SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1998
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 N/A
LOUISIANA CASINO CRUISES, INC.
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(Exact name of registrant as specified in its charter)
LOUISIANA 72-1196619
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1717 River Road North
Baton Rouge, Louisiana 70802
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (225) 709-7777
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Registration S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
As of February 25, 1999 the aggregate market value of the voting stock
held by non-affiliates of the registrant was $0. (Calculated by excluding all
shares that may be deemed to be beneficially owned by executive officers,
directors and greater than 10% shareholders of the registrant, without conceding
that all such persons are "affiliates" of the registrant for purposes of the
federal securities laws.)
As of February 25, 1999 the number of outstanding shares of the
registrant's common stock was 996,883.
DOCUMENTS INCORPORATED BY REFERENCE
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PART I
ITEM 1. BUSINESS.
GENERAL
Louisiana Casino Cruises, Inc. (the "Company") owns and operates a
riverboat gaming facility in Baton Rouge, Louisiana (the "Casino Rouge"). The
Casino Rouge is one of two riverboat gaming facilities in Baton Rouge. Current
Louisiana legislation authorizes 15 riverboat casinos statewide and one
land-based casino in New Orleans. In addition, three casinos operate in
Louisiana on Native American land under contract agreements with the state. The
Casino Rouge opened on December 28, 1994. The Casino Rouge is managed by CRC
Holdings, Inc., doing business as Carnival Resorts and Casinos ("CRC"), an
experienced operator of gaming facilities and owner of approximately 59% of the
Company's common stock, no par value per share.
The Company was incorporated in Louisiana in August 1991. From the date
of incorporation until opening of the Casino Rouge on December 28, 1994, the
Company devoted substantially all of its efforts to evaluating gaming
opportunities in Louisiana, including seeking a Louisiana gaming license, the
development and construction of the Casino Rouge and the financing thereof.
FACILITIES
The Casino Rouge features a four-story, 47,000 square foot riverboat
casino, replicating a 19th century Mississippi River paddlewheel steamboat, and
a two-story, 58,000 square foot dockside embarkation building. The riverboat has
a capacity of 1,800 customers and emphasizes spaciousness and excitement with
its ample aisle space, 15-foot ceilings, a large central atrium and specially
designed lighting. The overall effect avoids the cramped atmosphere found in
many riverboat casinos. Patrons are offered a selection of 925 gaming machines
and 43 table games in 28,000 square feet of gaming space spread over three
decks. The dockside embarkation facility, which has recently undergone a $2.3
million renovation, offers a panoramic view of the Mississippi River and
features a variety of amenities, including (i) the new 268-seat "International
Marketplace Buffet," (ii) an array of food, bar and lounge areas, (iii) a new
meeting and planning center and (iv) a gift shop. All of the facilities are open
seven days a week, 24 hours a day, with eight cruises scheduled daily.
The 23-acre site is located on the east bank of the Mississippi River
in the East Baton Rouge Downtown Development District less than one-quarter mile
from the state capital complex. The site is within approximately one mile of
both Interstate 10 and Interstate 110. In addition, the site has convenient
parking for approximately 1,100 cars adjacent to the embarkation facility with
potential capacity for a total of 1,550 spaces.
COMPETITION
GENERAL. The Louisiana Riverboat Economic Development and Gaming
Control Act (the "Louisiana Act") limits the number of gaming casinos in
Louisiana to fifteen riverboat casinos statewide and one land-based casino in
New Orleans. Absent further state legislation and local option referenda,
additional licenses cannot be granted. Fourteen of the fifteen available
riverboat licenses are currently issued and outstanding: two for Baton Rouge;
three for the greater New Orleans area; four for the Shreveport/Bossier City
area in the northwest part of the state, approximately 235 miles from Baton
Rouge; four for Lake Charles in the southwest part of the state, approximately
120 miles from Baton Rouge; and one granted to a riverboat casino which
discontinued operations in New Orleans in October 1997 and whose owners received
the approval of the Louisiana Gaming Control Board (the "Louisiana Board") to
relocate the riverboat casino for what will be the fifth license in the
Shreveport/Bossier City area.
