... 82
8.1.9. Bankruptcy, Insolvency, etc............................................. 82
8.1.10. Loan Documents........................................................... 83
8.1.11. Gaming License........................................................... 83
8.1.12. Governmental Approvals................................................... 83
8.1.13. Liens on Shares of Significant Subsidiaries.............................. 83
8.2. Action if Bankruptcy.................................................... 83
8.3. Action if Other Event of Default........................................ 84
ARTICLE IX
THE AGENT........................................................................ 84
9.1. Actions................................................................. 84
9.2. Funding Reliance, etc................................................... 85
9.3. Exculpation............................................................. 85
9.4. Successor............................................................... 86
9.5. Credit Decisions........................................................ 86
9.6. Copies, etc............................................................. 86
9.7. Collateral Agent........................................................ 87
ARTICLE X
MISCELLANEOUS PROVISIONS......................................................... 87
10.1. Waivers, Amendments, etc................................................ 87
10.2. Notices................................................................. 89
10.3. Payment of Costs and Expenses........................................... 89
10.4. Indemnification......................................................... 90
10.5. Survival................................................................ 91
10.6. Severability............................................................ 91
10.7. Headings................................................................ 91
10.8. Execution in Counterparts, Effectiveness, etc........................... 91
10.9. Governing Law; Entire Agreement......................................... 91
10.10. Successors and Assigns.................................................. 92
10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes....................................... 92
10.11.1. Assignments............................................................. 92
10.11.2. Participations.......................................................... 94
10.12. Other Transactions...................................................... 95
10.13. Waiver of Jury Trial.................................................... 95
10.14. Amendment and Restatement............................................... 95
</TABLE>
iv
<PAGE> 6
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
----
<S> <C>
SCHEDULES
I Percentages
II Disclosure Schedule
III Existing Letters of Credit
IV Additional Definitions
EXHIBITS
A Form of Revolving Note
B Form of Term Note
C Swingline Note
D Form of Borrowing Request
E Form of Continuation/Conversion Notice
F Form of Deed of Trust
G Form of General Continuing Guaranty
H Form of Hazardous Materials Indemnity
I Form of Lender Assignment Agreement
J Form of Security Agreement
K Solvency Certificate
L Opinion of Borrower's and Guarantors' Counsel
M Form of Compliance Certificate
N Form of Prepayment Notice
</TABLE>
v
<PAGE> 7
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, made as of June 30,
1999, by and among BOYD GAMING CORPORATION, a Nevada corporation (the
"Borrower"), the commercial lending institutions listed on the signature pages
hereof (collectively, the "Lenders"), WELLS FARGO BANK, N.A., as Swingline
Lender and as syndication agent (herein, in such capacity, the "Syndication
Agent"), CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as letter of credit issuer
and as administrative agent and collateral agent for the Lenders (herein, in
such capacity, the "Agent"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as documentation agent (herein, in such capacity, the
"Documentation Agent").
R E C I T A L S:
WHEREAS, the Borrower, California Hotel and Casino, a Nevada corporation
and wholly-owned subsidiary of the Borrower ("CH&C"), various commercial lending
institutions and CIBC, as agent for such financial institutions, were parties to
that certain $500,000,000 Credit Agreement dated as of June 19, 1996, as amended
prior to the date hereof (as so amended, the "Prior Credit Agreement") pursuant
to which such financial institutions agreed to make credit extensions to the
Borrower and CH&C in an amount not to exceed $500,000,000; and
WHEREAS, the parties hereto wish to amend and restate the Prior Credit
Agreement on the terms and conditions more particularly hereinafter set forth;
NOW, THEREFORE, it is agreed that the Prior Credit Agreement shall be
amended and restated in its entirety to read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. Certain terms used in Sections 7.2.16 and
7.2.17 shall have the meanings set forth on Schedule IV. The following terms
(whether or not underscored) when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or
<PAGE> 8
any committee with responsibility for administering, any Plan). A Person shall
be deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 9.4.
"Aggregate Percentage" means, relative to any Lender, the percentage set
forth opposite its name on Schedule I under the caption "Aggregate Percentage"
or as set forth in its Lender Assignment Agreement, as such percentage may be
adjusted from time to time pursuant to Lender Assignment Agreements executed by
such Lender and its Assignee Lenders and delivered pursuant to Section 10.11.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced by the Agent at
its Domestic Office as its reference rate; and
(b) the Federal Funds Rate most recently determined by the Agent
plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Agent or any other Lender in connection with
extensions of credit. Changes in the rate of interest on that portion of any
Loans maintained as Base Rate Loans will take effect simultaneously with each
change in the Alternate Base Rate. The Agent will give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
"Applicable Base Rate Margin" is the rate per annum determined for Base
Rate Loans by reference to the definition of the term "Applicable Margin."
2
<PAGE> 9
"Applicable Eurodollar Rate Margin" is the rate per annum determined for
Eurodollar Rate Loans by reference to the definition of the term "Applicable
Margin."
"Applicable Margin" means, in the case of the Unused Fee or any Base
Rate Loan or Eurodollar Rate Loan, a rate per annum determined by reference to
the Borrower's Total Leverage Ratio as follows (expressed in basis points):
<TABLE>
<CAPTION>
REVOLVING LOANS TERM LOANS
--------------- ----------
TOTAL APPLICABLE APPLICABLE APPLICABLE APPLICABLE UNUSED
LEVERAGE BASE RATE EURODOLLAR BASE RATE EURODOLLAR FEE
RATIO MARGIN RATE MARGIN MARGIN RATE MARGIN
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LESS THAN 0.00 100.00 125.00 250.00 37.50
2.00
GREATER THAN 0.00 125.00 125.00 250.00 37.50
OR EQUAL TO
2.00, BUT
LESS THAN
2.50
GREATER THAN 25.00 150.00 125.00 250.00 43.75
OR EQUAL TO
2.50, BUT
LESS THAN
3.00
GREATER THAN 50.00 175.00 125.00 250.00 50.00
OR EQUAL TO
3.00, BUT
LESS THAN
3.50
GREATER THAN 75.00 200.00 125.00 250.00 50.00
OR EQUAL TO
3.50, BUT
LESS THAN
4.00
GREATER THAN 100.00 225.00 150.00 275.00 50.00
OR EQUAL TO
4.00, BUT
LESS THAN
4.50
4.50 OR 125.00 250.00 175.00 300.00 50.00
GREATER
</TABLE>
The Applicable Margin shall be adjusted on the first day of each March, June,
September and December (or, if such day is not a Business Day, on the next
succeeding Business Day), based on the Total Leverage Ratio as of the last day
of the preceding Fiscal Quarter. If the Borrower should fail to deliver in a
timely manner a certificate required under Section 7.1.1(d) hereof, then, until
the Borrower shall have provided such certificate, it shall be
3
<PAGE> 10
presumed that the Total Leverage Ratio as of the end of the preceding Fiscal
Quarter was greater than 4.50 (and, from the date of the delivery of such
certificate, the Applicable Margin for all Base Rate Loans and Eurodollar Rate
Loans shall be determined by reference to such certificate).
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.1.
"Available Net Equity Proceeds" means the net cash proceeds received by
the Borrower from and after the Effective Date from the sale or issuance of
Capital Stock minus any amounts utilized by the Borrower pursuant to Section
7.2.5(viii)(b), Section 7.2.6(a)(ii)(b), Section 7.2.6(b)(b)(ii) or Section
7.2.7(a)(ii).
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Blue Chip Acquisition" means the acquisition by Boyd Indiana or another
wholly-owned Subsidiary of the Borrower of all of the limited liability company
units of a newly formed Indiana limited liability company which substantially
concurrently therewith will have acquired all of the assets and certain of the
liabilities of Blue Chip Casino.
"Blue Chip Casino" means Blue Chip Casino, Inc., an Indiana corporation
and the owner of a riverboat casino gaming complex in Michigan City, Indiana.
"Borgata Completion Guaranty" means a Guaranty given by the Borrower to
a holder of Indebtedness of, or an obligee of, the Borgata Partnership which
obligates the Borrower to cause the completion of construction of the Borgata
Joint Venture and/or to provide funding for all or a portion of any construction
cost overruns with respect thereto.
"Borgata Joint Venture" means the proposed development by the Borgata
Partnership of a hotel with at least 1000 rooms and adjoining casino in Atlantic
City, New Jersey.
"Borgata Letter of Credit" means any Letter of Credit issued to support
the obligations of the Borrower or the Borgata Subsidiary in connection with the
Borgata Joint Venture.
"Borgata Partnership" means Marina District Development Company, a New
Jersey general partnership, fifty percent of which is owned by a Subsidiary of
Mirage Resorts, Inc. and fifty percent
4
<PAGE> 11
of which is owned by the Borgata Subsidiary, and any successor entity thereto in
which the Borrower holds a fifty percent interest.
"Borgata Subsidiary" means Boyd Atlantic City, Inc., a wholly- owned
Subsidiary of the Borrower.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same Type made by all Lenders holding
the applicable Commitment on the same Business Day and pursuant to the same
Borrowing Request in accordance with Section 2.3.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit D
hereto.
"Boyd Family" means William S. Boyd, any direct descendant or spouse of
such person, or any direct descendant of such spouse, and any trust or other
estate in which each person who has a beneficial interest directly or indirectly
through one or more intermediaries in any Capital Stock of Boyd Gaming is one of
the foregoing persons.
"Boyd Indiana" means Boyd Indiana, Inc., an Indiana corporation and
wholly-owned Subsidiary of the Borrower.
"Boyd Kenner" means Boyd Kenner, Inc., a Louisiana corporation and
wholly-owned Subsidiary of the Borrower.
"Boyd Mississippi" means Boyd Mississippi, Inc., a Nevada corporation
and wholly-owned Subsidiary of the Borrower.
"Boyd Tunica" means Boyd Tunica, Inc., a Mississippi corporation and
wholly-owned Subsidiary of the Borrower.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York or Las Vegas; and
(b) relative to the making, continuing, prepaying or repaying of
any Eurodollar Rate Loans, any day on which dealings in Dollars are
carried on in the London eurodollar interbank market.
"Capital Expenditures" means, for any period, without duplication, the
sum of
5
<PAGE> 12
(a) the aggregate amount of all expenditures of the Borrower
and its Subsidiaries for fixed or capital assets made during such
period which, in accordance with GAAP, would be classified as capital
expenditures; and
(b) the aggregate amount of all Capital Lease Obligations
incurred during such period.
"Capital Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Capital Stock" means, with respect to any Person, any and all shares
or other equivalents (however designated) of corporate stock, partnership
interests, limited liability company membership interests, or any other
participation, right, warrants, options or other interest in the nature of an
equity interest in such Person, but excluding any debt security convertible or
exchangeable into such equity interest.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response
Compensation Liability Information System List.
"Change of Control" is defined in Section 8.1.8.
"CH&C" is defined in the first recital.
"CHFC" means California Hotel Finance Corporation, a Nevada corporation
and wholly-owned Subsidiary of CH&C.
"CIBC" is defined in the preamble.
"CIBC Inc." means CIBC Inc., a Delaware corporation.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means, collectively, the Pledged Casinos, the vessels
subject to the First Preferred Ship Mortgages, the property described in the
Security Agreement, all property pledged pursuant to Section 7.1.10 and all
other property and interests pledged as collateral security for the Obligations.
"Commitment" means, as the context may require, a Lender's
Term Loan Commitment or Revolving Loan Commitment or the Swingline
Lender's Swingline Commitment.
6
<PAGE> 13
"Commitment Amount" means, as the context may require, the Term Loan
Commitment Amount, the Revolving Loan Commitment Amount or the Swing Loan
Commitment Amount.
"Commitment Fee Amount" means, on any date, $500,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2, minus the aggregate
principal amount of outstanding Revolving Loans, minus the aggregate undrawn
face amount of outstanding Letters of Credit.
"Commitment Reduction Date" means each date specified in Section 2.2.3.
"Commitment Termination Date" means, as the context may require, either
the Revolving Loan Commitment Termination Date or the Term Loan Commitment
Termination Date.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default described in clauses
(a) through (d) of Section 8.1.9;
(b) any other Event of Default shall have occurred and be
continuing and as a result thereof (i) the Loans are declared to be due
and payable or (ii) the Commitments have been terminated, in either case
pursuant to Section 8.3 ; or
(c) the failure of the Effective Date to occur on or before July
31, 1999.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the debt, obligation or
other liability of any other Person (other than by endorsements of instruments
in the course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation under any Contingent Liability shall (subject to any limitation set
forth therein) be deemed to be the outstanding principal amount (or maximum
outstanding principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby; provided, however, that the amount of any
Contingent Liability consisting of a Borgata Completion Guaranty shall be deemed
to be zero unless and until the guarantor's independent auditors have quantified
the amount of exposure thereunder (and thereafter shall be deemed to be the
amount as quantified from time to time).
7
<PAGE> 14
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit E hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Currency Exchange Protection Agreement" means, in respect of a Person,
any foreign exchange contract, currency swap agreement, currency option or other
similar agreement or arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"Deed of Trust" means each Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Financing Statement substantially in the form of
Exhibit F, executed and delivered pursuant to Section 5.1.5 as amended,
supplemented, restated or otherwise modified from time to time.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule II.
"Disqualification" means, with respect to any Lender:
(a) the failure of that Person timely to file pursuant to
applicable Gaming Laws (i) any application requested of that Person by
any Gaming Board in connection with any licensing required of that
Person as a lender to Borrower or (ii) any required application or other
papers in connection with determination of the suitability of that
Person as lender to Borrower;
(b) the withdrawal by that Person (except where requested or
permitted by the Gaming Board) of any such application or other required
papers; or
(c) any final determination by a Gaming Board pursuant to
applicable Gaming Laws (i) that such Person is "unsuitable" as a lender
to Borrower, (ii) that such Person shall be "disqualified" as a lender
to Borrower or (iii) denying the issuance to that Person of any license
required under applicable Gaming Laws.
8
<PAGE> 15
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.
"EBITDA" means, for any period, the Borrower and its Subsidiaries'
consolidated earnings before depreciation, amortization, interest expense,
pre-opening expenses, extraordinary items and taxes, all as determined in
accordance with GAAP, plus (without duplication) the earnings, before
depreciation, amortization, interest expense, pre-opening expenses,
extraordinary items and taxes, all as determined in accordance with GAAP, during
such period for any New Venture which becomes a direct or indirect Subsidiary of
the Borrower during such period, in either case, plus (or minus) any non-cash
loss (or gain) arising from a change in GAAP.
"Effective Date" means the date this Agreement becomes effective
pursuant to the second sentence of Section 10.8.
"Eldorado" means Eldorado, Inc., a Nevada corporation and a direct,
wholly-owned Subsidiary of CH&C that operates the Eldorado Casino in Henderson,
Nevada and the Jokers Wild Casino in Henderson, Nevada.
"Eligible Assignee" means (a) a financial institution organized under
the laws of the United States or any state thereof; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, provided that such bank is acting
through a branch or agency located in the United States of America; (c) a Person
that is engaged in the business of commercial finance and that is (i) a
Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a
Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; and (d) a
financial institution, insurance company, mutual fund or other fund that has
been approved by the Borrower and the Agent (which approvals shall not be
unreasonably withheld) and that is, to the extent required under applicable
Gaming Laws, registered with, approved by, or not disapproved by (whichever may
be required under applicable Gaming Laws), all applicable Gaming Boards.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders)
9
<PAGE> 16
regulating or imposing liability or standards of conduct with respect to
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Eurodollar Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Agent, whether or not
outside the United States, which shall be making or maintaining Eurodollar Rate
Loans of such Lender hereunder.
"Eurodollar Rate" means, relative to the Interest Period for each
Eurodollar Rate Loan comprising all or any part of the same Borrowing, the rate
of interest equal to (a) the interest rate per annum for deposits in U.S.
dollars and for a period approximately equal to such Interest Period which
appears on page 3750 of the Dow Jones Telerate Screen as of 11:00 a.m. London
time two Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, or (b) if such a rate does
not appear on page 3750 of the Dow Jones Telerate Screen, the average (rounded
upwards, if necessary, to the nearest 1/100 of 1%) of the rates per annum at
which Dollar deposits in immediately available funds are offered to the Agent in
the interbank market as at or about 11:00 a.m. New York time two Business Days
prior to the beginning of such Interest Period for delivery on the first day of
such Interest Period, and for a period equal to such Interest Period.
"Eurodollar Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed rate of interest
determined by reference to the Eurodollar Rate (Reserve Adjusted).
"Eurodollar Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a Eurodollar Rate Loan for
any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
------------------ ------------------------------------
(Reserve Adjusted) 1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) for the Interest Period for each
Eurodollar Rate Loan comprising part of the same Borrowing
10
<PAGE> 17
will be determined by the Agent two Business Days before the first day of such
Interest Period.
"Eurodollar Reserve Percentage" means, relative to each Interest Period,
a percentage (expressed as a decimal) equal to the daily average during such
Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the F.R.S. Board, for determining the maximum aggregate
reserve requirements (including any emergency, supplemental or other marginal
reserve requirement) applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other applicable regulation issued from time to time by the
F.R.S. Board which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as currently defined in Regulation D having a term approximately
equal or comparable to such Interest Period.
"Event of Default" is defined in Section 8.1.
"Existing Letters of Credit" means the letters of credit described in
Schedule III.
"Expansion Capital Expenditure" means any Capital Expenditure of the
Borrower or any of its Subsidiaries (a) made with respect to any Venture that
is, or after giving effect to such expenditures will be, wholly-owned by the
Borrower, a Guarantor or a direct or indirect wholly-owned Subsidiary of the
Borrower or (b) which further expands any existing Venture wholly-owned by the
Borrower, a Guarantor or a direct or indirect wholly-owned Subsidiary of the
Borrower and which is not properly characterized as a Maintenance Capital
Expenditure.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"First Preferred Ship Mortgages" means those certain First Preferred
Ship Mortgages on the Whole of the Patco 400, Official Number 545101, on the
Whole of Treasure Chest Casino, Official Number 1025416 and on the Whole of
Par-A-Dice, Official Number 1020343.
11
<PAGE> 18
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1998 Fiscal Year") refers to the Fiscal Year
ending on the December 31 occurring during such calendar year.
"Fronting Fee" is defined in Section 3.3.3.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Gaming Board" means any governmental agency that holds regulatory,
licensing or permit authority over gambling, gaming or casino activities
conducted by the Borrower or any of its Subsidiaries within its jurisdiction.
"Gaming Laws" means all Laws pursuant to which any Gaming Board
possesses regulatory, licensing or permit authority over gambling, gaming or
casino activities conducted by the Borrower or any of its Subsidiaries within
its jurisdiction.
"Gaming License" means any license, permit, franchise or other
authorization from any governmental authority required to own, lease, operate or
otherwise conduct the gaming business of the Borrower and its Subsidiaries,
including all licenses granted under Gaming Laws.
"Guaranty" means the guaranty executed and delivered by the Guarantors
pursuant to Section 5.1.3, and any Amendment to Guaranty executed and delivered
by a Significant Subsidiary pursuant to Section 7.1.10 hereof, which shall be
substantially in the form of Exhibit G hereto, as amended, supplemented or
otherwise modified from time to time.
"Guarantors" means, collectively, Mare-Bear, Sam-Will, Boyd Tunica,
CH&C, CHFC, the Borgata Subsidiary, Eldorado, Par-A-Dice Gaming Corporation,
East Peoria Hotel Limited Partnership, East Peoria Hotel, Inc., Boyd
Mississippi, Boyd Kenner, Boyd Louisiana L.L.C., MSW, Treasure Chest, any other
Significant Subsidiary of the Borrower and any other Subsidiary that executes a
Guaranty pursuant to the provisions of Section 7.1.10.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
12
<PAGE> 19
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; or
(c) any hazardous, dangerous or toxic chemical, material or
substance within the meaning of any other applicable federal, state or
local law, regulation, ordinance or requirement (including consent
decrees and administrative orders) requiring investigation or
remediation or regulating or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or
material, all as amended or hereafter amended.
"Hazardous Materials Indemnity" means that certain Hazardous Materials
Indemnity executed and delivered by the Borrower and each of the Guarantors
pursuant to Section 5.1.11, substantially in the form of Exhibit H hereto, as
amended, supplemented, restated or otherwise modified from time to time.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under Interest Rate Agreements and Currency Exchange Protection
Agreements.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to such financial statement and which the
Majority Lenders reasonably determine is unacceptable.
"including" means including without limiting the generality of any
description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and,
without duplication, all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments other than by
endorsements of instruments in the ordinary course of collection;
13
<PAGE> 20
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and bankers'
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
(i) have been or should be, in accordance with GAAP, recorded as Capital
Lease Obligations or (ii) are treated as operating leases under GAAP but
are treated as secured financings for commercial law and federal income
tax purposes (commonly referred to as "synthetic" leases or off- balance
sheet loans);
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined
(including trade payables and other current accrued liabilities arising
in the ordinary course of business);
(e) without duplication, net liabilities of such Person under
all Hedging Obligations, as determined in accordance with GAAP;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services (excluding trade payables and other current
accrued liabilities arising in the ordinary course of business), and
indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person
or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any
of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership in which such Person is a general partner or
any joint venture in which such Person is a joint venturer to the extent of such
Person's liability for such Indebtedness in connection with such partnership or
joint venture.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
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"Interest Coverage Ratio" means the ratio of (a) twelve-month trailing
EBITDA to (b) the Borrower and its Subsidiaries' consolidated interest expense
(as defined under GAAP) for such twelve-month period minus any amortization of
fees during such period plus all capitalized interest expense during such
period.
"Interest Period" means, relative to any Eurodollar Rate Loans
comprising part of the same Borrowing, the period beginning on (and including)
the date on which such Eurodollar Rate Loan is made or continued as, or
converted into, a Eurodollar Rate Loan pursuant to Section 2.3 or 2.5 and shall
end on (but exclude) the day which numerically corresponds to such date one,
two, three or six months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month) or for such other
time period for which the Agent shall determine that Dollar deposits are
generally available in the interbank market, in either case as the Borrower may
select in its relevant notice pursuant to Section 2.3 or 2.5; provided, however,
that
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than twelve different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of the next calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day);
(d) no Interest Period may end later than the Stated Maturity
Date; and
(e) the Borrower shall select Interest Periods that will enable
the Borrower to meet its payment obligations on each Commitment
Reduction Date without having to prepay any Eurodollar Rate Loans.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement.
"Investment" means, relative to any Person,
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(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"L/C Fees" is defined in Section 3.3.3.
"L/C Issuer" shall mean CIBC, and its successors and assigns.
"Laws" is defined in Section 6.10.
"Lead Arranger" means CIBC World Markets Corp.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit I hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" means a standby letter of credit issued at the
request and for the account of the Borrower or for the account of the Borrower
and one or more of its Subsidiaries pursuant to Section 2.7.
"Lien" means any security interest, mortgage, pledge, hypothecation, or
other assignment, deposit arrangement, encumbrance, or lien (statutory or
other).
"Loan" means, as the context may require a Term Loan, a Revolving Loan
or a Swing Loan of any Type made hereunder.
"Loan Document" means this Agreement, the Notes, each Letter of Credit,
the Deeds of Trust, the First Preferred Ship Mortgages, the Security Agreement,
the Guaranty, the Hazardous Materials Indemnity and each other document or
instrument to be delivered in connection with this Agreement.
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"Main Street Station" means the Main Street Station Hotel and Casino,
which facility is owned by MSW and is located in Las Vegas, Nevada.
"Maintenance Capital Expenditures" means any Capital Expenditures by the
Borrower or its Subsidiaries which are made to maintain or restore the condition
or usefulness of property of the Borrower or its Subsidiaries but which are not
properly chargeable to repairs and maintenance in accordance with GAAP;
provided, however, that such term shall not include any Capital Expenditures to
restore the condition or usefulness of property to the extent funded from
insurance proceeds delivered to the Borrower or its Subsidiaries in accordance
with the terms of the Loan Documents.
"Majority Lenders" means, at any time, Lenders owed or holding (a) if
the Revolving Loan Commitments shall not have been terminated, at least 51% of
the aggregate of all Term Loans and Revolving Loan Commitments then outstanding
or (b) if the Revolving Loan Commitments shall have been terminated, at least
51% of the aggregate amount of all Loans then outstanding.
"Majority Revolving Lenders" means, at any time, Revolving Lenders owed
or holding (a) if the Revolving Loan Commitments shall not have been terminated,
at least 51% of the Revolving Percentages or (b) if the Revolving Loan
Commitments shall have been terminated, at least 51% of the aggregate amount of
all Revolving Loans then outstanding.
"Majority Term Lenders" means, at any time, Term Lenders owed or holding
(a) if the Term Loan Commitments shall not have been terminated, at least 51% of
the Term Percentages or (b) if the Term Loan Commitments shall have been
terminated, at least 51% of the aggregate amount of all Term Loans then
outstanding.
"Mare-Bear" means Mare-Bear, Inc., a Nevada corporation and wholly-owned
Subsidiary of CH&C.
"Material Adverse Effect" means any circumstances or event which is
reasonably likely to (i) have any material adverse effect upon the validity or
enforceability of this Agreement, the Notes or any other Loan Document, (ii) be
material and adverse to the condition (financial or otherwise), business,
operations or property of the Borrower and the Guarantors taken as a whole, or
(iii) materially impair the ability of the Borrower or any Guarantor to fulfill
its respective obligations under this Agreement, the Notes or any other Loan
Document.
"Monthly Payment Date" means the first day of each calendar month or, if
any such day is not a Business Day, the next succeeding Business Day.
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"MSW" means MSW, Inc., a Nevada corporation which is a wholly-owned
Subsidiary of CH&C.
"Net Cash Proceeds" means, with respect to any Restricted Disposition,
the gross consideration received by or for the account of its seller minus (i)
transfer taxes paid or payable as a result of such sale, (ii) broker's
commissions and other professional fees and expenses relating to such sale that
are payable by the seller, (iii) any amount applied to repayment of Indebtedness
secured by a Lien permitted under Section 7.2.3 on the asset that is the subject
of such sale and (iv) any promissory notes received by the seller in connection
with such sale.
"Net Worth" means the consolidated net worth of the Borrower and its
Subsidiaries.
"New Venture" means any Venture (other than the Blue Chip Acquisition)
not wholly-owned by the Borrower or one of its Subsidiaries as of the Effective
Date but which after the Effective Date is owned by the Borrower, one of its
Subsidiaries or a New Venture Entity in which the Borrower or one of its
Subsidiaries holds an Investment.
"New Venture Entity" means the Person or Persons that directly owns a
New Venture, if such Person or Persons are neither the Borrower nor a Subsidiary
of the Borrower. The Borgata Partnership is a New Venture Entity.
"New Venture Investment" means any Investment of the Borrower or any of
its direct or indirect wholly-owned Subsidiaries in a New Venture Entity. The
Borrower's proposed Investment in the Borgata Partnership, if made, would
constitute a New Venture Investment.
"Note" means, as the context may require, either a Revolving Note, a
Term Note or the Swingline Note.
"Notes" means the Revolving Notes, the Term Notes and the Swingline
Note.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Notes, the
Letters of Credit and each other Loan Document.
"Organic Document" means, relative to any Person, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements to which such Person is a party applicable to any of its
authorized shares of Capital Stock.
"Par-A-Dice Hotel and Casino" means the Par-A-Dice riverboat casino and
nearby hotel, which facility is owned by Par-A-Dice
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Gaming Corporation and East Peoria Hotel Limited Partnership and is located in
East Peoria, Illinois.
"Participant" is defined in Section 10.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, as the context may require, a Lender's Revolving
Percentage, Term Percentage or Aggregate Percentage.
"Permitted Disposition" means any (a) sale or disposition of assets by
the Borrower or any Subsidiary in the ordinary course of business (which sale
shall for purposes hereof include replacement of gaming equipment), or (b) sale
or disposition by the Borrower or any Subsidiary of assets other than any
Collateral in individual transactions or related transactions in an aggregate
amount of not more than $10,000,000 in any Fiscal Year or $40,000,000 over the
term of this Agreement, or (c) sale or disposition by the Borrower or any
Guarantor of any Collateral so long as (i) such assets are not material to the
business, operations or property of the Venture in which such assets are used
and (ii) the aggregate value of all such assets sold or disposed does not exceed
$10,000,000 in the aggregate over the term of this Agreement, or (d) sale of the
Borrower's stock so long as such sale does not cause a Change of Control, or (e)
the liquidation or dissolution of Boyd Louisiana L.L.C. into Boyd Kenner or the
Borrower or any organizational restructuring permitted by Section 7.1.7 or
Section 7.2.8, or (f) disposition of assets made consistent with each
Guarantor's historical practices in connection with the renovation, expansion or
modification of any of the Pledged Casinos.
"Permitted Liens" means the Liens permitted under Section 7.2.3.
"Permitted Senior Note Issuance" means an issuance after the Effective
Date by the Borrower or CHFC of senior unsecured notes on terms reasonably
acceptable to the Agent.
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"Permitted Subordinated Debt Issuance" means an issuance after the
Effective Date by the Borrower or CHFC of subordinated unsecured Indebtedness on
terms reasonably acceptable to the Agent.
"Person" means any natural person, corporation, partnership, joint
venture, firm, limited liability company, trust, association, government,
governmental agency or any other entity, whether acting in an individual,
fiduciary or other capacity.
"Personal Property Collateral" is defined in Section 5.1.4.
"Plan" means any Pension Plan or Welfare Plan.
"Pledged Casinos" shall mean all real property interests underlying (i)
Par-A-Dice Hotel and Casino, (ii) Sam's Town Tunica, (iii) Sam's Town Las Vegas,
(iv) the California Hotel and Casino, (v) the Stardust Hotel and Casino, (vi)
the Fremont Hotel and Casino, (vii) the Treasure Chest Casino, (viii) the
Eldorado Casino in Henderson, Nevada, (ix) the Jokers Wild Casino in Henderson,
Nevada, (x) the Main Street Station, and all rights appurtenant thereto and (xi)
any Ventures pledged pursuant to Section 7.1.10, all property subject to the
Liens of the First Preferred Ship Mortgages, and all fixtures, personal property
and other improvements now existing or to be constructed on any of such
properties (exclusive of any gaming equipment to the extent the pledge thereof
is prohibited by local law).
"Prior Credit Agreement" is defined in the first recital.
"Related Fund" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate thereof.
"Release" means a "release", as such term is defined in CERCLA.
"Required Borgata Investment" means the $90,000,000 equity contribution
by the Borrower to the Borgata Partnership that is scheduled to be made during
the first quarter of 2000.
"Restricted Disposition" means any sale, lease, transfer or disposition
of, or grant of options, warrants or other rights with respect to, assets by the
Borrower or any Guarantor (including accounts receivable and Capital Stock of
its Subsidiaries) that is not a Permitted Disposition.
"Restricted Indebtedness" means all Indebtedness incurred pursuant to a
Permitted Senior Note Issuance and all Indebtedness incurred pursuant to a
Permitted Subordinated Debt Issuance in
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excess of $250,000,000, except in either case to the extent otherwise permitted
pursuant to Section 7.2.2(vi).
"Restricted Payment and Investment Basket" means $35,000,000 minus any
amounts utilized by the Borrower pursuant to Section 7.2.5(viii)(a), Section
7.2.6(a)(ii)(a) or Section 7.2.6(b)(ii)(a).
"Revolving Lender" means each Lender that holds a Revolving Loan
Commitment or a Revolving Loan.
"Revolving Loan" means each Loan made by the Revolving Lenders pursuant
to the Revolving Loan Commitment.
"Revolving Loan Commitment" is defined in Section 2.1.2.
"Revolving Loan Commitment Amount" means, on any date, $500,000,000, as
such amount may be reduced from time to time pursuant to Section 2.2 minus the
aggregate principal amount of indebtedness of the Borrower to the Swingline
Lender resulting from outstanding Swing Loans, minus the aggregate undrawn face
amount of outstanding Letters of Credit.
"Revolving Loan Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Revolving Loan Commitments of the
Lenders are terminated in full pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Revolving
Loan Commitments shall terminate automatically and without any further action.
"Revolving Note" means a promissory note of the Borrower payable to any
Revolving Lender in the form of Exhibit A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Revolving Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes accepted
from time to time in substitution therefor or renewal thereof.
"Revolving Percentage" means, relative to any Revolving Lender for all
Revolving Loans made or Letters of Credit issued, the percentage set forth
opposite its name on Schedule I under the caption "Revolving Percentage" or as
set forth in its Lender Assignment Agreement, as such percentage may be adjusted
from time
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to time pursuant to Lender Assignment Agreements executed by such Lender and its
Assignee Lenders and delivered pursuant to Section 10.11.
"Sam-Will" means Sam-Will, Inc., a Nevada corporation and wholly-owned
Subsidiary of CH&C.
"Sam's Town Las Vegas" means Sam's Town Hotel, Gambling Hall and Bowling
Center, which facility is owned by CH&C and is located in Las Vegas, Nevada.
"Sam's Town Tunica" means Sam's Town Hotel and Gambling Hall, which
facility is owned by Boyd Tunica and is located in Tunica County, Mississippi.
"Security Agreement" means the security agreement executed and delivered
pursuant to Section 5.1.4, as such agreement may be amended, supplemented,
restated or otherwise modified from time to time, which will cover all of the
property and rights described therein that can be pledged without the consent of
any third party and which will be in substantially the form of Exhibit I hereto.
"Senior Indenture" means that certain Indenture dated as of October 4,
1996 among the Borrower, as issuer, certain Subsidiaries of the Borrower as
guarantors and The Bank of New York, as trustee.
"Senior Notes" means the $200,000,000 of 9.25% Senior Notes of the
Borrower due on October 1, 2003 outstanding under the Senior Indenture.
"Senior Secured Leverage Ratio" means the ratio of (a) Total Debt minus
all senior unsecured Indebtedness of the Borrower and its Subsidiaries and minus
all Subordinated Debt to (b) twelve-month trailing EBITDA. For purposes of
determining such ratio, the outstanding Total Debt, senior unsecured
Indebtedness and Subordinated Debt as of the last day of any Fiscal Quarter
shall be the average of the outstanding Total Debt, senior unsecured
Indebtedness and Subordinated Debt as of the last day of each calendar month in
such Fiscal Quarter.
"Senior Subordinated Indenture" means that certain Indenture dated as of
July 22, 1997 between the Borrower, as issuer, and State Street Bank and Trust
Company, as trustee.
"Senior Subordinated Notes" means the $250,000,000 of 9 1/2% Senior
Subordinated Notes of the Borrower due July 15, 2007 outstanding under the
Senior Subordinated Indenture.
"Significant Subsidiary" means each Subsidiary of the Borrower that
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(a) is designated with an asterisk in Item 2 ("Existing
Subsidiaries") of the Disclosure Schedule;
(b) accounted for at least 5% of consolidated revenues of the
Borrower and its Subsidiaries or 5% of consolidated earnings of the
Borrower and its Subsidiaries before interest and taxes, in each case
for the four Fiscal Quarters of the Borrower ending on the last day of
the last Fiscal Quarter of the Borrower immediately preceding the date
as of which any such determination is made; or
(c) has assets which represent at least 5% of the consolidated
assets of the Borrower and its Subsidiaries as of the last day of the
last Fiscal Quarter of the Borrower immediately preceding the date as of
which any such determination is made,
all of which, with respect to clauses (b) and (c), shall be as reflected on the
financial statements of the Borrower for the period, or as of the date, in
question.
"Stated Maturity Date" means June 15, 2003.
"Subordinated Debt" means the Senior Subordinated Notes, the Permitted
Subordinated Debt Issuance, and all additional unsecured Indebtedness of the
Borrower for money borrowed which is subordinated, upon terms satisfactory to
the Agent, in right of payment to the payment in full in cash of all
Obligations.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, trust or other organization of which
more than 50% of the outstanding Capital Stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether at the time Capital Stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) or other managing person(s) is at the time
directly or indirectly owned by such Person, by such Person and one or more
other Subsidiaries of such Person, or by one or more other Subsidiaries of such
Person; provided, however, that the term "Subsidiary" shall not include any New
Venture Entity in which the Borrower or any of its Subsidiaries owns less than
80% of the outstanding Capital Stock or other ownership interests.
"Swingline Commitment" is defined in Section 2.1.3.
"Swingline Lender" means Wells Fargo Bank, N.A., and its successors and
assigns.
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"Swingline Note" means a promissory note of the Borrower payable to the
Swingline Lender in the form of Exhibit C hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to the Swingline Lender resulting from
outstanding Swing Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Swing Loan" means each Loan made by the Swingline Lender pursuant to
the Swingline Commitment.
"Swing Loan Commitment Amount" means, on any date, $15,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Taxes" is defined in Section 4.6.
"Term Lender" means each Lender that holds a Term Loan Commitment or a
Term Loan.
"Term Loan" is defined in Section 2.1.1.
"Term Loan Commitment" is defined in Section 2.1.1.
"Term Loan Commitment Amount" means, on any date, $100,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Term Loan Commitment Termination Date" means the earliest of
(a) July 31, 1999;
(b) the date of the initial Borrowing; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described above, the Term Loan Commitments
shall terminate automatically and without any further action.
"Term Note" means a promissory note of the Borrower payable to any Term
Lender, in the form of Exhibit B hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Term Lender resulting from outstanding Term
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Term Percentage" means, relative to any Term Lender for its Term Loan
made, the percentage set forth opposite its name on
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Schedule I under the caption "Term Percentage" or as set forth in its Lender
Assignment Agreement, as such percentage may be adjusted from time to time
pursuant to Lender Assignment Agreements executed by such Lender and its
Assignee Lenders and delivered pursuant to Section 10.11.
"Title Company" means Lawyers Title Insurance Company or such other
title insurance company as may be reasonably acceptable to the Agent.
"Title Policies" is defined in Section 5.1.5.
"Total Debt" means the consolidated Indebtedness of the Borrower and its
Subsidiaries of the nature referred to in clauses (a), (b), (c), (f) and (g) of
the definition of "Indebtedness" (exclusive of any Indebtedness of the
Borrower's Subsidiaries to the Borrower or another Subsidiary or any
Indebtedness of the Borrower to any Subsidiary).
"Total Leverage Ratio" means the ratio of (a) Total Debt to (b)
twelve-month trailing EBITDA. For purposes of determining such ratio, the
outstanding Total Debt as of the last day of any Fiscal Quarter shall be the
average of the outstanding Total Debt as of the last day of each calendar month
in such Fiscal Quarter.
"Treasure Chest" means Treasure Chest Casino LLC, a Louisiana limited
liability company.
"Treasure Chest Casino" means Treasure Chest casino, which facility is
owned by Treasure Chest and is located in Kenner, Louisiana.
"Type" means, relative to any Borrowing or Loan, the portion thereof, if
any, being maintained as a Base Rate Loan or a Eurodollar Rate Loan.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unused Fees" is defined in Section 3.3.1.
"Venture" means any casino, hotel, casino/hotel, resort, resort/hotel,
riverboat, riverboat/dockside casino, entertainment center or similar facility
(or any site or proposed site for any of the foregoing), together with the
businesses and operations incidental thereto.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
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SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each Note, Borrowing Request,
Continuation/Conversion Notice, Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or any other Loan
Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder shall be made, and all financial statements required to be delivered
hereunder or thereunder shall be prepared, in accordance with those generally
accepted accounting principles ("GAAP") applied in the preparation of the
financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article V), each Lender severally agrees to make Loans
pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. Term Loan Commitment. On the date of the initial
Borrowing hereunder, each Lender will make Loans (relative to such Lender, its
"Term Loan") to the Borrower equal to such Lender's Term Percentage of the
aggregate amount of the Borrowing of Term Loans requested by the Borrower to be
made on such day. The Commitment of each Lender described in this Section 2.1.1
is herein referred to as its "Term Loan Commitment". On the date of the initial
Borrowing hereunder, the Term Loan Commitment shall terminate, and any portion
of the Term Loan Commitment Amount that is not borrowed on such date shall be
extinguished. No amounts paid or prepaid with respect to Term Loans may be
reborrowed.
SECTION 2.1.2. Revolving Loan Commitment. From time to time on
any Business Day occurring before the Revolving Loan Commitment Termination
Date, each Lender will make Loans to the Borrower equal to such Lender's
Revolving Percentage of the aggregate amount of the Borrowing of Revolving Loans
requested by the Borrower to be made on such day. The Commitment of each Lender
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described in this Section 2.1.2 is herein referred to as its "Revolving Loan
Commitment". On the terms and subject to the conditions hereof, the Borrower may
from time to time borrow, prepay and reborrow Revolving Loans.
SECTION 2.1.3. Swing Loan Commitment. From time to time on any
Business Day occurring before the Revolving Loan Commitment Termination Date,
the Swingline Lender will make Swing Loans to the Borrower equal to the amount
of Swing Loans requested by the Borrower to be made on such day. The commitment
of the Swingline Lender described in this Section 2.1.3 is herein referred to as
its "Swingline Commitment". On the terms and subject to the conditions hereof,
the Borrower may from time to time borrow, repay and reborrow Swing Loans.
SECTION 2.1.4. Lenders Not Permitted or Required To Make Loans.
Notwithstanding anything to the contrary contained herein,
(a) no Lender shall be permitted or required to make its Term
Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all Term
Loans of all Lenders would exceed the Term Loan Commitment
Amount, or
(ii) the aggregate outstanding principal amount of the Term
Loans of such Lender would exceed such Lender's Term Percentage
of the Term Loan Commitment Amount;
(b) no Lender shall be permitted or required to make any
Revolving Loan if, after giving effect thereto, the aggregate
outstanding principal amount of all Revolving Loans
(i) of all Lenders would exceed the Revolving Loan
Commitment Amount, or
(ii) of such Lender would exceed such Lender's Revolving
Percentage of the Revolving Loan Commitment Amount; and
(c) the Swingline Lender shall not be permitted or required to
make any Swing Loan if, after giving effect thereto,
(i) the aggregate outstanding principal amount of all Swing
Loans would exceed the Swing Loan Commitment Amount; or
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(ii) the aggregate outstanding principal amount of all Swing
Loans and Revolving Loans would exceed the Revolving Loan
Commitment Amount.
SECTION 2.2. Reduction of Commitment Amounts. The Commitment Amounts are
subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1. Optional. The Borrower may, from time to time on
any Business Day, voluntarily reduce the amount of any Commitment Amount;
provided, however, that all such reductions shall require at least five Business
Days' prior notice to the Agent and be permanent, and any partial reduction of
any Commitment Amount shall be in a minimum amount of $1,000,000 or an integral
multiple thereof. Prior to the occurrence and continuance of an Event of
Default, all voluntary reductions of the Commitments by the Borrower shall be
made to reduce the Revolving Loan Commitment and, in the case of the last
$15,000,000 of the Revolving Loan Commitment, the Swing Loan Commitment.
SECTION 2.2.2. Mandatory Reductions From Net Proceeds.
(a) There shall be a mandatory reduction of the Term Loan
Commitment Amount and, after the Term Loan Commitment Amount shall have
been reduced to zero, the Revolving Loan Commitment Amount by the
following amounts:
(i) One hundred percent (100%) of the net cash proceeds
received by the Borrower from the issuance of any Restricted
Indebtedness.
(ii) One hundred percent (100%) of the net cash proceeds
received by the Borrower or any of its Subsidiaries from any
Restricted Disposition.
(iii) One hundred percent (100%) of all cash insurance
proceeds received by the Borrower or any of its Subsidiaries
from any condemnation awards or casualty losses; provided,
however, so long as no Default shall have occurred and be
continuing, upon the Borrower's request such proceeds shall be
retained by the Borrower or delivered to the Borrower to repair
or replace the property subject to such casualty.
(b) All net non-cash proceeds (including any promissory notes)
realized from any transaction described in clause (a)(ii) or (a)(iii)
above shall on the first Business Day following the Borrower's receipt
thereof be assigned and delivered to the Agent as and shall be held by
the Agent as additional Collateral for the performance of the
Obligations. Upon the reduction of any non-cash proceeds to cash, the
28
<PAGE> 35
principal amount of such proceeds shall be applied by the Agent as
hereinafter provided and any interest attributable to such proceeds
shall, prior to the occurrence and continuance of a Default, be
delivered to the Borrower and from and after the occurrence and
continuance of a Default, be applied by the Agent as hereinafter
provided.
(c) The reduction of the Commitment Amounts shall be effective
on the first Business Day following the Borrower's receipt of such net
cash proceeds. Such net cash proceeds shall first be applied to the
prepayment of the Term Loans, with such application to be made to the
Term Loan repayments specified in Section 2.2.3 in the inverse order of
maturity. After the Term Loan Commitment Amount shall have been reduced
to zero, all such net cash proceeds shall be applied first, to any
unused portion of the Revolving Loan Commitment Amount and, in the case
of the last $15,000,000 of the Revolving Loan Commitment Amount, the
Swing Loan Commitment Amount, in which event such unused portion of the
Revolving Loan Commitment Amount (or the Revolving Loan Commitment
Amount and the Swingline Commitment Amount) shall, to the extent of such
net cash proceeds, be canceled and the Borrower may retain proceeds in
an amount equal to the amount of the Revolving Loan Commitment Amount so
canceled; and thereafter, to the prepayment of the outstanding Revolving
Loans in excess of such unused portion of the Revolving Loan Commitment
Amount and the corresponding cancellation of the Revolving Loan
Commitment Amount by the amount of such prepayment; provided that at
such time, if any, as the Revolving Loan Commitment Amount is equal to
or less than $15,000,000, the net cash proceeds shall be applied pro
rata to the outstanding Revolving Loans and Swing Loans, with a
cancellation of the Revolving Loan Commitment Amount and Swing Loan
Commitment Amount by the amount of such prepayment. All cancellations
and reductions of the Revolving Loan Commitment Amount shall be made to
the Revolving Loan repayments specified in Section 2.2.3 in the inverse
order of maturity.
(d) To the extent that the Revolving Loan Commitment Amount is
at any time less than the aggregate undrawn face amount of outstanding
Letters of Credit then in effect, then the Borrower must deposit with
the Agent all amounts required pursuant to the second paragraph of
Section 2.7 hereof.
SECTION 2.2.3. Scheduled Commitment Reductions.
(a) The Revolving Loan Commitment Amount and the aggregate
outstanding principal amount of all Revolving Loans, Swing Loans and
Letters of Credit shall be reduced on or before each date set forth
below to an amount not more than the amount set forth opposite such
date:
29
<PAGE> 36
<TABLE>
<CAPTION>
Date Revolving Loan Commitment Amount
---- --------------------------------
<S> <C>
December 31, 2001 $484,375,000
March 31, 2002 $468,750,000
June 30, 2002 $453,125,000
September 30, 2002 $437,500,000
December 31, 2002 $421,875,000
March 31, 2003 $406,250,000
June 15, 2003 0
</TABLE>
(b) The Term Loan Commitment Amount and the aggregate
outstanding principal amount of all Term Loans shall be reduced on or
before each date set forth below to an amount not more than the amount
set forth opposite such date:
<TABLE>
<CAPTION>
Date Term Loan Commitment Amount
---- ---------------------------
<S> <C>
September 30, 1999 $99,750,000
December 31, 1999 $99,500,000
March 31, 2000 $99,250,000
June 30, 2000 $99,000,000
September 30, 2000 $98,750,000
December 31, 2000 $98,500,000
March 31, 2001 $98,250,000
June 30, 2001 $98,000,000
September 30, 2001 $97,750,000
December 31, 2001 $97,500,000
March 31, 2002 $97,250,000
June 30, 2002 $97,000,000
September 30, 2002 $96,750,000
December 31, 2002 $96,500,000
March 31, 2003 $96,250,000
June 15, 2003 0
</TABLE>
SECTION 2.2.4. Post Default Application. After the occurrence and
during the continuance of an Event of Default, all optional and mandatory
reductions of commitment amounts under Section 2.2.1 and Section 2.2.2 shall be
applied to the pro rata reduction of all outstanding Revolving Loans, Swing
Loans and Term Loans and the cash-collateralization pursuant to Section 2.7 of
outstanding Letters of Credit. In the case of Revolving Loans and Term Loans,
such reductions shall be applied to the scheduled reductions set forth in
Section 2.2.3 in the inverse order of their maturity.
SECTION 2.3. Borrowing Procedure.
SECTION 2.3.1. Revolving Loans and Term Loans. The Borrower may
from time to time irrevocably request that a Borrowing of Revolving Loans be
made, and may prior to the date of its initial Borrowing hereunder irrevocably
request that a Borrowing of
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<PAGE> 37
Term Loans be made, by delivering a Borrowing Request to the Agent (i) for a
Eurodollar Rate Loan, on or before 11:30 a.m. New York time, on a Business Day,
at least three Business Days prior to the date of such proposed Borrowing, in a
minimum amount of $3,000,000 or an integral multiple of $1,000,000 in excess
thereof, or in the unused amount of the applicable Commitment Amount, as the
availability thereof may be reduced pursuant to Section 2.2 and (ii) for a Base
Rate Loan, on or before 11:30 a.m. New York time, on a Business Day, at least
one Business Day prior to the date of such proposed Borrowing, in a minimum
amount of $3,000,000 or an integral multiple of $1,000,000 in excess thereof, or
in the unused amount of the applicable Commitment Amount, as the availability
thereof may be reduced pursuant to Section 2.2. The Agent shall promptly notify
each other Lender in writing of the terms of such Borrowing Request. On the
terms and subject to the conditions of this Agreement, each Borrowing shall be
comprised of the Type of Loans, and shall be made on the Business Day, specified
in such Borrowing Request. On or before 1:00 p.m., New York time, on the
Business Day such Loans are to be made, each Lender shall deposit with the Agent
same day funds in an amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the Agent shall specify
from time to time by notice to the Lenders. No Lender's obligation to make any
Loan shall be affected by any other Lender's failure to make any Loan. To the
extent funds are received from the Lenders, on the proposed date for such
Borrowing the Agent shall make such funds available to the Borrower at the
office of the Agent.
SECTION 2.3.2. Swing Loans. The Borrower may from time to time
irrevocably request, by delivering a telephonic notice to the Swingline Lender
(which notice shall promptly be confirmed by telecopy to the Swingline Lender
and to the Agent) that a Borrowing of Swing Loans be made, by 1:00 p.m., Las
Vegas time, on or before the date such Borrowing is requested, in a minimum
amount of $100,000 or an integral multiple thereof, or in the unused amount of
the Swingline Loan Commitment Amount. On the terms and subject to the conditions
of this Agreement, each such Borrowing shall be comprised of Base Rate Loans,
shall bear interest at the applicable rate for Base Rate Loans minus 0.5% and
shall be made on the Business Day specified in its Borrowing Request. The
Swingline Lender shall make funds in an amount equal to the requested Borrowing
available to the Borrower to the accounts the Borrower shall have specified in
its Borrowing Request. Each request by the Borrower for a Borrowing of Swing
Loans shall be deemed to reaffirm the representations set forth in subsections
(a), (b) and (c) of Section 5.2.1. The Swingline Lender shall not fund a
Borrowing of Swing Loans if prior to the date of such Borrowing the Swingline
Lender shall have received written notice from the Agent or any Lender of the
existence and continuance of a Default or an Event of Default.
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<PAGE> 38
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 11:30 a.m., New York
time, on a Business Day, the Borrower may from time to time irrevocably elect,
on not less than three or more than five Business Days' notice that all, or any
portion in an aggregate minimum amount of $3,000,000 and an integral multiple of
$1,000,000 in excess thereof, of any Loan be, in the case of Base Rate Loans,
converted into Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans,
continued as a Eurodollar Rate Loan or that all, or any portion in an aggregate
minimum amount of $3,000,000 and an integral multiple of $1,000,000 in excess
thereof of any Loan be, in the case of Eurodollar Rate Loans, converted into
Base Rate Loans (in the absence of delivery of a Continuation/Conversion Notice
with respect to any Eurodollar Rate Loan at least three Business Days before the
last day of the then current Interest Period with respect thereto, such
Eurodollar Rate Loan shall, on such last day, automatically convert to a Base
Rate Loan); provided, however, that no portion of the outstanding principal
amount of any Loans may be continued after the end of the applicable Interest
Period therefor as, or be converted into, Eurodollar Rate Loans when any Default
has occurred and is continuing. The Agent shall promptly notify each other
Lender in writing of the terms of such Continuation/Conversion Notice.
SECTION 2.5. Funding. Subject to the provisions of Section 4.11 hereof,
each Lender may, if it so elects, fulfill its obligation to make, continue or
convert Eurodollar Rate Loans hereunder by causing one of its foreign branches
or Affiliates (or an international banking facility created by such Lender) to
make or maintain such Eurodollar Rate Loan; provided, however, that such
Eurodollar Rate Loan shall nonetheless be deemed to have been made and to be
held by such Lender, and the obligation of the Borrower to repay such Eurodollar
Rate Loan shall nevertheless be to such Lender for the account of such foreign
branch, Affiliate or international banking facility. In addition, the Borrower
hereby consents and agrees that, for purposes of any determination to be made
for purposes of Sections 4.1, 4.2, 4.3, or 4.4, it shall be conclusively assumed
that each Lender elected to fund all Eurodollar Rate Loans by purchasing Dollar
deposits in its Eurodollar Office's interbank eurodollar market.
SECTION 2.6. Notes; Register. Unless prior to the Effective Date the
Agent shall have been advised by a Lender that it does not want to receive a
Note, each Lender's Loans under each of its Commitments shall be evidenced by a
Note payable to the order of such Lender in a maximum principal amount equal to
such Lender's Percentage of the original applicable Commitment Amount. Whether
or not a Loan is evidenced by a Note, the Borrower hereby designates Agent to
serve as its agent, solely for the purposes of this section, to maintain a
register (the "Register") on which Agent will record the name and address of
each Lender, the
32
<PAGE> 39
Commitment and Loans and each repayment in respect of the principal amount of
the Loans of each Lender from time to time. No payment with respect to the
outstanding principal and interest applicable for each of the Loans shall be
made to any Person other than the Person identified in such Register as the
Lender. Failure to make any such recordation or any errors in such recordation
shall not affect the Borrower's obligations in respect of such Loans. The
entries in the Register shall be conclusive and binding on the Borrower absent
manifest error. The Borrower hereby irrevocably authorizes each Lender to make
(or cause to be made) appropriate notations on the grid attached to such
Lender's Note (or on any continuation of such grid), which notations, if made,
shall evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to the Loans evidenced thereby.
Upon request by the Borrower, each Lender agrees to confirm to the Borrower the
information reflected in such notations. Such notations shall be conclusive and
binding on the Borrower absent manifest error; provided, however, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower.
SECTION 2.7. Letter of Credit Procedure. The Borrower may from time to
time request that a Letter of Credit be issued by delivering to the L/C Issuer
(with a telecopy to the Agent) on a Business Day, at least five Business Days
prior to the date of such proposed issuance, a Letter of Credit application in
the L/C Issuer's then standard form, completed to the satisfaction of the L/C
Issuer, and such other certificates as the L/C Issuer may reasonably request;
provided, however, that no Letter of Credit other than a Borgata Letter of
Credit shall be issued if after giving effect to the issuance thereof, the
aggregate undrawn face amount of outstanding Letters of Credit would exceed the
lesser of (a) $15,000,000 or (b) the Revolving Loan Commitment Amount minus the
aggregate unpaid principal amount of Revolving Loans and Swing Loans then
outstanding; and provided further, that no Borgata Letter of Credit shall be
issued if after giving effect to the issuance thereof, the aggregate undrawn
face amount of outstanding Borgata Letters of Credit would exceed the lesser of
(x) $60,000,000 or (y) the Revolving Loan Commitment Amount minus the aggregate
unpaid principal amount of Revolving Loans and Swing Loans then outstanding and
minus the aggregate undrawn face amount of outstanding Letters of Credit (other
than the Borgata Letters of Credit). On the terms and subject to the conditions
of this Agreement, each Letter of Credit shall be issued by the L/C Issuer on
the Business Day specified in the Borrower's application therefor. The Agent
shall promptly notify each Lender in writing of the material terms of each
Letter of Credit issued by the L/C Issuer. Each request for a Letter of Credit
and each Letter of Credit shall be subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of Commerce
Publication Number 500 and, to the extent not inconsistent
33
<PAGE> 40
therewith, International Standby Practices 1998 by the International Chamber of
Commerce. Each Letter of Credit will be issued for a term of not more than one
year, and in no event shall any Letter of Credit have an expiration date later
than the Stated Maturity Date.
Upon any termination of the Revolving Loan Commitment prior to the
Stated Maturity Date, the Borrower shall deposit with the Agent an amount equal
to 105% of the aggregate amount available to be drawn under outstanding Letters
of Credit, such amount to be placed in a segregated, interest-bearing cash
collateral account pledged to the Lenders as Collateral hereunder over which
Borrower shall have no control but which shall be applied solely to repay the
Borrower's obligations in connection with such Letters of Credit unless an Event
of Default has occurred and is continuing. In the event the expiry date (or
earlier termination) of any Letter of Credit should occur with no draw having
been made thereunder for which the Borrower has not made reimbursement and so
long as no Event of Default has occurred and is continuing, the amount of the
cash collateral account shall be reduced by 105% of the undrawn amount of such
expired Letter of Credit and the amount of such reduction shall be paid to the
Borrower (and, in the case of the final Letter of Credit to expire or otherwise
be terminated, the remaining balance of the cash collateral account shall be
paid to the Borrower).
SECTION 2.8. Designation of Debt. The Borrower hereby designates its
Indebtedness under this Agreement as "Designated Senior Indebtedness" for
purposes of the Senior Subordinated Indenture.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
SECTION 3.1.1. Payment Terms. Prior to the Stated Maturity Date
of each Loan, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of
any Loans; provided, however, that
(i) no such prepayment of any Eurodollar Rate Loan may be
made on any day other than the last day of the Interest Period
for such Loan;
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<PAGE> 41
(ii) all such voluntary prepayments of any Eurodollar Rate
Loan shall require at least three Business Days' prior written
notice to the Agent and all such voluntary partial prepayments
shall be in an aggregate minimum amount of $3,000,000 and
integral multiples of $1,000,000 in excess thereof or such
lesser amount as will prepay such Loan in full;
(iii) all such voluntary prepayments of any Base Rate Loan
shall require at least one Business Day's notice, and all such
voluntary partial prepayments shall be in an aggregate minimum
amount of $3,000,000 and integral multiples of $1,000,000 in
excess thereof or such lesser amount as will prepay such Loan in
full; and
(iv) all such voluntary prepayments of any Swing Loan shall
require at least one Business Day's notice to the Swingline
Lender (unless notice shall have been given by 11:30 a.m., Las
Vegas time and payment shall be received by 1:00 p.m. Las Vegas
time, in which event one Business Day's notice shall not be
required), and all such voluntary partial prepayments shall be
in an aggregate minimum amount of $100,000 or integral multiples
of $100,000 or such lesser amount as will prepay such Loan in
full.
(b) shall, one (1) Business Day after receipt of any net cash
proceeds described in Section 2.2.2, apply such proceeds in accordance
with Section 2.2.2 or Section 2.2.4, if applicable; and
(c) shall, immediately upon any acceleration of the Stated
Maturity Date pursuant to Section 8.2 or Section 8.3, repay all Loans.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. All mandatory
prepayments pursuant to clause (b) above shall require at least one (1) Business
Day prior written notice to the Agent. Each prepayment of Term Loans shall be
applied, to the extent of such prepayment, to the scheduled repayments of Term
Loans set forth in Section 2.2.3 in the inverse order of their maturity. All
prepayments of Loans shall be applied first to the repayment of Base Rate Loans
and second to the repayment of Eurodollar Rate Loans in the direct order of the
maturity of the Interest Periods therefor. All notices of prepayment required to
be delivered to the Agent hereunder (other than notices relating to Swing Loans)
shall be in substantially the form of Exhibit N. The Agent shall promptly notify
each other Lender of the terms of each notice of prepayment.
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<PAGE> 42
SECTION 3.1.2. Special Swing Loan Provisions. All Swing Loans
shall be payable with accrued interest thereon solely to the Swingline Lender
for its own account, and shall otherwise be subject to all the terms and
conditions applicable to the Revolving Loans (unless otherwise specifically set
forth herein). Upon the earlier to occur of (x) fourteen days after the making
of any Swing Loan or (y) one Business Day after the occurrence of an Event of
Default, the Borrower shall repay all of such Swing Loans in cash by 1:00 p.m.,
Las Vegas time, on the date due or make a Borrowing of Revolving Loans in an
amount at least equal to the aggregate outstanding principal amount of all Swing
Loans together with all accrued interest thereon, and shall apply the proceeds
of such Borrowing to repay in its entirety the aggregate outstanding principal
amount of all Swing Loans together with accrued interest thereon to the date of
such repayment.
In the event that any portion of any Swing Loan is not repaid when due,
the Swingline Lender shall promptly notify the Agent and the Agent shall
promptly, and in no event later than 5:00 p.m., New York time, two Business Days
after its receipt of such notice, notify each Lender in writing of the
unreimbursed amount of such Swing Loan and of such Lender's Revolving Percentage
of such unreimbursed amount. Each of the Lenders shall make a Revolving Loan in
an amount equal to such Lender's Revolving Percentage of the unreimbursed amount
of such Swing Loan, together with accrued unpaid interest thereon (to the extent
that there is availability under the Revolving Loan Commitment), and pay the
proceeds thereof, in immediately available funds, directly to the Agent for the
account of the Swingline Lender, not later than 1:00 p.m., New York time, on the
next Business Day after the date such Lender is notified by the Agent. Revolving
Loans made by the Lenders to repay unreimbursed Swing Loans pursuant to this
subsection shall constitute Revolving Loans hereunder, initially shall be Base
Rate Loans and shall be subject to all of the provisions of this Agreement
concerning Revolving Loans, except that such Revolving Loans shall be made upon
demand by the Agent as set forth above rather than upon notice by the Borrower,
and shall be made, notwithstanding anything in this Agreement to the contrary,
without regard to satisfaction of conditions precedent to the making of
Revolving Loans set forth in Article V of this Agreement; provided, however that
no Lender shall be obligated to make such Revolving Loans if, prior to the date
of the Borrowing of the Swing Loan to be refunded, the Swingline Lender had
received written notice from the Agent or any Lender of the existence and
continuance of a Default or an Event of Default.
Each Lender's obligation to make Revolving Loans in the amount of its
Revolving Percentage of any unreimbursed Swing Loan pursuant hereto is several,
and not joint or joint and several. The failure of any Lender to perform its
obligation to make a Revolving Loan in the amount of such Lender's Revolving
Percentage of any
36
<PAGE> 43
unreimbursed Swing Loan will not relieve any other Lender of its obligation
hereunder to make a Revolving Loan in the amount of such other Lender's
Revolving Percentage of such unreimbursed Swing Loan. Any Lender may, but shall
have no obligation to any Person to, assume all or any portion of any
non-performing Lender's obligation to make a Revolving Loan in the amount of
such Lender's Revolving Percentage of such unreimbursed Swing Loan. The Borrower
agrees to accept the Revolving Loans hereinabove provided, whether or not such
Loans could have been made pursuant to the terms of Section 5.2 hereof or any
other Section of this Agreement.
In the event, for whatever reason, the Agent determines that the Lenders
are not able to, or that it could be disadvantageous for the Lenders to, advance
their respective Revolving Percentage of Revolving Loans for the purpose of
refunding Swing Loans as required hereunder, then each of the Lenders absolutely
and unconditionally agrees to purchase and take from the Swingline Lender on
demand an undivided participation interest in Swing Loans outstanding in an
amount equal to their respective Revolving Percentage of such Swing Loans.
SECTION 3.1.3. Post Default Application of Payments.
Notwithstanding any provision of Section 3.1.1 to the contrary, after the
occurrence and during the continuance of an Event of Default, all optional and
mandatory payments under Section 3.1.1 shall be applied first to pay any fees
and expenses then due and owing, second to the pro rata payment of accrued and
unpaid interest on all Loans and third to the pro rata reduction of all
outstanding Revolving Loans, Swing Loans and Term Loans and the
cash-collateralization pursuant to Section 2.7 of outstanding Letters of Credit.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect that
Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Alternate Base Rate from time to time in
effect plus the Applicable Base Rate Margin in effect from time to time;
and
(b) on that portion maintained as a Eurodollar Rate Loan, during
each Interest Period applicable thereto, equal to the sum of the
Eurodollar Rate (Reserve Adjusted) for such Interest Period plus the
Applicable Eurodollar Rate Margin in effect from time to time.
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<PAGE> 44
All Eurodollar Rate Loans shall bear interest from and including the
first day of the applicable Interest Period to (but not including) the last day
of such Interest Period at the interest rate determined as applicable to such
Eurodollar Rate Loan. All Swing Loans shall bear interest at a rate per annum
equal to the sum of the Alternative Base Rate from time to time in effect plus
the Applicable Base Rate Margin in effect from time to time minus one-half of
one percent (0.50%).
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower hereunder shall have become due and payable, the Borrower shall pay
interest (after as well as before judgment) on such amounts at a rate per annum
equal to the Alternate Base Rate plus a margin of 3% until such amount is paid
in full.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall
be payable, without duplication:
(a) on the Stated Maturity Date;
(b) with respect to Base Rate Loans, on each Monthly Payment
Date occurring on and after the Effective Date;
(c) with respect to Eurodollar Rate Loans, the last day of each
applicable Interest Period (and, if such Interest Period shall exceed
three months, at the end of the third month thereof); and
(d) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay to the Agent and each
Lender the fees set forth in this Section 3.3.
SECTION 3.3.1. Unused Fee. The Borrower agrees to pay to the
Agent for the account of each Lender, for the period (including any portion
thereof when any of its Commitments are suspended by reason of the Borrower's
inability to satisfy any condition of Article V) commencing on the Effective
Date and continuing through the Revolving Loan Commitment Termination Date, an
unused fee (the "Unused Fee") at the rate per annum set forth under the column
labeled "Unused Fee" in the definition of
38
<PAGE> 45
"Applicable Margin" opposite the Total Leverage Ratio as of the last day of the
most recently ended Fiscal Quarter, calculated on the average daily Commitment
Fee Amount. The Unused Fee shall be payable by the Borrower quarterly in arrears
on the last day of March, June, September and December in each year (or, if such
day is not a Business Day, on the next succeeding Business Day), commencing with
the first such date to occur after the Effective Date, and on any expiration or
termination of the Revolving Loan Commitment.
SECTION 3.3.2. Upfront Fees. On the Effective Date, the Borrower
agrees to pay to the Agent for the account of each Lender upfront fees in such
amounts as have been agreed upon previously by the Agent and each such Lender.
SECTION 3.3.3. Letter of Credit Fees. The Borrower agrees to pay
to the Agent, for the account of the Lenders, letter of credit fees (the "L/C
Fees") on the average daily face amount of outstanding Letters of Credit during
each Fiscal Quarter, calculated at a per annum rate equal to the Applicable
Eurodollar Rate Margin in effect for Revolving Loans from time to time. The
Borrower further agrees to pay to the L/C Issuer, for its own account, a
fronting fee (the "Fronting Fee") equal to 0.125% per annum of the average daily
face amount of outstanding Letters of Credit during each Fiscal Quarter,
calculated on the last day of such Fiscal Quarter. The L/C Fees and the Fronting
Fee shall be payable quarterly in arrears, on the last day of March, June,
September and December.
SECTION 3.3.4. Agent's Fees. To the Agent for its own account,
fees in such amounts and at such times as more particularly set forth in that
certain confidential fee letter dated May 3, 1999 between the Agent and the
Borrower, as amended from time to time.
SECTION 3.4. Agreement to Repay Letter of Credit Drawings with Revolving
Loans. The Borrower agrees to reimburse the L/C Issuer for each draft that is
paid under any Letter of Credit for the amount of (a) such draft and (b) any
reasonable taxes, fees, charges or other costs and expenses incurred by the L/C
Issuer in connection with such payment, whether such draft is paid before, on or
after termination of the Revolving Loan Commitment. If the L/C Issuer shall
notify the Borrower and the Agent prior to 11:00 a.m., New York time, on any day
that payment has been made under any Letter of Credit, the Borrower shall
reimburse the L/C Issuer with the proceeds of a Revolving Loan made pursuant to
Section 3.5 not later than the following Business Day. If such notice to the
Borrower and the Agent shall be given after 11:00 a.m., New York time, the
Borrower shall reimburse the L/C Issuer with the proceeds of a Revolving Loan
made pursuant to Section 3.5 not later than the second following Business Day.
Interest shall be payable on any
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and all unreimbursed amounts advanced by the L/C Issuer under this Section from
the date such amounts have been advanced by the L/C Issuer until reimbursed at
the rate of interest payable on the Base Rate Loans.
The payment obligations of the Borrower under this Section shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including without limitation,
the following circumstances:
(a) the existence of any claim, set-off, defense or other right
which the Borrower may have at any time against any beneficiary, or any
transferee, of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any
other Person, whether in connection with this Agreement, the
transactions contemplated herein, or any unrelated transaction;
(b) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
unenforceable in any respect or any statement therein being untrue or
inaccurate in any respect; provided that any such statement or other
document appears, on examination, to be regular on its face; or
(c) payment by the L/C Issuer under any Letter of Credit against
presentation of drafts, certificates, claims, documents or required
statements that do not strictly comply with the terms of the Letter of
Credit; provided that, upon examination, any such drafts, certificates,
claims, documents or statements appear on their face to be in accordance
with the Letter of Credit.
SECTION 3.5. Letter of Credit Participations. The L/C Issuer irrevocably
agrees to grant and hereby grants to each Lender, and, to induce the L/C Issuer
to issue Letters of Credit hereunder, each Lender irrevocably agrees to accept
and purchase and hereby accepts and purchases from the L/C Issuer for such
Lender's own account and risk an undivided interest equal to such Lender's
Revolving Percentage in the L/C Issuer's obligations and rights under each
Letter of Credit issued hereunder and each draft paid by the L/C Issuer
hereunder.
Upon presentation of a draft drawn under any Letter of Credit, the L/C
Issuer shall promptly notify the Agent and the Agent shall promptly notify each
Lender of the amount under such draft and of such Lender's Percentage of such
amount. Unless (i) the Borrower shall have previously reimbursed the L/C Issuer
for the amount of such draft or (ii) there is a sufficient amount in any cash
collateral account established to cover payments to be made under
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such Letter of Credit, each of the Lenders shall thereafter make a Revolving
Loan in an amount equal to such Lender's Revolving Percentage of the amount of
such payment made by the L/C Issuer, together with any accrued and unpaid
interest thereon. Each Lender shall pay the proceeds of its Loan, in immediately
available funds, directly to the Agent for the account of the L/C Issuer, (i)
not later than 1:00 p.m. New York time, on the following Business Day if the
Agent shall have provided notice prior to 11:30 a.m. New York time, and (ii) if
the Agent shall have provided notice after 11:30 a.m. New York time, not later
than 1:00 p.m. New York time, on the second following Business Day. Revolving
Loans made by the Lenders to repay amounts under Letters of Credit pursuant to
this subsection shall constitute Revolving Loans hereunder, initially shall be
Base Rate Loans and shall be subject to all of the provisions of this Agreement
concerning Revolving Loans, except that such Revolving Loans shall be made upon
demand by the Agent as set forth above rather than upon notice by the Borrower,
and shall be made, notwithstanding anything in this Agreement to the contrary,
without regard to satisfaction of conditions precedent to the making of
Revolving Loans set forth in Article V of this Agreement and, notwithstanding
any termination of the Revolving Loan Commitment prior to the Stated Maturity
Date, Revolving Loans shall be made to reimburse the L/C Issuer for any drafts
paid under any Letter of Credit outstanding on the date of such termination.
Each Lender's obligation to make Revolving Loans in the amount of its
Revolving Percentage of any unreimbursed amounts outstanding under a Letter of
Credit pursuant hereto is several, and not joint or joint and several. The
failure of any Lender to perform its obligation to make a Revolving Loan in the
amount of such Lender's Revolving Percentage of any unreimbursed amounts
outstanding under a Letter of Credit will not relieve any other Lender of its
obligation hereunder to make a Revolving Loan in the amount of such other
Lender's Revolving Percentage of such amounts. Any Lender may, but shall have no
obligation to any Person to, assume all or any portion of any non-performing
Lender's obligation to make a Revolving Loan in the amount of such Lender's
Revolving Percentage of such amount outstanding under a Letter of Credit. The
Borrower agrees to accept the Revolving Loans hereinabove provided, whether or
not such loans could have been made pursuant to the terms of Section 5.2 hereof,
or any other Section of this Agreement.
SECTION 3.6. Existing Letters of Credit. On and after the Effective
Date, the Existing Letters of Credit shall be deemed for all purposes to be
Letters of Credit outstanding under this Agreement and entitled to the benefits
of this Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. Each
Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the L/C Issuer on the Effective Date a participation in each such
Letter of Credit and each drawing
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thereunder in an amount equal to the product of (i) such Lender's Revolving
Percentage times (ii) the sum of the maximum amount then available to be drawn
under such Letter of Credit and the amount of any amount drawn but not
reimbursed under such Letter of Credit. For purposes of Section 2.1.2, the
Existing Letters of Credit shall be deemed to utilize pro rata the Revolving
Loan Commitment of each Lender.
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1. Eurodollar Rate Lending Unlawful. If any Lender shall
determine that the introduction of or any change in or in the interpretation of
any law makes it unlawful, or any central bank or other governmental authority
asserts that it is unlawful, for such Lender to make, continue or maintain any
Loan as, or to convert any Loan into, a Eurodollar Rate Loan, the obligation of
such Lender to make, continue, maintain or convert any such Loans shall, upon
such determination, forthwith be suspended until such Lender shall notify the
Agent that the circumstances causing such suspension no longer exist, and all
Eurodollar Rate Loans of such Lender shall automatically convert into Base Rate
Loans at the end of the then current Interest Periods with respect thereto or
sooner, if required by such law or assertion. Until the circumstances causing
such suspension no longer exist, such Lender(s) shall have no obligation to make
or continue any Loans as, or to convert any Loans into Eurodollar Rate Loans.
SECTION 4.2. Deposits Unavailable. If the Agent shall have determined
that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to CIBC in the interbank market; or
(b) by reason of circumstances affecting the interbank market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurodollar Rate Loans,
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue
any Loans as, or to convert any Loans into, Eurodollar Rate Loans shall
forthwith be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased Costs, etc. The Borrower agrees to reimburse each
Lender for any increase in the cost to such Lender of, or any reduction in the
amount of any sum receivable by such Lender in respect of, (i) making,
continuing or maintaining (or of
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its obligation to make, continue or maintain) any Loans as, or of converting (or
of its obligation to convert) any Loans into, Eurodollar Rate Loans or (ii) any
Letter of Credit (or any Lender's participation therein) issued hereunder as a
result of any change in, or the introduction, adoption, effectiveness,
interpretation, reinterpretation or phase-in adopted after the Effective Date
of, any law or regulation, directive, guideline, decision or request (whether or
not having force of law) of any court, central bank, regulator or other
governmental authority (whether or not having the force of law and whether or
not the failure to comply with such guideline or requirement would be unlawful).
Such Lender shall promptly notify the Agent and the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
Lender for such increased cost or reduced amount. Such additional amounts shall
be payable by the Borrower directly to such Lender within five (5) days of its
receipt of such notice, and such notice shall, in the absence of manifest error,
be conclusive and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurodollar Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as Eurodollar Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurodollar Loans in accordance with the Continuation/ Conversion Notice
therefor,
then, upon the written notice of such Lender to the Borrower (with a copy to the
Agent), the Borrower shall, within five (5) Business Days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation,
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reinterpretation or phase-in adopted after the Effective Date of, any law or
regulation, directive, guideline, decision or request (whether or not having the
force of law) of any court, central bank, regulator or other governmental
authority or the implementation of any risk-based capital guideline or other
requirement (whether or not having the force of law and whether or not the
failure to comply with such guideline or requirement would be unlawful)
heretofore or hereafter issued by any governmental authority, whereby such law
or regulation affects or would affect the amount of capital required or expected
to be maintained by any Lender or any Person controlling such Lender, and such
Lender reasonably determines that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments or the Loans made by such
Lender or any Letter of Credit issued by such Lender or in which such Lender is
a risk participant is reduced to a level below that which such Lender or such
controlling Person could have achieved but for the occurrence of any such
circumstance, then, in any such case upon notice from time to time by such
Lender to the Borrower, the Borrower shall within two (2) Business Days after
demand pay directly to such Lender additional amounts sufficient to compensate
such Lender or such controlling Person for such reduction in rate of return. A
statement of such Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the Borrower. In determining such amount,
such Lender may use any method of averaging and attribution that it (in its
reasonable discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, other
than taxes imposed on or measured by any Lender's net income or receipts by the
U.S., any state, the jurisdiction in which such Lender is organized or the
country in which such Lender's Eurodollar Office is located (such non-excluded
items being called "Taxes"). In the event that any withholding or deduction from
any payment to be made by the Borrower hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then, subject to the
Borrower's receipt of the documentation required by the terms of the last
paragraph of this Section 4.6, the Borrower will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
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(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses (unless such
penalties, interest or expenses are attributable solely to the actions of such
Lender)) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower. Without prejudice to the survival of any other
agreement of the Borrower hereunder or any other Loan Document, the agreements
of the Borrower contained in this Section shall survive the payment in full of
all its Obligations.
Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes and subsequently as
required by law, execute and deliver to the Borrower and the Agent, one or more
(as the Borrower or the Agent may reasonably request) United States Internal
Revenue Service Forms 4224, Forms 1001 or Forms W-8 or such other forms or
documents (or successor forms or documents), appropriately completed, as may be
applicable to establish the extent, if any, to which a payment to such Lender is
exempt from withholding or deduction of Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes
(other than the Swingline Note) or any other
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Loan Document shall be made by the Borrower to the Agent for the pro rata
account of the Lenders entitled to receive such payment. All such payments
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 1:00 p.m., New York time, on the date due, in same
day or immediately available funds, Bank of New York, ABA No. 021-000-018,
credit to Canadian Imperial Bank of Commerce account no. 890-0331-046, for
further credit to: Agented Loans account no. 0709611, reference: Boyd or to such
other account as the Agent shall specify from time to time by written notice to
the Borrower. Funds received after such time shall be deemed to have been
received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds on the Business Day received to each Lender its
share, if any, of such payments received by the Agent for the account of such
Lender. All interest shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest is payable over a year comprised of 360 days (or, in the
case of interest on a Base Rate Loan, 365 days or, if appropriate, 366 days).
All Unused Fees, Fronting Fees, L/C Fees and other fees shall be computed on the
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such fees are payable over a
year comprised of 365 days or, if appropriate, 366 days. Whenever any payment to
be made shall otherwise be due on a day which is not a Business Day, such
payment shall (except as otherwise required by clause (c) of the definition of
the term "Interest Period" with respect to Eurodollar Rate Loans) be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments then or
therewith obtained by all Lenders entitled to such payment, such Lender shall
purchase from the other Lenders such participations in Loans made by them as
shall be necessary to cause such purchasing Lender to share the excess payment
or other recovery ratably with each of them; provided, however, that if all or
any portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Lender's ratable share (according to the
proportion of (a) the amount of such selling Lender's required repayment to the
purchasing Lender to (b) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable
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by the purchasing Lender in respect of the total amount so recovered. The
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 4.9) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such secured
claim in a manner consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured claim. For the
purposes of determining a Lender's applicable pro rata share, all issued and
outstanding Letters of Credit shall be considered Revolving Loans, and any
payments in respect thereof shall be deposited in the cash collateral account
established pursuant to Section 2.7 hereof. If any Letter of Credit shall
thereafter expire or terminate without being drawn, the amount previously
deposited into the cash collateral account in respect thereof shall be released
from the cash collateral account and distributed to the Lenders on a pro rata
basis or, if no Loans shall be outstanding, delivered to the Borrower.
SECTION 4.9. Setoff. Each Lender, with the consent of the Agent and the
Majority Lenders, shall, upon the occurrence of any Default described in clauses
(a) through (d) of Section 8.1.9 or upon the occurrence of any other Event of
Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however, that
any such appropriation and application shall be subject to the provisions of
Section 4.8. Each Lender agrees promptly to notify the Borrower and the Agent
after any such setoff and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
setoff and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds. No proceeds of any Loan will be used to
acquire any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934 or any "margin stock", as defined in
F.R.S. Board Regulation U.
SECTION 4.11. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary,
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each Lender shall be entitled to fund and maintain its funding of all or any
part of its Loans in any manner it sees fit, it being understood, however, that
for the purposes of this Agreement all determinations hereunder shall be made as
if such Lender had actually funded and maintained each Eurodollar Loan during
the Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to the last day of such Interest Period and bearing an
interest rate equal to the Eurodollar Rate for such Interest Period. Each Lender
shall use reasonable efforts (consistent with its internal policies and legal
and regulatory restrictions) to take appropriate action, including the selection
of a jurisdiction of its Eurodollar Office or the changing of the jurisdiction
of its Eurodollar Office, as the case may be, so as to avoid the imposition of
any increased costs or withholding taxes or to eliminate the amount of any such
increased costs or withholding taxes which may thereafter accrue; provided that
no such selection or change of the jurisdiction for its Eurodollar Office shall
be made if, in the reasonable judgment of such Lender, such selection or change
would be disadvantageous to such Lender.
SECTION 4.12. Substitution. In the event that (x) any Lender's
obligation to make Eurodollar Rate Loans has been declared unlawful pursuant to
Section 4.1, (y) any Lender has demanded compensation under Section 4.3 or 4.6,
or (z) a Lender is the subject of a Disqualification, and so long as there does
not exist a Default or Event of Default, the Borrower shall have the right, with
the consent of the Agent, to designate an Eligible Assignee (which may be one or
more of the Lenders) as a substitute for such Lender to purchase the Notes (for
a price equal to all principal, interest, fees and costs owed to such Lender)
and assume the Commitments of such Lender.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1. Initial Borrowing. The obligations of the Lenders to fund
the initial Borrowing or the L/C Issuer to issue the initial Letter of Credit
shall be subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 5.1; provided, that if the
initial Borrowing is not funded by July 31, 1999, the Commitments shall then
expire.
SECTION 5.1.1. Resolutions, etc. The Agent shall have received
from the Borrower a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
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(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document to be executed by it; and
(c) its articles of incorporation and bylaws,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling or
amending such prior certificate; and the Agent shall have received from each
Guarantor a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to
(a) resolutions of the Board of Directors then in full force and
effect authorizing the execution, delivery and performance of its
Guaranty and each other Loan Document to be executed by it;
(b) the incumbency and signatures of those of its officers
authorized to act with respect to its Guaranty, and each other Loan
Document to be executed by it; and
(c) its articles of incorporation and bylaws,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Guarantor canceling or
amending such prior certificate. In addition, the Agent shall have received from
the Borrower and each Guarantor a certificate, dated not earlier than June 1,
1999 from the Secretary of State of each State in which such Person is qualified
to do business confirming the good standing in that State of the Borrower or
such Guarantor, as the case may be.
SECTION 5.1.2. Delivery of Notes. The Agent shall have received,
for the account of each Lender, the Notes duly executed and delivered by the
Borrower and the lenders under the Prior Credit Agreement shall have made
arrangements satisfactory to the Borrower to return the notes delivered
thereunder.
SECTION 5.1.3. Guaranty. The Agent shall have received the
Guaranty, dated the date hereof, duly executed by each of the Guarantors.
SECTION 5.1.4. Security Agreement. The Agent shall have received
executed counterparts of the Security Agreement or amendments thereto, duly
executed by each of the Borrower and the Guarantors (other than the Borgata
Subsidiary, which shall become a party thereto when it becomes a Significant
Subsidiary), covering all of each such Person's equipment, gaming devices (but
only to the extent permitted by applicable law) and associated equipment,
fixtures, furnishings, inventory, accounts, intangibles and other
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personal property of every kind and description, including, to the extent
permitted by the terms of the financing or leasing agreements applicable
thereto, all furniture, fixtures and equipment that are financed or leased (all
of the foregoing is collectively referred to as the "Personal Property
Collateral"), together with
(a) acknowledgment copies of properly filed Uniform Commercial
Code financing statements (Form UCC-1), dated a date reasonably near to
and prior to the date of the initial Borrowing, or such other evidence
of filing as may be acceptable to the Agent, naming each of the
Guarantors (as appropriate) as the debtor, and the Agent on behalf of
the Lenders, as the secured party, or other similar instruments or
documents, filed under the Uniform Commercial Code of all jurisdictions
as may be necessary or, in the opinion of the Agent, desirable to
perfect the security interest of the Agent pursuant to the Security
Agreement;
(b) executed copies of proper Uniform Commercial Code
termination statements, if any, necessary to release all Liens and other
rights of any Person securing any existing Liens (other than Permitted
Liens), together with such other Uniform Commercial Code termination
statements as the Agent may reasonably request; and
(c) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-3), or a similar search report certified
by a party selected by and acceptable to the Agent, dated a date
reasonably near to the date of the initial Borrowing, listing all
effective financing statements which name each of the Guarantors (under
their present names and any previous names) as the debtor and which are
filed in the jurisdictions in which filings were made pursuant to clause
(a) above, together with copies of such financing statements (none of
which (other than those described in clause (a), if such Form UCC-3 or
search report, as the case may be, is current enough to list such
financing statements described in clause (a)) shall cover any Collateral
described in the Security Agreement).
SECTION 5.1.5. Deeds of Trust. The Agent shall have received
executed counterparts of a Deed of Trust or an amendment thereto with respect to
each Pledged Casino, duly executed by each of the owners of the Pledged Casinos,
together with
(a) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of each of the Deeds of
Trust or, if applicable, amendments thereto as may be necessary or, in
the reasonable opinion of the Agent, desirable effectively to record the
Deeds of Trust
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as valid, perfected Liens against the Pledged Casinos, which Liens are
subject to no outstanding monetary Liens recorded against Guarantors'
interest in the Pledged Casino;
(b) title policies (collectively, the "Title Policies") in favor
of the Agent on behalf of the Lenders providing title insurance in an
aggregate amount of $600,000,000 and otherwise in form and substance
satisfactory to the Agent and issued by the Title Company, with respect
to the Deeds of Trust; and
(c) such other approvals, opinions, or documents in connection
with the foregoing as the Agent may reasonably request.
SECTION 5.1.6. Surveys. The Agent shall have received, in
triplicate, a surveyor's plat of survey (dated not earlier than January 1, 1999
in the case of the Par-a-Dice Hotel and Casino and the Main Street Station and
not earlier than May 1, 1996 in the case of all other Pledged Casinos) of each
of the Pledged Casinos prepared (and so certified) in compliance with the
provisions of the applicable state survey standards by a registered land
surveyor of the state in which such Pledged Casino is located, and certified to
the Agent and the Title Company.
SECTION 5.1.7. Environmental Audit. The Agent shall have received
copies of a so-called "phase one" environmental audit covering the Main Street
Station and the Par-A-Dice Hotel and Casino, in each case prepared by an
environmental consulting firm selected by the Borrower and reasonably acceptable
to the Agent, and in form, substance and results, reasonably satisfactory to the
Agent.
SECTION 5.1.8. First Preferred Ship Mortgages. The Agent shall
have received executed counterparts of the First Preferred Ship Mortgages or
amendments thereto duly executed by each of Boyd Tunica, Par-A-Dice Gaming
Corporation and Treasure Chest, together with
(a) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of each of the First
Preferred Ship Mortgages or, if applicable, amendments thereto, as may
be necessary or, in the reasonable opinion of the Agent, desirable
effectively to record the First Preferred Ship Mortgages as valid,
perfected Liens against the vessels described therein, which Liens are
subject to no outstanding monetary Liens recorded against such vessels;
and
(b) such other approvals, opinions or documents in connection
with the foregoing as the Agent may reasonably request.
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SECTION 5.1.9. Consents, etc. The Agent shall have received
certified copies of all documents evidencing any necessary corporate action of
the Borrower, material consents, shareholder, creditor, material lessor,
governmental and material regulatory approvals or exemptions in connection with
this Agreement, all in form and substance reasonably satisfactory to the Agent
and, as to legal matters, its counsel.
SECTION 5.1.10. Insurance Coverages.
(a) The Borrower shall have obtained, and the Agent shall have
approved, the following insurance coverages with respect to the Pledged
Casinos:
(i) Comprehensive general public liability insurance in an
amount reasonably satisfactory to the Agent and the Borrower
covering the Borrower and the Guarantors;
(ii) Worker's compensation insurance (or self insurance
therefor) and employer's liability insurance for the Borrower
and the Guarantors, all in such amounts as may be required by
statute;
(iii) If commercially available, flood insurance if any
Pledged Casino is located in an area designated by the Secretary
of Housing and Urban Development as a special flood hazard area;
and
(iv) Rental or business interruption insurance in amounts
sufficient to pay operating expenses, lost rental income and
debt service for a period of up to six months on each Pledged
Casino.
(b) All policies of insurance required to be maintained by the
Borrower and the Guarantors shall be issued by companies reasonably
satisfactory to the Agent and shall have coverages and endorsements
(including, without limitation, waivers of subrogation and waivers of
breach of warranty) and be written for such amount as the Agent may
reasonably require. All policies of insurance required to be maintained
by Borrower and the Guarantors must name the Agent as mortgagee and
additional insured or loss payee, must insure the interest of the Agent
in the property as mortgagee and must provide that no cancellation or
material modification of the policies will be made without thirty days'
prior written notice to Agent. Certificates for all such policies must
be delivered to the Agent and approved by the Agent (which approval
shall not be unreasonably withheld).
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SECTION 5.1.11. Hazardous Materials Indemnity. The Agent shall
have received the Hazardous Materials Indemnity, dated as of the date hereof,
duly executed by the Guarantors.
SECTION 5.1.12. Solvency. The Agent shall have received a
certificate substantially in the form of Exhibit K hereto from the president,
the chief executive or chief financial Authorized Officer of the Borrower as to
solvency of the Borrower and each of the Guarantors, both before and after
giving effect to the transactions contemplated by this Agreement.
SECTION 5.1.13. Opinions of Counsel. The Agent shall have
received opinions, dated the date of the initial Borrowing and addressed to the
Agent and all Lenders, from Morrison & Foerster LLP, McDonald Carano Wilson
Bergin Frankovich & Hicks LLC, Watkins Ludlam & Stennis, P.A., Freeborn &
Peters, McGlinchey Stafford and Terriberry, Carroll & Yancey L.L.P., counsel to
the Borrower and the Guarantors as to the matters set forth in Exhibit L hereto.
SECTION 5.1.14. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, all fees, costs
and expenses due and payable pursuant to Sections 3.3 and, if then invoiced,
10.3.
SECTION 5.1.15. Loan Documents. The Agent shall have received
copies of such other documents or such other evidence as the Agent may
reasonably request showing that the Loans have been fully secured on the terms
described in this Agreement.
SECTION 5.2. All Borrowings. Subject to the provisions of Section 3.1.2,
the obligation of the L/C Issuer to issue any Letter of Credit or of each Lender
to fund any Loan on the occasion of any Borrowing (including the initial
Borrowing) that would increase the aggregate principal amount of Loans
outstanding hereunder shall be subject to the satisfaction of each of the
conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to the issuance of a Letter of Credit or any
Borrowing (but, if any Default of the nature referred to in Section 8.1.5 shall
have occurred with respect to any other Indebtedness, without giving effect to
the application, directly or indirectly, of the proceeds thereof) the following
statements shall be true and correct:
(a) the representations and warranties set forth in Article VI
(excluding, however, those contained in Section 6.7) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an earlier date, in
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which case such representations and warranties shall be true and correct
as of such earlier date);
(b) except as disclosed by the Borrower to the Agent and the
Lenders pursuant to Section 6.7
(i) no labor controversy, litigation, action, arbitration or
governmental investigation or proceeding shall be pending or, to
the knowledge of the Borrower, threatened against the Borrower
or any of its Subsidiaries which if adversely determined may be
reasonably expected to have a Material Adverse Effect; and
(ii) no development shall have occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7
which may be reasonably expected to have a Material Adverse
Effect; and
(c) no Default shall have then occurred and be continuing.
SECTION 5.2.2. Borrowing Request. Except for the Borrowings of
Swing Loans, the Borrower shall have furnished the Agent with a Borrowing
Request for such Borrowing. Each of the delivery of a Borrowing Request and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) the statements made in Subsection 5.2.1 are
true and correct. Each request by the Borrower for the issuance of a Letter of
Credit shall be made pursuant to a Letter of Credit application in the L/C
Issuer's then current form. Delivery of such application and the delivery by the
L/C Issuer of the Letter of Credit shall constitute a representation and
warranty by the Borrower that on the date of issuance of such Letter of Credit
(both immediately before and after giving effect thereto) the statements made in
Subsection 5.2.1 are true and correct. Each request by the Borrower for
Borrowings of Swing Loans and the acceptance by the Borrower of the proceeds of
such Swing Loans shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing (both immediately before and after giving
effect to such Borrowing in the application of the proceeds thereof) the
statements made in Subsection 5.2.1 are true and correct.
SECTION 5.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its
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counsel shall have received all information, approvals, opinions, documents or
instruments as the Agent or its counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the Borrower
represents and warrants unto the Agent and each Lender as set forth in this
Article VI.
SECTION 6.1. Organization, etc. Each of the Borrower and its Significant
Subsidiaries is a corporation, partnership, limited liability company or trust
validly organized and existing and in good standing under the laws of the State
of its formation, is duly qualified to do business and is in good standing as
foreign corporation, partnership, limited liability company or trust in each
jurisdiction where the nature of its business requires such qualification,
unless the failure to so qualify may not reasonably be expected to have a
Material Adverse Effect, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals necessary to enter
into and perform its Obligations under this Agreement, the Notes and each other
Loan Document to which it is a party and to own and hold its property and to
conduct its business substantially as currently conducted. As of the Effective
Date, each Significant Subsidiary is a Guarantor.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by the Borrower of this Agreement, the Notes, each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each Guarantor of each Loan Document executed or to
be executed by each Guarantor, are within each such Person's corporate powers,
have been duly authorized by all necessary corporate action, and do not
(a) contravene such Person's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting the Borrower
or any Guarantor, except where such contravention may not reasonably be
expected to have a Material Adverse Effect; or
(c) result in, or require the creation or imposition of, any
Lien on the Borrower's or any Guarantor's properties other than pursuant
to the Loan Documents.
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SECTION 6.3. Government Approval, Regulation, etc. Except for such
authorizations, approvals or notices obtained or delivered as of the Effective
Date or subsequently required in connection with the addition of any Guarantor
or the pledge of any additional Venture pursuant to Section 7.1.10, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance (i) by the Borrower of this
Agreement, the Notes or any other Loan Document or (ii) by any Guarantor of any
Loan Document to which any of them is a party, except that pursuant to
regulation 8.130 of the Nevada Gaming Control Board a notice of the Borrower's
execution of this Credit Agreement must be filed with the Nevada Gaming Control
Board within the time periods prescribed therein and pursuant to Mississippi
Gaming Commission Regulation III.I.11 a notice and report of the material terms
of this Agreement and certain related information must be filed with the
Mississippi Gaming Commission within the time period prescribed therein. Neither
the Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrower enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
general principles of equity; and each Loan Document executed by each Guarantor
will, on the due execution and delivery thereof, constitute, the legal, valid
and binding obligations of each such Person enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and general principles of equity.
SECTION 6.5. Financial Information. The audited balance sheet of the
Borrower and its Subsidiaries as at December 31, 1998, the unaudited balance
sheet of the Borrower and its Subsidiaries as at March 31, 1999, the operating
statements for each of the Pledged Casinos for the three-month period ending
March 31, 1999, and the related statements of income and cash flow of the
Borrower and its Subsidiaries, copies of which have been furnished to the Agent
and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates
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thereof and the results of their operations for the periods then ended.
SECTION 6.6. No Material Adverse Effect. Since December 31, 1998, there
has been no Material Adverse Effect.
SECTION 6.7. Litigation, etc. As of the Effective Date, there is no
pending or, to the knowledge of the Borrower, threatened labor controversy,
litigation, action, or proceeding affecting the Borrower or any of its
Subsidiaries, or any of their respective properties, assets or revenues, which,
if adversely determined may be reasonably expected to have a Material Adverse
Effect, except as disclosed in Item 1 ("Litigation; Labor Matters") of the
Disclosure Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no direct or indirect
Subsidiaries, except those Subsidiaries
(a) which are identified in Item 2 ("Existing Subsidiaries") of
the Disclosure Schedule and which are wholly-owned by the Borrower as of
the Effective Date; or
(b) which are permitted to have been formed or acquired in
accordance with Section 7.2.5 or Section 7.2.13.
SECTION 6.9. Ownership of Properties. The Borrower and each of its
Subsidiaries have good and marketable title to all of their respective
properties and assets, in the case of the Borrower and each of its Subsidiaries,
free and clear of all Liens, charges or claims (including infringement claims
with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 7.2.3. The provisions of the Deeds of Trust, the
First Preferred Ship Mortgages and the Security Agreement are effective to
create, in favor of the Agent (for the benefit of the Lenders), valid and
perfected first priority Liens on the Pledged Casinos, the vessels subject to
the First Preferred Ship Mortgages and all personal property described in the
Security Agreement and the Deeds of Trust, subject only to the Permitted Liens.
All governmental approvals necessary or, in the reasonable opinion of the Agent,
desirable to perfect and protect, and establish and maintain the priority of,
such Liens have been duly effected or taken.
SECTION 6.10. Compliance. The Borrower and the Guarantors are in
compliance with all presently existing applicable statutes, laws, regulations,
rules, ordinances and orders of any kind whatsoever (including, but not limited
to, any zoning and building laws or ordinances, subdivision laws or ordinances,
any Environmental Laws, or any presently existing rules, regulations or orders
of any governmental entity, authority or agency) (all of which are sometimes
hereinafter collectively referred to as "Laws"), and with all presently existing
covenants and restrictions
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of record relating to the use and occupancy of any of their respective
properties, in any case except to the extent that failure to so comply may not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.11. Pension and Welfare Plans. During the twelve-
consecutive-month period prior to the date of the execution and delivery of this
Agreement by the Borrower and prior to the date of any Borrowing hereunder, no
steps have been taken to terminate any Pension Plan, and no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which is reasonably likely to result
in the incurrence by the Borrower or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in Item 4 ("Employee
Benefit Plans") of the Disclosure Schedule, neither the Borrower nor any member
of the Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in Item 5
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its Subsidiaries
have been, and continue to be, owned or leased by the Borrower and such
Subsidiaries in material compliance with all applicable Environmental
Laws;
(b) there have been no past, and there are no pending or
threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect
to any alleged violation of any applicable Environmental Law;
(ii) complaints, notices or inquiries to the Borrower or any
of its Subsidiaries regarding potential liability under any
applicable Environmental Law; or
(iii) claims, complaints, notices or requests to the
Borrower or any its Subsidiaries requiring investigation or
remediation under any applicable Environmental Law;
that, singly or in the aggregate, have, or may be reasonably expected to
have, a Material Adverse Effect;
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(c) there have been no Releases of Hazardous Materials in
violation of any applicable Environmental Law at, on or under any
property now or previously owned or leased by the Borrower or any of its
Subsidiaries that, singly or in the aggregate, may be reasonably
expected to have a Material Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are
in material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental matters that
are required pursuant to any Environmental Law and necessary for their
businesses;
(e) no property now or previously owned or leased by the
Borrower or any of it Subsidiaries is listed or proposed for listing
(with respect to owned property only) on the National Priorities List
pursuant to and as defined by CERCLA, on the CERCLIS or on any similar
state list of sites requiring investigation or clean-up;
(f) there are no underground storage tanks, or water, gas or oil
wells, active or abandoned, including petroleum storage tanks, on or
under any property now or previously owned or leased by the Borrower or
any of its Subsidiaries that, singly or in the aggregate, may be
reasonably expected to have a Material Adverse Effect;
(g) there are no polychlorinated biphenyls or friable asbestos
present at any of the Pledged Casinos that, singly or in the aggregate,
have, or may be reasonably expected to have a Material Adverse Effect;
and
(h) as of the Effective Date, to the best of the Borrower's
knowledge, no conditions exist at, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries
which, with the passage of time, or the giving of notice or both, would
give rise to any material liability under any existing Environmental
Law.
SECTION 6.13. Regulations U and X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation U or X. Terms for which
meanings are provided in F.R.S. Board Regulation U or X or any regulations
substituted therefor, as from time to time in effect, are used in this Section
with such meanings.
SECTION 6.14. Taxes. The Borrower and each of its Subsidiaries have
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental
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charges thereby shown to be owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 6.15. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is true and accurate in every
material respect on the date as of which such information is dated or certified
and as of the date of execution and delivery of this Agreement by the Borrower
or has been subsequently supplemented by other or further information to the
extent necessary to give the Agent and the Lenders true and accurate knowledge
of the subject matter thereof, and such information is not, or shall not be, as
the case may be, incomplete by omitting to state any material fact necessary to
make such information not misleading.
SECTION 6.16. Year 2000 Compliance. Any reprogramming required to permit
the proper functioning (to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and other equipment supplied by others or with which the
computer systems of the Borrower or any of its Subsidiaries interface), and the
testing of all such systems and other equipment as so reprogrammed, will be
completed by September 30, 1999, except to the extent such non-completion could
not reasonably be expected to result in a Material Adverse Effect. The costs to
the Borrower and its Subsidiaries that have not been incurred as of the date
hereof for such reprogramming and testing and for the other reasonably
foreseeable consequences to them of any improper functioning of other computer
systems and equipment containing embedded microchips due to the occurrence of
the year 2000 could not reasonably be expected to result in a Default or Event
of Default or to have a Material Adverse Effect. Except for any reprogramming
referred to above, the computer systems of the Borrower and its Subsidiaries are
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be, sufficient in all material respects for the conduct of
their business as currently conducted.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the Agent
and each Lender that, until all Commitments have
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terminated, all Letters of Credit have expired or been cash-collateralized and
all Obligations have been paid and performed in full, the Borrower will perform
the obligations set forth in this Section 7.1.
SECTION 7.1.1. Financial Information, Reports, Notices, etc. The
Borrower will furnish to each Lender and the Agent copies of the following
financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of the Borrower, consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Quarter and consolidated
statements of income and cash flow of the Borrower and its Subsidiaries
for such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial officer of the Borrower;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of the Borrower, a copy of the annual audit
report for such Fiscal Year for the Borrower and its Subsidiaries,
including therein consolidated balance sheets of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of income and cash flow of the Borrower and its Subsidiaries
for such Fiscal Year, in each case certified (without any Impermissible
Qualification) in a manner acceptable to the Agent by Deloitte & Touche
or other independent public accountants reasonably acceptable to the
Agent and the Majority Lenders, together with a certificate from such
accountants confirming compliance with each of the financial ratios and
restrictions contained in Section 7.2 and to the effect that, in making
the examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or Event of
Default that has occurred and is continuing, all as certified by the
chief financial officer of the Borrower;
(c) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year,
a certificate in substantially the form of Exhibit M hereto, executed by
the chief financial officer of the Borrower, showing (in reasonable
detail and with appropriate calculations and computations in all
respects satisfactory to the Agent) compliance with the financial
covenants set forth in Section 7.2;
(d) as soon as possible and in any event within 45 days after
the end of each Fiscal Quarter, a computation of the
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Total Leverage Ratio as of the end of such Fiscal Quarter and a written
report, in form and detail reasonably acceptable to the Agent, with
respect to the status of each New Venture, including the amounts of
Expansion Capital Expenditures and New Venture Investments made, and
reasonably anticipated to be made, with respect thereto, each certified
by the chief financial officer of the Borrower;
(e) promptly after request by the Agent or any Lender, copies of
any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board
of directors) of the Borrower by independent accountants in connection
with the accounts or books of the Borrower or any of its Subsidiaries,
or any audit of any of them;
(f) as soon as possible and in any event within 30 days after
the end of each month, monthly and year-to-date operating statements for
each Venture owned by the Borrower and its Subsidiaries, each of which
statements shall compare the financial performance of such Venture to
the Borrower's projections and each of which shall be certified by the
chief financial officer of the Borrower and accompanied by a narrative
report describing the results of operations of such Venture during such
month;
(g) as soon as possible and in any event within five days after
the Borrower obtains knowledge of the occurrence of each Default, a
statement of an Authorized Officer of the Borrower setting forth details
of such Default and the action which the Borrower has taken and proposes
to take with respect thereto;
(h) as soon as possible and in any event within five days after
the Borrower obtains knowledge of the (x) occurrence of any material
adverse development with respect to any labor controversy, litigation,
action or proceeding described in Section 6.7 (including, without
limitation, the entry against the Borrower or any of its Subsidiaries of
a judgment in excess of $1,000,000) or (y) commencement of any material
labor controversy, litigation, action or proceeding of the type
described in Section 6.7, notice thereof and, as promptly as possible,
but in no event later than ten Business Days after such event, copies of
all documentation relating thereto;
(i) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its security holders and
copies of all material filings that the Borrower makes with any
regulatory commission having jurisdiction over the Borrower (except to
the extent that such reports are
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restricted from disclosure by the particular regulatory agency), and all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(j) within thirty days after the beginning of each Fiscal Year
of the Borrower, financial projections for each Venture owned by the
Borrower and its Subsidiaries for such Fiscal Year, in reasonable detail
and in all respects satisfactory to the Agent;
(k) promptly upon becoming aware of the institution of any steps
by the Borrower or any other Person to terminate any Pension Plan, or
the failure to make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a Lien under section 302(f) of
ERISA, or the taking of any action with respect to a Pension Plan which
is reasonably likely to result in the requirement that the Borrower
furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan which is
reasonably likely to result in the incurrence by the Borrower of any
material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower with respect to any post-retirement
Welfare Plan benefit, notice thereof and copies of all documentation
relating thereto; and
(l) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
Subsidiaries as any Lender or the Agent may from time to time reasonably
request.
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders (including, without limitation,
all applicable gaming laws, rules, regulations and orders and all filings
described in Section 6.3) except to the extent that failure to so comply may not
reasonably be expected to have a Material Adverse Effect, such compliance by
each Significant Subsidiary to include (without limitation):
(a) subject to Sections 7.1.7 and 7.2.8, the maintenance and
preservation of its qualification as a foreign corporation or other
entity; and
(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for
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which adequate reserves in accordance with GAAP shall have been set
aside on its books.
SECTION 7.1.3. Construction and Maintenance of Properties, Etc.
The Borrower shall, and shall cause its Subsidiaries to, maintain and preserve
all of its properties necessary or useful in the proper conduct of their
business (including, in the case of the Guarantors, the Pledged Casinos), in
good working order and condition in all material respects, ordinary wear and
tear excepted and make necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times. The Borrower shall not permit all or any portion of any
of the Pledged Casinos to be removed, demolished or materially altered, except
in connection with the improvement, renovation or expansion thereof and to the
extent that the value thereof is not materially impaired, and shall restore,
replace or rebuild any Pledged Casino, or any part thereof now or hereafter
damaged or destroyed by any casualty (whether or not insured against or
insurable).
SECTION 7.1.4. Insurance.
(a) In addition to maintaining the insurance coverage required
as of the Effective Date under Section 5.1.10 hereof, the Borrower will,
and will cause each of its Subsidiaries to, maintain or cause to be
maintained with responsible insurance companies insurance with respect
to the Pledged Casinos and the business of the Borrower and its
Subsidiaries conducted therein or in connection therewith (including
business interruption insurance) against such casualties and
contingencies and of such types and in such amounts as is customary in
the case of similar businesses and will furnish to each Lender annually
and thirty days prior to the expiry of any policy a certificate of an
Authorized Officer of the Borrower setting forth the nature and extent
of all insurance maintained by the Borrower and its Subsidiaries in
accordance with Section 5.1.10 and this Section.
(b) All such policies of insurance shall:
(i) be written by financially responsible companies selected
by the Borrower and having an A.M. Best rating of "A" or better
and being in a financial size category of XII or larger, or by
other companies acceptable to the Majority Lenders; and
(ii) name the Agent and the Lenders as additional insured,
or loss payee, as its interest may appear (except in the case of
workers' compensation insurance);
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(iii) provide that it will not be canceled or reduced,
except after not less than 30 days' written notice to the Agent;
(iv) provide that the interests of the Agent and the Lenders
shall not be invalidated by: (A) any act or negligence of the
Borrower or any Person (other than the Lenders or the Agent)
having an interest in any property covered by any Deed of Trust,
First Preferred Ship Mortgage or Security Agreement; (B) any
foreclosure or other proceeding relating to such property; (C)
any negligent or unintentional breach or violation of any
warranty, declaration or condition in any policy of insurance by
the Borrower; provided, however, that neither the Agent nor any
Lender shall be deemed to have made any such warranty,
declaration or to be subject to any such condition in respect of
any such policy or insurance; or (D) any change in the title to
or ownership of all or any part of the Pledged Casinos;
(v) waive all rights of subrogation of the insurers against
the Agent and the Lenders;
(vi) waive any right of the insurers to set-off or
counterclaim or to make any other deduction, whether by way of
attachment or otherwise, as against the Agent or any Lender;
(vii) waive all claims for insurance premiums or commissions
or additional premiums or assessments against the Agent and the
Lenders; and
(viii) provide that, except in the case of third-party
liability insurance, the proceeds of any loss affecting real or
personal property or interests shall be applied in accordance
with the terms of the applicable Deed of Trust, First Preferred
Ship Mortgage or Security Agreement.
(c) The Borrower will advise the Agent promptly of any policy
cancellation, reduction or amendment.
(d) On or before the date of the initial Borrowing hereunder,
the Borrower will deliver to the Agent certificates of insurance
reasonably satisfactory to the Agent evidencing the existence of all
insurance required to be maintained by the Borrower under this Agreement
setting forth the respective coverages, limits of liability, carriers,
policy numbers and periods of coverage and showing that such insurance
will be effective through July 1, 2000 as to property insurance policies
for the Pledged Casinos subject only to the payment
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<PAGE> 72
of premiums as they become due. Thereafter, on each July 1 of each year
(commencing in 2000) the Borrower will deliver to the Agent certificates
of insurance evidencing that all insurance required to be maintained by
the Borrower under this Agreement will be in effect through the
respective anniversary dates of the following Fiscal Year, subject only
to the payment of premiums as they become due. In addition, the Borrower
will not materially modify any of the provisions of any policy with
respect to casualty insurance without delivering the original copy of
the endorsement reflecting such modification to the Agent. The Borrower
will not obtain or carry separate insurance concurrent in form or
contributing in the event of loss with that required by this Section
7.1.4. unless the Agent on behalf of the Lenders are named insured under
such insurance, with loss payable as provided in this Agreement. The
Borrower will immediately notify the Agent whenever any such separate
insurance is obtained and shall deliver to the Agent the certificates
evidencing the same.
(e) Without limiting the obligations of the Borrower under the
foregoing provisions of this Section 7.1.4., in the event the Borrower
shall fail to maintain in full force and effect insurance as required by
the foregoing provisions of this Section 7.1.4., then the Agent may, and
shall if instructed so to do by the Majority Lenders, procure insurance
covering the interests of the Lenders and the Agent in such amounts and
against such risks as otherwise would be required hereunder and the
Borrower shall reimburse the Agent in respect of any premiums paid by
the Agent in respect thereof.
SECTION 7.1.5. Books and Records. The Borrower will, and will
cause each of its Significant Subsidiaries to, keep books and records which
accurately reflect all of their business affairs and transactions and permit the
Agent and each Lender or any of their respective representatives, at reasonable
times and intervals, to visit all of its offices, to discuss its financial
matters with its officers and independent public accountant (and the Borrower
hereby authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy a reasonable number of extracts from) any of its
books or other corporate records. The Borrower shall cooperate with any
representative of the Agent or any Lender in connection with the exercise by the
Agent or such Lender of its rights under this Section 7.1.5.
SECTION 7.1.6. Environmental Covenant. The Borrower will, and
will cause each of its Subsidiaries to,
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(a) use and operate all of its facilities and properties in
material compliance with all applicable Environmental Laws, keep all
permits, approvals, certificates, licenses and other authorizations
required pursuant to applicable Environmental Laws in effect and remain
in material compliance therewith, and handle all Hazardous Materials in
material compliance with all applicable Environmental Laws;
(b) promptly notify the Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the
condition of its facilities and properties under, or compliance of its
facilities and properties with, applicable Environmental Laws, and shall
promptly commence and diligently proceed to cure, to the reasonable
satisfaction of the Agent any actions and proceedings relating to
violations of compliance with applicable Environmental Laws; and
(c) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section 7.1.6.
SECTION 7.1.7. Maintenance of Existence. Subject to the right to
complete mergers, liquidations and distributions permitted under Section 7.2.8,
the Borrower will take all action necessary to maintain its corporate existence
and the corporate existence of each Guarantor. Notwithstanding the foregoing,
the Borrower and any of its Subsidiaries may, with the consent of the Agent
(which consent shall not be unreasonably withheld or delayed), change its
jurisdiction of organization or change the form of its organization (such as any
change from a limited liability company to a partnership or corporation, or vice
versa, any change from a corporation to a limited liability company or
partnership, or vice versa, or any change from a partnership to a limited
liability company or a corporation or a change from a multi-member limited
liability company to a single-member limited liability company, or any similar
change in structure).
SECTION 7.1.8. Gaming and Liquor Licenses. The Borrower will
maintain, and will cause each Guarantor to maintain, (i) such valid Gaming
Licenses, registrations and findings of suitability in all jurisdictions as may
be necessary to conduct their casino businesses and (ii) all liquor licenses and
registrations as may be necessary to sell alcoholic beverages from and in their
casinos.
SECTION 7.1.9. Accuracy of Information. All factual information
furnished after the date of execution and delivery of this Agreement by or on
behalf of the Borrower or any Guarantor in writing to the Agent or any Lender
for purposes of or in connection with this Agreement or any transaction
contemplated hereby will be true and accurate in every material respect on the
date as of which
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such information is dated or certified, and such information shall not be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
SECTION 7.1.10. Significant Subsidiaries. Promptly upon the
determination that any Subsidiary has become a Significant Subsidiary
(including, without limitation, at the time Boyd Indiana completes the Blue Chip
Acquisition), the Borrower will cause such Significant Subsidiary to execute and
deliver to the Agent for the benefit of the Lenders (i) an amendment to the
Guaranty, if such Subsidiary is not already a party thereto, joining such
Subsidiary as a party thereto, (ii) if such Subsidiary owns a Venture that is
not already a Pledged Casino, one or more Deeds of Trust substantially in the
form required by Section 5.1.5 hereof, together with a joinder to the Hazardous
Materials Indemnity and all other documentation required thereunder, encumbering
such Venture, (iii) an amendment to the Security Agreement, if such Subsidiary
is not already a party thereto, joining such Subsidiary as a party thereto, (iv)
legal opinions in form and substance satisfactory to the Agent, and (v) the
documentation required by Sections 5.1.1, 5.1.6 and 5.1.7 hereof in respect of
such Venture(s).
SECTION 7.1.11. Use of Proceeds. The Borrower shall use the
proceeds of the Loans to (i) refinance outstanding Indebtedness under the Prior
Credit Agreement, (ii) to fund a portion of the Borrower's Investment in the
Borgata Joint Venture, (iii) to fund the Blue Chip Acquisition and (iv) for
other general corporate purposes.
SECTION 7.1.12. Further Agreements. Unless otherwise consented to
by the Majority Revolving Lenders, (i) prior to completing the Blue Chip
Acquisition, the Agent shall have reviewed and approved the documentation to be
delivered in connection with the Blue Chip Acquisition and (ii) prior to
completing both of the Blue Chip Acquisition and the Required Borgata
Investment, the Borrower shall have received not less than $150,000,000 of net
proceeds from the issuance of Subordinated Debt.
SECTION 7.2. Negative Covenants. The Borrower agrees with the Agent and
each Lender that, until all Commitments have terminated, all Letters of Credit
have expired or been cash-collateralized and all Obligations have been paid and
performed in full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not, and
will not permit any of its Significant Subsidiaries or any New Venture Entity
to, engage in any business activity, except for (i) the ownership and operation
of casinos, hotel/casinos,
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riverboats and the related facilities or any other Venture and (ii) such
activities as may be incidental or related thereto.
SECTION 7.2.2. Indebtedness. Without the consent of the Majority
Revolving Lenders, the Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or
be liable in respect of any Indebtedness other than the following:
(i) the Obligations;
(ii) the Senior Notes and Senior Subordinated Notes outstanding
on the Effective Date,
(iii) any notes issued pursuant to a Permitted Senior Note
Issuance or a Permitted Subordinated Debt Issuance;
(iv) Hedging Obligations entered into by the Borrower with any
Lender or any Affiliate of any Lender to hedge the Borrower's exposure
with respect to interest rate fluctuations, which Hedging Obligations
may, at a Lender's discretion, be ratably secured by the Collateral;
provided, in no event shall the notional principal amount of such
secured Hedging Obligations exceed $300,000,000 in the aggregate;
(v) unsecured trade debt incurred in the ordinary course of
business and unsecured accrued liabilities incurred in the ordinary
course of business;
(vi) Indebtedness in an aggregate amount not to exceed
$25,000,000 at any time outstanding; provided, however that any secured
Indebtedness permitted hereunder shall be secured by only those assets
that are purchased, leased or financed with the funds provided thereby;
and
(vii) direct or indirect Indebtedness of the Borrower's
Subsidiaries to the Borrower or another Subsidiary or Indebtedness of
the Borrower to any Subsidiary;
provided, however, that no additional Indebtedness other than
Indebtedness pursuant to subsection (v) or Indebtedness to Guarantors or
Indebtedness from a Guarantor to the Borrower or a Guarantor pursuant to
subsection (vii) hereof, shall be permitted to be incurred if
immediately before, or after giving effect to the incurrence thereof,
any Default shall have occurred and be continuing. The Agent shall
execute such documentation as may be reasonably required by a lender or
lessor pursuant to subsection (vi) above in order to evidence that such
lender or lessor's Lien on the assets leased or financed by such lender
or lessor, if perfected and non-
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avoidable, is prior in right to any Lien in favor of the Lenders.
SECTION 7.2.3.Liens. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon (i) any of the Pledged Casinos or any of the Collateral, (ii) any real or
personal property of any Guarantor, or (iii) the management contracts for the
Silver Star Hotel and Casino, in each case whether now owned or hereafter
acquired, except (solely with respect to the foregoing clauses (i) and (ii)):
(a) Liens securing payment of the Obligations, granted pursuant
to any Loan Document;
(b) Liens described in, and securing Indebtedness permitted by,
Section 7.2.2(iv), which Liens shall be secured ratably with the
Obligations, and Liens described in, and securing Indebtedness permitted
by, Section 7.2.2(vi);
(c) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being diligently contested in good faith by appropriate
proceedings and which have been stayed pending resolution and for which
adequate reserves in accordance with GAAP shall have been set aside on
its books;
(d) Liens for labor done and materials and services supplied and
furnished (i) which have not been filed or recorded for more than sixty
(60) days; (ii) which have not been filed or recorded for more than one
hundred twenty (120) days and with respect to which, within the first
sixty (60) days after such filing or recordation, the Borrower or the
Subsidiary whose property is the subject of such a Lien has commenced,
and thereafter diligently continues to prosecute by appropriate means,
the release of such lien of record pursuant to the provisions of
applicable state or federal law or (iii) which the Title Company has
agreed to insure over in a manner satisfactory to the Agent;
(e) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
tenders, statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(f) easements, rights of way, restrictions and similar
encumbrances incurred in the ordinary course of business not
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materially adversely affecting the value of any of the Pledged Casinos;
(g) judgment Liens securing an aggregate amount less than
$300,000 in existence less than twenty consecutive days after the entry
thereof or with respect to which execution has been stayed by reason of
a pending appeal or otherwise or the payment of which is covered in full
(subject to a customary deductible) by insurance;
(h) Liens held by joint venture partners, any lender to any New
Venture Entity and any assignees thereof, with respect to the interests
of the Borrower or one of its Subsidiaries in a New Venture Entity;
provided that such Lien shall secure and relate only to the obligations
of such New Venture Entity; and
(i) Liens in existence on the date hereof described in Item 3 of
the Disclosure Schedule;
provided that this Section 7.2.3 shall not apply to prohibit the
creation of a Lien to the extent necessary to prevent a revocation of a
Gaming License under any applicable Gaming Laws if (i) no Default or
Event of Default then exists which is not curable by the creation of the
Lien; (ii) the Borrower has notified the Agent in writing of the
necessity to invoke this proviso at least ten Business Days (or such
shorter period as may be necessary in order to comply with a regulation
or order of the relevant Gaming Board) in advance; and (iii) the
creation of such Lien will not have a Material Adverse Effect.
SECTION 7.2.4. Financial Condition. Without the consent of the
Majority Revolving Lenders, the Borrower will not permit:
(a) Net Worth to be less than the sum of (i) $212,587,000, plus
(ii) 50% of the Borrower's consolidated net income (without giving
effect to any losses) for each Fiscal Quarter ending on or after June
30, 1999, plus (iii) an amount equal to the increase in the Borrower's
stockholders equity following the Effective Date by reason of sales and
issuances of the Borrower's Capital Stock;
(b) the Total Leverage Ratio at the end of any Fiscal Quarter,
for the period of four consecutive Fiscal Quarters ending on such date,
to be greater than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 30, 1999 - September 30, 2000 4.50 to 1.0
December 31, 2000 - December 31, 2001 4.75 to 1.0
</TABLE>
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
March 31, 2002 - December 31, 2002 5.25 to 1.0
March 31, 2003 and thereafter 4.75 to 1.0;
</TABLE>
provided, that until the Borrower shall have made the Required Borgata
Investment, then the foregoing chart shall be replaced with the following chart:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 30, 1999 to December 31, 2001 4.25 to 1.0
March 31, 2002 to December 31, 2002 4.50 to 1.0
March 31, 2003 and thereafter 4.25 to 1.0;
</TABLE>
(c) the Senior Secured Leverage Ratio at the end of any Fiscal
Quarter for any period of four consecutive Fiscal Quarters ending on or
after June 30, 1999 to be greater than 2.50 to 1.00; or
(d) the Interest Coverage Ratio at the end of any Fiscal
Quarter, for the period of four consecutive Fiscal Quarters ending on
such date, to be less than the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 30, 1999 to June 30, 2000 2.50 to 1.0
September 30, 2000 to December 31, 2001 2.25 to 1.0
March 31, 2002 to December 31, 2002 2.00 to 1.0
March 31, 2003 and thereafter 2.25 to 1.0;
</TABLE>
provided that until the Borrower shall have made the Required Borgata
Investment, then the foregoing chart shall be replaced with the
following chart:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 30, 1999 and thereafter 2.50 to 1.0
</TABLE>
SECTION 7.2.5.Investments. Without the consent of the Majority
Revolving Lenders, the Borrower will not, and will not permit any of its
Subsidiaries to, make, incur, assume or suffer to exist any Investment other
than (i) Investments in existing Ventures owned by the Borrower or one of its
Subsidiaries; (ii) New Venture Investments in the Borgata Joint Venture not
exceeding $150,000,000 in the aggregate on a cumulative basis during the term of
this Agreement; (iii) Expansion Capital Expenditures to the extent permitted by
Section 7.2.7; (iv) purchases or redemptions of the Capital Stock of the
Borrower to the extent permitted by Section 7.2.6(b); (v) Investments consisting
of or evidencing the extension of credit to customers of the Borrower or any of
its Subsidiaries in the ordinary course of business and any Investments received
in satisfaction or partial satisfaction thereof; (vi) Investments representing
all or a portion of the sales price for property sold to another Person; (vii)
Investments of the
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Borrower's Subsidiaries in the Borrower or any Subsidiary or Investments of the
Borrower in any Subsidiary; and (viii) other Investments in an amount not to
exceed the sum of (a) the Restricted Payment and Investment Basket plus (b)
Available Net
Equity Proceeds.
SECTION 7.2.6. Restricted Payments. Without the consent of the
Majority Revolving Lenders,
(a) Neither the Borrower nor any of its Subsidiaries shall
purchase, or defease or redeem the Senior Notes, the Senior Subordinated
Notes or any other Subordinated Debt; provided, however, that the
Borrower may make such purchases or redemptions if (i) both before and
after giving effect thereto, there shall not exist a Default or an Event
of Default and (ii) the aggregate amount of such purchases or
redemptions after the Effective Date does not exceed the sum of (a) the
Restricted Payment and Investment Basket plus (b) Available Net Equity
Proceeds and provided, further that the Borrower may, after prior
written notice to the Lenders, redeem, purchase or defease any Senior
Notes, Senior Subordinated Notes or other Subordinated Debt that any
Gaming Board has ordered so purchased, redeemed or defeased.
(b) The Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any
class of Capital Stock (now or hereafter outstanding) of the Borrower or
on any warrants, options or other rights with respect to any shares of
any class of Capital Stock (now or hereafter outstanding) of the
Borrower or apply, or permit any of its Subsidiaries to apply, any of
its funds or assets to the purchase or redemption of any shares of
Capital Stock of the Borrower unless (i) both before and after giving
effect to any such dividend, distribution, purchase or redemption, there
shall not exist a Default or an Event of Default and (ii) the aggregate
amount of such dividends, distributions, purchases or redemptions after
the Effective Date does not exceed the sum of (a) the Restricted Payment
and Investment Basket plus (b) Available Net Equity Proceeds.
(c) Except to the extent permitted by clause (a) above, the
Borrower will not, and will not permit any of its Subsidiaries to make
any payment or prepayment of Subordinated Debt on any day other than the
stated scheduled date for such payment set forth in the Subordinated
Debt.
SECTION 7.2.7. Capital Expenditures. Except as otherwise approved
by the Majority Revolving Lenders, the Borrower will not, and will not permit
any of its Subsidiaries to, make or commit to make any Capital Expenditure other
than:
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(a) Up to $75,000,000 of Expansion Capital Expenditure to expand
and renovate Sam's Town Las Vegas and other Expansion Capital
Expenditures on a cumulative basis from and after the Effective Date in
an amount not to exceed the sum of (i) $50,000,000 plus (ii) Available
Net Equity Proceeds plus (iii) up to $25,000,000 of the Expansion
Capital Expenditures allocated for Sam's Town Las Vegas to the extent
that such amounts were not expended at that property plus (iv) an
additional $50,000,000 after January 1, 2000 if the Borrower's Total
Leverage Ratio (after giving effect to the Required Borgata Investment)
is less than 4.0 to 1.0 at the time the proposed Expansion Capital
Expenditures are commenced; provided, however, in no event shall the
Expansion Capital Expenditures for any Venture other than Sam's Town Las
Vegas exceed $50,000,000 in the aggregate;
(b) The Blue Chip Acquisition, but only to the extent that the
purchase price therefor does not exceed $280,000,000; and
(c) Maintenance Capital Expenditures (i) for the refurbishment
of Sam's Town Las Vegas in an amount not to exceed $25,000,000, (ii) for
the refurbishment of the Stardust Hotel and Casino in an amount not to
exceed $25,000,000, (iii) for the Borrower's new customer information
system in an amount not to exceed $50,000,000 and (iv) other Maintenance
Capital Expenditures which do not exceed an aggregate amount of
$65,000,000 in any Fiscal Year.
SECTION 7.2.8. Consolidation, Merger, etc. The Borrower will not,
and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) other than in connection with the Blue Chip Acquisition,
provided, however that any Subsidiary of the Borrower that has aggregate assets
of less than $100,000 may liquidate or dissolve and provided further that (i)
any Subsidiary of the Borrower may liquidate or dissolve voluntarily into, and
may merge with and into, the Borrower or any other Subsidiary and (ii) the
Borrower may consolidate with or merge into any of its Subsidiaries; provided,
however, that such Subsidiary agrees to assume the Obligations of the Borrower
hereunder in a manner reasonably satisfactory to the Majority Lenders.
SECTION 7.2.9. Asset Dispositions, etc. The Borrower will not,
and will not permit any of its Subsidiaries to, sell or dispose of all or
substantially all of the Collateral without the prior written consent of all
Lenders. The Borrower will not, and will not permit any of its Subsidiaries to,
make any Restricted
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Disposition without the prior written consent of the Majority Lenders.
SECTION 7.2.10. Transactions with Affiliates. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its other
Affiliates, including without limitation, any management contract, unless such
arrangement is fair and equitable to the Borrower or such Subsidiary and is of a
sort which would be entered into by a prudent Person in the position of the
Borrower or such Subsidiary with, or which is on terms which are no less
favorable than are obtainable from, any Person which is not one of its
Affiliates.
SECTION 7.2.11. Negative Pledges, etc. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any agreement prohibiting
the creation or assumption of any Lien or restricting the ability of any
Subsidiary to make any payments to the Borrower by way of dividends, advances or
repayments of advances to the Borrower or restricting the ability of the
Borrower to amend or otherwise modify this Agreement or any other Loan Document,
except for
(i) negative pledges in favor of joint venture partners, any
lender to any New Venture Entity or any assignees thereof, with respect
to the interests of the Borrower or one of its Subsidiaries in a New
Venture Entity; and
(ii) rights consisting of holdings in joint tenancy or other
forms of ownership interests (and rights associated therewith) in a New
Venture Entity or consisting of obligations of the Borrower or any of
its Subsidiaries to sell, or rights of other Persons to purchase, the
ownership interests of the Borrower or any of its Subsidiaries in a New
Venture Entity, which obligations or rights were created substantially
concurrently with the acquisitions of such ownership interests in the
New Venture Entity;
provided that this Section 7.2.11 shall not apply to prohibit the creation of a
negative pledge to the extent necessary to obtain or prevent a revocation of a
Gaming License under any applicable Gaming Laws if (i) no Default or Event of
Default then exists which is not curable by the creation of the negative pledge,
(ii) the Borrower has notified the Agent in writing of the necessity to invoke
this proviso at least ten Business Days (or such shorter period as may be
necessary in order to comply with a regulation or order of the relevant Gaming
Board) in advance and (iii) the creation of such negative pledge will not have a
Material Adverse Effect.
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SECTION 7.2.12. Amendments or Waivers of Certain Documents. The
Borrower shall not, and shall not permit any of its Subsidiaries to, amend or
supplement any term or provision of any Subordinated Debt or any documents
pursuant to which any Subordinated Debt is outstanding, or waive or otherwise
relinquish any of its rights or causes of action under or arising out of the
Subordinated Debt or such other documents, without in each case obtaining the
prior written consent of the Majority Lenders; provided, however,
notwithstanding the foregoing, the Borrower and its Subsidiaries may amend,
supplement or waive any terms of any Subordinated Debt so long as the Majority
Lenders shall have determined that, after giving effect to such amendment,
supplement or waiver, the terms of such Subordinated Debt are no less favorable
to the Borrower and the Lenders than those under the existing Subordinated Debt.
The Borrower shall not, and shall not permit any of its Subsidiaries to, make
any material amendment or modification of the partnership agreement for the
Borgata Partnership without obtaining the prior written consent of the Agent.
SECTION 7.2.13. Subsidiaries. The Borrower will not create any
Subsidiaries, without the prior written consent of the Agent, which consent
shall not be unreasonably withheld, provided, that the provisions of this
Section 7.2.13 shall not require the Agent's consent for the formation of
wholly-owned direct and indirect Subsidiaries of the Borrower or a New Venture
Investment in a less than wholly-owned Subsidiary.
SECTION 7.2.14. Fiscal Year. The Borrower will not, and will not
permit any of its Subsidiaries to, change its Fiscal Year.
SECTION 7.2.15. Rental Obligations. Except as otherwise approved
by the Majority Revolving Lenders, the Borrower will not, and will not permit
any of its Subsidiaries to, enter into at any time any arrangement which does
not create a Capital Lease Obligation and which involves the leasing by the
Borrower or any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), except arrangements which, together with all
other such arrangements which shall then be in effect, will not cause the
aggregate rental expense of the Borrower and its Subsidiaries (net of rental
receipts) to exceed $10,000,000 (excluding escalations resulting from a rise in
the consumer price or similar index) for any Fiscal Year.
SECTION 7.2.16. Limitation on Indebtedness.
(a) Without the written consent of the Majority Term Lenders,
the Borrower shall not, and shall not permit any Restricted Subsidiary
to, Incur any Indebtedness unless no Event of Default has occurred and
is continuing and unless (after giving effect to (i) the Incurrence of
such
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Indebtedness as if such Indebtedness was Incurred at the beginning of
the Reference Period and (if applicable) the application of the net
proceeds thereof to repay other Indebtedness as if the application of
such proceeds occurred at the beginning of the Reference Period, (ii)
the Incurrence and retirement of any other Indebtedness since the first
day of the Reference Period as if such Indebtedness was Incurred or
retired at the beginning of the Reference Period and (iii) the
acquisition or disposition of any company or business by the Borrower or
any Restricted Subsidiary since the first day of the Reference Period
including any acquisition or disposition which will be consummated
contemporaneously with the Incurrence of such Indebtedness, as if such
acquisition or disposition occurred at the beginning of the Reference
Period), the Borrower's Consolidated Fixed Charge Coverage Ratio would
exceed 2.0 to 1.
(b) Notwithstanding the foregoing limitation, the Borrower may
Incur the following Indebtedness: (i) Indebtedness evidenced by the
Senior Notes; (ii) Indebtedness outstanding on the Issue Date; (iii)
Indebtedness under this Agreement; (iv) Indebtedness of the Borrower or
a Restricted Subsidiary owing to and held by a Restricted Subsidiary or
the Borrower; provided, however, that any subsequent issuance or
transfer of any Capital Stock or other event that results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of any such Indebtedness except to the Borrower or a
Restricted Subsidiary shall be deemed in each case to constitute the
Incurrence of such Indebtedness by the issuer thereof; (v) Indebtedness
under Interest Rate Agreements entered into for the purpose of limiting
interest rate risks, provided that the obligations under such agreements
are related to payment obligations on Indebtedness otherwise permitted
by the terms of this covenant; (vi) Indebtedness under Currency Exchange
Protection Agreements, provided that such Currency Exchange Protection
Agreements were entered into for the purpose of limiting exchange rate
risks in connection with transactions entered into in the ordinary
course of business; (vii) Indebtedness in connection with one or more
standby letters of credit, performance bonds or completion guarantees
issued in the ordinary course of business or pursuant to self-insurance
obligations and not in connection with the borrowing of money or the
obtaining of advances or credit; (viii) Indebtedness outstanding under
Permitted FF&E Financings which are either (x) Non-Recourse Indebtedness
of the Borrower and its Restricted Subsidiaries or (y) limited in amount
for each Gaming Facility owned or leased by the Borrower or any of its
Restricted Subsidiaries to the lesser of (1) the amount of FF &E used in
such Gaming Facility and financed by such Permitted FF&E Financing or
(2) $10 million; (ix) so long as no Event of
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Default has occurred and is continuing, Indebtedness of the Borrower not
otherwise permitted to be Incurred pursuant to the provisions of
paragraph (a) above or this paragraph in an aggregate amount Incurred
not to exceed $25 million; or (x) Permitted Refinancing Indebtedness
Incurred in respect of Indebtedness outstanding pursuant to the
provisions of Section 7.2.16(a) or clauses (i), (ii), (iii), (viii) and
this clause (x) of this Section 7.2.16(b).
SECTION 7.2.17. Limitation on Restricted Payments.
(a) Without the prior written consent of the Majority Term
Lenders, the Borrower shall not make, and shall not permit any
Restricted Subsidiary to make, any Restricted Payment if at the time of,
and after giving effect to, such proposed Restricted Payment, (a) a
Default or an Event of Default shall have occurred and be continuing,
(b) the Borrower could not Incur at least $1.00 of additional
Indebtedness pursuant to Section 7.2.16 or (c) the aggregate amount of
such Restricted Payment and all other Restricted Payments made from and
after the Issue Date (the amount of any Restricted Payment, if made
other than in cash, to be based upon Fair Market Value) would exceed an
amount equal to the sum of (i) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the
end of the most recent Fiscal Quarter ended immediately prior to the
Issue Date to the end of the most recent Fiscal Quarter ended
immediately prior to the date of such Restricted Payment (or, in the
case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (ii) the aggregate Net Cash Proceeds received by the Borrower
from the issue or sale of its Capital Stock (other than Disqualified
Stock) subsequent to the end of the most recent Fiscal Quarter ended
immediately prior to the Issue Date (other than an issuance or sale to a
Subsidiary of the Borrower or an employee stock ownership plan or other
sale to a Subsidiary of the Borrower or an employee stock ownership plan
or other trust established by the Borrower or any of its Subsidiaries or
pursuant to clauses (iii) or (iv) of Section 7.2.17(b)); (iii) the
amount by which Indebtedness of the Borrower or any Guarantor is reduced
on the Borrower's balance sheet upon the conversion or exchange (other
than an issuance or sale to a Subsidiary of the Borrower or an employee
stock ownership plan or other trust established by the Borrower or any
of its Subsidiaries) subsequent to the end of the most recent Fiscal
Quarter ended immediately prior to the Issue Date, of any Indebtedness
of the Borrower or any Guarantor convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Borrower (less the amount
of any cash or other property distributed by the Borrower or any
Restricted Subsidiary upon such conversion or exchange); (iv) the amount
equal to the net reduction in
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Investments resulting from (A) payments of dividends, repayments of
loans or advances or other transfers of assets to the Borrower or any
Guarantor or the satisfaction or reduction (other than by means of
payments by the Borrower or any Restricted Subsidiary) of obligations of
other Persons which have been Guaranteed by the Borrower or any
Guarantor or (B) the redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries which execute Guarantees of the Senior Notes, in
each case such net reduction in Investments being (x) valued as provided
in the definition of "Investment" set forth in Section 1.1 of the Senior
Indenture, (y) in an amount not to exceed the aggregate amount of
Investments previously made by the Borrower or any Guarantor which were
treated as a Restricted Payment, and (z) included in this clause (iv)
only to the extent not included in Consolidated Net Income; (v) payments
of dividends, repayments of loans or advances or other transfers of
assets to the Borrower or any Guarantor from the Borgata Joint Venture
to the extent such dividends, repayments, advances or other transfers
exceed $100 million; and (vi) $75 million.
(b) The provisions of the preceding paragraph shall not
prohibit: (i) the payment of any dividend within 60 days after the date
of its declaration if such dividend could have been paid on the date of
its declaration in compliance with such provisions; provided that at the
time of payment of such dividend no Default under any provision of
Section 7.2.16 shall have occurred and be continuing (or would result
therefrom); (ii) the redemption or repurchase of any Capital Stock or
Indebtedness of the Borrower (other than any Capital Stock or
Indebtedness which is held or beneficially owned by, or issued by, any
member of the Boyd Family, the Borrower or any Affiliate of the
Borrower) (A) if the holder or beneficial owner of such Capital Stock or
Indebtedness is required to qualify under the Gaming Laws and does not
so qualify or (B) if necessary in the reasonable, good faith judgment of
the Board of Directors, as evidenced by a Board Resolution, to prevent
the loss or secure the reinstatement of any Gaming License which if lost
or not reinstated, as the case may be, would have a material adverse
effect on the business of the Borrower and its Subsidiaries, taken as a
whole, or would restrict the ability of the Borrower or any of its
Subsidiaries to conduct business in any gaming jurisdiction; (iii) any
purchase, redemption or other acquisition or retirement of Capital Stock
of the Borrower made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock (other than Disqualified
Stock) of the Borrower; (iv) any purchase, redemption or other
acquisition or retirement of the Indebtedness of any Person made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Capital Stock (other than Disqualified
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Stock) of the Borrower; (v) any purchase, redemption, defeasance or
other acquisition or retirement for value of Indebtedness from the
process of Permitted Refinancing Indebtedness; (vi) any purchase,
redemption or other retirement of the Senior Subordinated Notes; (vii)
Investments not to exceed $100 million in the Borgata Joint Venture;
(viii) Investment Guarantees to the extent permitted by Section 7.2.16
that constitute Permitted Joint Venture Investments and Guarantee (with
full rights of subrogation) Indebtedness Incurred by a Permitted Joint
Venture to acquire or construct Gaming Facilities provided that such
Indebtedness (A) is not expressly subordinated in right of payment or
otherwise to any other Indebtedness of such Permitted Joint Venture and
(B) is secured by first priority security interests in such Gaming
Facilities, and (ix) payments pursuant to Investment Guarantees which
were entered into in compliance with clause (viii) of this Section
7.2.17(b).
(c) The full amount of any Restricted Payments pursuant to
clauses (i) and (ii) of Section 7.2.17(b) (but not pursuant to clauses
(iii), (iv), (v), (vi) and (vii) of Section 7.2.17(b)) shall be included
in the calculation of the aggregate amount of the Restricted Payments
referred to in Section 7.2.17(a). With respect to any Investment
Guarantee, (x) if at any time the Borrower or any Restricted Subsidiary
ceases to control the day-to-day operations of the Permitted Joint
Venture the Indebtedness of which is Guaranteed by the Investment
Guarantee, the full amount of such Investment Guarantee shall thereafter
be included in the calculation of the aggregate amount of Restricted
Payments referred to in Section 7.2.17(a) and (y) if the Borrower or a
Restricted Subsidiary retains such control, any amount actually paid
pursuant to such Investment Guarantee shall be included in the
calculation of the aggregate amount of Restricted Payments referred to
in the next preceding paragraph.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall
fail to pay when due any payment or prepayment of any principal of any Loan or
the Borrower shall fail to pay within five days of the date when due any payment
of interest on any Loan or any Unused Fee or of any other monetary Obligation.
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SECTION 8.1.2. Breach of Warranty. Any representation or warranty
of the Borrower made or deemed to be made hereunder or in any other Loan
Document or any other writing or certificate furnished by or on behalf of the
Borrower to the Agent or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
material respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance and observance of
any of its obligations under Section 7.2.
SECTION 8.1.4. Non-Performance of Other Covenants and
Obligations. The Borrower shall default in the due performance and observance of
any other agreement contained herein, and such default shall continue unremedied
for a period of thirty days after notice thereof shall have been given to the
Borrower by the Agent.
SECTION 8.1.5. Default on Other Indebtedness. A default shall
occur in the payment when due (after giving effect to any applicable notice and
grace periods), whether by acceleration or otherwise, of any Indebtedness (other
than Indebtedness described in Section 8.1.1, but including, without limitation,
all Subordinated Debt of the Borrower or any Guarantor) in an aggregate amount
exceeding $5,000,000 of the Borrower or any of its Significant Subsidiaries, or
a default shall occur in the performance or observance of any obligation or
condition with respect to any such Indebtedness in an aggregate amount exceeding
$5,000,000 (including, without limitation, all Subordinated Debt of the Borrower
or any Guarantor), and to the extent required under the terms of such
Indebtedness, notice of such default shall have been given and any applicable
grace period shall have expired, if the effect of such default is to accelerate
the maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such Indebtedness to
become due and payable prior to its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment
of money in excess of $5,000,000 (not covered by insurance subject to customary
deductibles) shall be rendered against the Borrower or any of its Significant
Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or
(b) such judgment or order shall not have been vacated, stayed,
satisfied, discharged or bonded pending appeal within twenty days from
the entry thereof.
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SECTION 8.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member of
its Controlled Group or any other Person to terminate a Pension Plan if,
as a result of such termination, the Borrower or any such member could
be required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $3,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 8.1.8. Change of Control. Any of the following shall
occur: (a) a "Change of Control" (as such term is defined in the Senior
Indenture or in any comparable instrument governing a permitted refinancing
thereof) in respect of the Borrower shall occur; (b) the Boyd Family shall (i)
cease to own at least 25% of the Borrower's outstanding voting stock or (ii)
otherwise cease to have the power to direct the management and policies of the
Borrower; (c) a "Change of Control" (as such term is defined under the Senior
Subordinated Indenture) in respect of the Borrower shall occur (each of such
events shall be considered a "Change of Control").
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any
Significant Subsidiary shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or
any of its Significant Subsidiaries or any property of any thereof, or
make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its
Significant Subsidiaries or for a substantial part of the property of
any thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within sixty days;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any
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dissolution, winding up or liquidation proceeding, in respect of the
Borrower or any of its Significant Subsidiaries, and, if any such case
or proceeding is not commenced by the Borrower or such Significant
Subsidiary, such case or proceeding shall be consented to or acquiesced
in by the Borrower or such Significant Subsidiary or shall result in the
entry of an order for relief or shall remain for ten days uncontroverted
or for sixty days undismissed; or
(e) take any corporate action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.10. Loan Documents. (a) Any Loan Document shall fail
to remain in full force and effect; (b) any action shall be taken by the
Borrower or any Guarantor to discontinue a Loan Document or to assert the
invalidity thereof; (c) the Borrower or any Guarantor shall breach any term of
any Loan Document and such breach shall continue after any applicable notice
and/or grace period set forth in such Loan Document; or (d) any representation
or warranty made by the Borrower or any Guarantor in any Loan Document is
breached or is false or misleading in any material respect when made.
SECTION 8.1.11. Gaming License. Once licensed by a Gaming Board,
the Borrower or a Guarantor shall fail to possess a valid Gaming License for
each casino owned by it or such license shall be suspended for a period of
fifteen days or longer.
SECTION 8.1.12. Governmental Approvals. Any obligor under any of
the Loan Documents shall fail to obtain, renew, maintain or comply with any such
governmental approvals as shall be necessary (1) for the execution, delivery or
performance by such obligors of their respective obligations, or the exercise of
their respective rights, under the Loan Documents, or (2) for the grant of the
Liens created under the Deeds of Trust, the First Preferred Ship Mortgages or
the Security Agreement or for the validity and enforceability or the perfection
of or exercise by the Agent of its rights and remedies under the Deeds of Trust,
the First Preferred Ship Mortgages or the Security Agreement; or any such
governmental approval shall be revoked, terminated, withdrawn, suspended,
modified or withheld or shall cease to be effective; or any proceeding shall be
commenced by or before any governmental person for the purpose of revoking,
terminating, withdrawing, suspending, modifying or withholding any such
governmental approval and such proceeding is not dismissed within 60 days; and
such failure, revocation, termination, withdrawal, suspension, modification,
cessation or commencement is reasonably likely to materially adversely affect
(i) the rights or the interests of the Lenders under the Loan Documents or (ii)
the ability of any obligor to perform its obligations under the Loan Documents.
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SECTION 8.1.13. Liens on Shares of Significant Subsidiaries. Any
Lien, other than a Lien in favor of the Agent on behalf of the Lenders, shall be
placed on any Capital Stock of any Significant Subsidiary.
SECTION 8.2. Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the outstanding principal
amount of all outstanding Loans and all other Obligations shall automatically be
and become immediately due and payable and the Commitments shall terminate,
without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent, upon the direction of the Majority Lenders, shall by
notice to the Borrower declare (i) all or any portion of the outstanding
principal amount of the Loans and other Obligations to be due and payable,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable
and/or (ii) except as otherwise provided in the immediately following sentence,
the Commitments (including, without limitation, the commitment of the Lenders to
issue any additional Letters of Credit) to be terminated, without further
notice, demand or presentment. Notwithstanding any termination of the Revolving
Loan Commitment prior to the Stated Maturity Date, Revolving Loans may
thereafter be made to reimburse the L/C Issuer for any drafts paid on or before
the Stated Maturity Date under any Letter of Credit outstanding on the date of
such termination.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. Each Lender hereby appoints the Agent as its
administrative agent and as its collateral agent under and for purposes of this
Agreement, the Notes and each other Loan Document. After the occurrence of an
Event of Default, the Agent agrees to solicit the consent of the Majority
Lenders prior to exercising any of its remedies under the Loan Documents. Each
Lender authorizes the Agent to act on behalf of such Lender under this
Agreement, the Notes and each other Loan Document and, in the absence of other
written instructions from the Majority Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will comply, except as
otherwise advised by counsel), to exercise such powers hereunder and thereunder
as are specifically delegated to or required of the Agent by the terms hereof
and thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which
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indemnity shall survive any termination of this Agreement) the Agent, pro rata
according to such Lender's Aggregate Percentage, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, the Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, to the extent that the Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, claims, costs or expenses
which result solely from the Agent's gross negligence or wilful misconduct. The
Agent shall not be required to take any action hereunder, under the Notes or
under any other Loan Document, or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Agent shall be
or become, in the Agent's determination, inadequate, the Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
SECTION 9.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 3:00 p.m., New
York time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its applicable Percentage of such
Borrowing on the date specified therefor, the Agent may assume that such Lender
has made such amount available to the Agent and, in reliance upon such
assumption, make available to the Borrower a corresponding amount. If and to the
extent that such Lender shall not have made such amount available to the Agent,
such Lender and the Borrower severally agree to repay the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to the Borrower to the date
such amount is repaid to the Agent, at the Federal Funds Rate for the first two
days such funds are overdue and thereafter at the interest rate applicable from
time to time on the Loans comprising such Borrowing.
SECTION 9.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by them under this Agreement or any other Loan Document,
or in connection herewith or therewith, except for their own wilful misconduct
or gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or
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sufficiency of any collateral security, nor to make any inquiry respecting the
performance by the Borrower of its obligations hereunder or under any other Loan
Document. The Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 9.4. Successor. The Agent may resign as such at any time upon at
least thirty (30) days' prior notice to the Borrower and all Lenders and the
Agent may be removed at any time by the Majority Lenders. If the Agent at any
time shall resign or be removed, the Majority Lenders and the Borrower may
appoint another Person as a successor Agent and such appointee shall thereupon
become the Agent hereunder. If no successor Agent shall have been so appointed,
and shall have accepted such appointment, within thirty (30) days after such
retiring Agent's giving notice of resignation or the removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as the Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) Section 10.3 shall continue to inure to its benefit.
SECTION 9.5. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower and such other documents,
information and investigations as such Lender has deemed appropriate, made its
own credit decision to extend its Commitments. Each Lender also acknowledges
that it will, independently of the Agent and each other Lender, and based on
such other documents, information and investigations as it shall deem
appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement or any other Loan Document.
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SECTION 9.6. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender copies of all communications received by the Agent from the Borrower for
distribution to the Lenders in accordance with the terms of this Agreement. The
Swingline Lender shall provide the Agent with a summary of Swing Loan Borrowings
and repayments on a monthly basis, and the Agent shall promptly provide copies
of such summary to each Lender.
SECTION 9.7. Collateral Agent. The Agent shall hold all Collateral as
the agent for all of the Lenders and all net proceeds of the Collateral shall be
shared by the Lenders pursuant to the provisions of Section 4.8.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. Sections 7.2.2, 7.2.4, 7.2.5,
7.2.6 and 7.2.7 may from time to time be amended, modified or waived (including
any waiver of an Event of Default resulting from the breach of any such
covenants), if such amendment, modification or waiver is in writing and is
consented to by the Borrower and the Majority Revolving Lenders, and Sections
7.2.16 and 7.2.17 may be amended, modified or waived (including any waiver of an
Event of Default resulting from the breach of any such covenants), if such
amendment, modification or waiver is in writing and is consented to by the
Borrower and the Majority Term Lenders. All other provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Majority Lenders (except where the applicable provision
of this Agreement or such other Loan Document specifies that a determination is
to be governed by the Majority Term Lenders or the Majority Revolving Lenders);
provided, however, that no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Majority Lenders or modify this
Section 10.1, shall be effective unless consented to by each Lender;
(b) modify any requirement hereunder that any particular action
be taken by the Majority Revolving Lenders or change the definition of
"Majority Revolving Lenders" shall be effective unless consented to by
each Revolving Lender;
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(c) modify any requirement hereunder that any particular action
be taken by the Majority Term Lenders or change the definition of
"Majority Term Lenders" shall be effective unless consented to by each
Term Lender;
(d) increase the Revolving Loan Commitment Amount of any
Revolving Lender or the Revolving Percentage of any Revolving Lender
shall be made without the consent of such Lender or, extend the
Revolving Loan Commitment Termination Date or change any provision
expressly requiring the consent of all Revolving Lenders shall be made
without the consent of each Revolving Lender;
(e) increase the Term Loan Commitment Amount of any Term Lender
or the Term Percentage of any Term Lender shall be made without the
consent of such Lender or extend the Term Loan Commitment Termination
Date or change any provision expressly requiring the consent of all Term
Lenders shall be made without the consent of each Term Lender;
(f) reduce any fees described in Article III without the consent
of each Lender affected thereby or extend the due date for, or reduce
the amount of, any scheduled repayment on any Loan (or reduce the
principal amount of or rate of interest on any Loan) shall be made
without the consent of the Lender holding the Note evidencing such Loan;
(g) release all or substantially all of the Collateral shall be
effective without the consent of all Lenders; release any Collateral in
connection with a Restricted Disposition shall be effective without the
consent of Majority Lenders; or release any Collateral in connection
with a Permitted Disposition shall require the consent of the Agent or
the Lenders;
(h) modify the application of payments specified under Section
2.2.2 without the consent of Majority Revolving Lenders and Majority
Term Lenders;
(i) release all or substantially all of the Guarantors shall be
effective without the consent of all Lenders; release any Guarantor in
connection with a Restricted Disposition shall be effective without the
consent of Majority Lenders; or release any Guarantor in connection with
a Permitted Disposition shall be effective without notice to the Agent;
(j) affect adversely the interests, rights or obligations of the
Agent qua the Agent shall be made without the consent of the Agent;
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(k) modify Section 3.1.2 without the consent of the Swingline
Lender; or
(l) modify Sections 2.7, 3.4 or 3.5 without the consent of the
L/C Issuer.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or at such
other address or facsimile number as may be designated by such party in a notice
to the other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees to pay
on demand all reasonable out-of-pocket costs and reasonable expenses of the
Agent (including the fees at normal hourly rates and reasonable disbursements of
(i) counsel to the Agent and (ii) local counsel, if any, who may be retained by
counsel to the Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document (including, without
limitation, the title insurance policies required pursuant to Section
5.1.5(b) hereof and the Agent's syndication expenses prior to the
Effective Date), including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to this Agreement
or any other Loan Document as may from time to time hereafter be
required, including, without limitation, any further appraisals of the
Pledged Casinos that may hereafter be required by any regulatory or
other governmental authority, whether or not the transactions
contemplated hereby are consummated,
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(b) the filing, recording, refiling or rerecording of the Deeds
of Trust, the First Preferred Ship Mortgages, the Security Agreement
and/or any Uniform Commercial Code financing statements relating thereto
and all amendments, supplements and modifications to any thereof and any
and all other documents or instruments of further assurance required to
be filed or recorded or refiled or rerecorded by the terms hereof or of
the Deeds of Trust or the Security Agreement,
(c) the reasonable fees and expenses of the trustees under the
First Preferred Ship Mortgages, and
(d) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the Borrowings
hereunder, or the issuance of the Notes or any other Loan Documents, except for
(i) any processing fees payable in connection with the assignment of a Lender's
Notes or Commitments or (ii) any taxes properly payable by the Lenders under
Section 4.6. The Borrower also agrees to reimburse the Agent and each Lender
upon demand for all reasonable out-of-pocket expenses (including attorneys' fees
and legal expenses) incurred by the Agent or such Lender in connection with (x)
any reorganization (including a bankruptcy reorganization) of the Borrower or
any Guarantor, (y) after the occurrence and during the continuance of any
Default or Event of Default, the negotiation of any restructuring or "work-out",
whether or not consummated, of any Obligations and (z) the enforcement of any
Obligations or the Loan Documents.
SECTION 10.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
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(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or Letter of
Credit; or
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Majority Revolving Lenders or the Majority Term
Lenders pursuant to Article V not to fund any Borrowing);
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under Sections
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
Section 9.1, shall in each case survive any termination of this Agreement. The
representations and warranties made by the Borrower in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document until full and final payment of the
Obligations.
SECTION 10.6. Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. This Agreement shall become effective
when counterparts hereof executed on behalf of the Borrower and each Lender (or
notice thereof satisfactory to the Agent) shall have been received by the Agent
and notice thereof shall have been given by the Agent
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to the Borrower and each Lender. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders (any attempted assignment or transfer in contravention of
the foregoing shall be void); and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans,
Revolving Loan Commitment and Term Loan Commitment to one or more other Persons
in accordance with this Section 10.11.
SECTION 10.11.1. Assignments. Any Lender,
(a) with the written consent of the Agent and the Borrower
(which consent shall not be unreasonably delayed or withheld) may at any
time assign and delegate to an Eligible Assignee, and
(b) with notice to the Borrower and the Agent, and with the
consent of the Agent (which consent shall not be unreasonably delayed or
withheld) but without the consent of the Borrower, may assign and
delegate to any of its Affiliates or Related Funds and with notice to
the Borrower and the Agent, may assign and delegate to any other
existing Lender
(each Person described in either of the foregoing clauses as being the
Person to whom such assignment and delegation is to be made, being
hereinafter referred to as an "Assignee
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Lender"), all or any fraction of such Lender's Revolving Loans (and such
fraction of any outstanding Letters of Credit) or Term Loans and the
corresponding Commitments therefor (which assignment and delegation
shall be of a constant, and not a varying, percentage of all the
assigning Lender's Revolving Loans (and such fraction of any outstanding
Letters of Credit) or Term Loans and the corresponding Commitments
therefor) in a minimum aggregate amount of $5,000,000 (treating
Affiliates and Related Funds of a Lender as a single entity for purposes
hereof) or such lesser amount as may be agreed by the Agent and the
Borrower or, if less, the entire amount of such Lender's applicable
Commitments; provided, if the Borrower objects to such proposed
assignment, the Borrower shall state in reasonable detail the reasons
why the Borrower proposes to withhold such consent; and provided,
further that any such Assignee Lender will comply, if applicable, with
the provisions contained in the final paragraph of Section 4.6 and
further provided, however, that, the Borrower and the Agent shall be
entitled to continue to deal solely and directly with such Lender in
connection with the interests proposed to be so assigned and delegated
to an Assignee Lender until
(a) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the Borrower
and the Agent by such Lender and such Assignee Lender,
(b) such Assignee Lender shall have executed and delivered to
the Borrower and the Agent a Lender Assignment Agreement, consented to
(if required) by the Agent and the Borrower, and
(c) the processing fees described below shall have been paid.
From and after the date that the Agent and the Borrower receive and consent to
(if required) such Lender Assignment Agreement, (x) the Assignee Lender
thereunder shall be deemed automatically to have become a party hereto and to
the extent that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender in connection with such Lender Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and under
the other Loan Documents, and (y) the assignor Lender, to the extent that rights
and obligations hereunder have been assigned and delegated by it in connection
with such Lender Assignment Agreement, shall be released from its obligations
hereunder and under the other Loan Documents. Within five Business Days after
its receipt of an executed, acknowledged and effective Lender Assignment
Agreement, the Borrower shall execute and deliver to the Agent (for delivery to
the relevant Assignee Lender) new Notes evidencing such Assignee
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Lender's assigned Loans and Commitments and, if the assignor Lender has retained
Loans and Commitments hereunder, replacement Notes in the principal amount of
the Loans and Commitments retained by the assignor Lender hereunder (such Notes
to be in exchange for, but not in payment of, those Notes then held by such
assignor Lender). Each such Note shall be dated the date of the predecessor
Notes. The assignor Lender shall mark the predecessor Notes "exchanged" and
deliver them to the Borrower. Accrued interest on that part of the predecessor
Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part of the
predecessor Notes evidenced by the replacement Notes shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent (for the sole account of the Agent) upon delivery of any Lender Assignment
Agreement in the amount of $3,500 except in the case of an assignment by a
Lender to one of its Affiliates or Related Funds. Any Lender may at any time
pledge its Note or any other instrument evidencing its rights as a Lender under
this Agreement to a Federal Reserve Bank, and any Lender that is an investment
fund that invests in bank loans may, without the consent of the Agent or the
Borrower, pledge all or any portion of its interest and rights to any trustee or
any other representative of holders of obligations owed or securities issued by
such investment fund as security for such obligations or securities; provided,
that no such pledge shall release that Lender from its obligations hereunder or
grant to the Federal Reserve Bank or any trustee the rights of a Lender
hereunder absent foreclosure of such pledge. Notwithstanding anything in this
Section 10.11.1 to the contrary, the rights of the Lenders to make assignments
of their Loans and corresponding Commitments therefor shall be subject to the
approval of any Gaming Board, to the extent required by applicable Gaming Laws.
SECTION 10.11.2.Participations. Any Lender may at any time sell
to one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a "Participant") participating interests
in any of the Loans, Commitments, or other interests of such Lender hereunder;
provided, however, that
(a) no participation contemplated in this Section 10.11.2 shall
relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
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(c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of
Section 10.1,
(e) no Participant shall be entitled to payment of any amount
under Section 4.6 that would not have been required to be paid to such
Lender had no participation occurred, and
(f) notwithstanding anything in this Section 10.11.2 to the
contrary, the rights of the Lenders to grant participations in any of
the Loans, Commitments, or other interests of any Lender hereunder shall
be subject to the approval of any Gaming Board, to the extent required
by applicable Gaming Laws.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.8, 4.9, 4.11 and 10.4, shall be considered a Lender.
SECTION 10.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. Waiver of Jury Trial. EACH OF THE AGENT, THE L/C ISSUER,
THE LENDERS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE L/C
ISSUER, THE LENDERS OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT
THIS PROVISION
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<PAGE> 102
IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION 10.14. Amendment and Restatement. This Agreement amends and
restates the Prior Credit Agreement, and all loans and commitments outstanding
under the Prior Credit Agreement and made by a Lender under this Agreement shall
be deemed Loans and Commitments outstanding under this Agreement.
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<PAGE> 103
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
BOYD GAMING CORPORATION
By:
-------------------------------
Title: Executive Vice President
Address: 2950 South Industrial Road
Las Vegas, Nevada 89109
Facsimile No.: (702) 792-7313
Attention: Chief Financial Officer
CANADIAN IMPERIAL BANK OF COMMERCE,
AS AGENT AND L/C ISSUER
By:
-------------------------------
Title: Managing Director
CIBC World Markets Corp.,
AS AGENT
Address: 425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 856-3799
Attention: Agency Services
97
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