BATON ROUGE CASINOS. The Company's principal competitor is the other
Baton Rouge riverboat casino, the Belle of Baton Rouge (the "Belle"), which
opened on September 30, 1994 and is owned and operated by Argosy Gaming Company
("Argosy"). Since commencing operations on December 28, 1994, the Casino Rouge
has achieved an average of 57% of the market-share of gaming win on Baton Rouge
riverboats as reported by the Louisiana State Police. Argosy constructed a
retail, restaurant and entertainment center called "Catfish Town" as an integral
part of its land-based facility which commenced operations in April 1996.
NEW ORLEANS CASINOS. New Orleans has three riverboats and one
land-based casino. During November 1995, the controlling partnership which owned
the right to operate the only land-based casino in New Orleans closed its
temporary casino, temporarily halted construction on its permanent casino and
filed for bankruptcy protection under Chapter 11. Construction of the land-based
casino under changed ownership has recently resumed and operations are expected
to begin in late 1999.
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NATIVE AMERICAN CASINOS. Gaming is also permitted on Native American
lands in Louisiana and other states, and there are currently three such
operating Native American casinos in Louisiana. Although the closest such casino
is a land-based facility located on the Chitimacha reservation in Charenton,
Louisiana, approximately 45 miles southwest of Baton Rouge, it is not accessible
by a major highway. The closest Native American casino to Baton Rouge with major
highway accessibility is a land-based facility located on the Tunica-Biloxi
reservation in Mansura, Louisiana, approximately 65 miles northwest of Baton
Rouge.
MISSISSIPPI CASINOS. An emerging trend in Mississippi gaming,
particularly on the Gulf Coast (approximately 125 miles from Baton Rouge), is
the development of large-scale destination resort projects. The Imperial Palace,
the largest gaming facility on the Gulf Coast, commenced operations in December
1997 and several projects of similar size have been proposed for development. As
of December 31, 1998, the Mississippi Gaming Commission had granted 45 gaming
licenses. Of these, 29 of the licensees have opened and are operating casinos,
one licensee anticipates opening in the immediate future and the remaining
licensees represent entities that have either consolidated or closed casinos.
OTHER COMPETITION. Proposals have been introduced into the Louisiana
legislature to increase the number of gaming facilities permitted in Louisiana.
However, to date no such legislation has been approved and currently there are
no proposals in the legislature to issue new licenses. Alternative forms of
gaming are available to potential customers. Louisiana state law allows the
operation of a state lottery, betting on horse racing and charitable bingo. In
July 1991, Louisiana also authorized operation of video poker terminals at
various types of facilities in the state, including taverns, restaurants,
hotels/motels, truckstops, and racing facilities. As of June 30, 1998,
approximately 15,000 video poker terminals at approximately 3,600 non-casino
locations were in operation throughout the state. These facilities are widely
distributed throughout the state and have had no greater impact on the Baton
Rouge riverboat casinos than on other Louisiana riverboats.
Competition in the gaming industry is intense in the market where the
Company operates its gaming facility. As new gaming opportunities arise in
existing gaming jurisdictions, in new gaming jurisdictions and on Native
American-owned lands, new or expanded operations by others can be expected to
increase competition for the Company's operations and could limit new
opportunities for the Company or result in the saturation of certain gaming
markets. Casino gaming does not have a long operating history in the
jurisdiction where the Company operates its gaming facility and other nearby
jurisdictions and, therefore, the effects of competition in these jurisdictions
cannot be predicted with any degree of certainty. Many of the Company's
competitors outside of the greater Baton Rouge area have more gaming industry
experience, are larger and have greater financial resources than the Company. In
addition, Native American casinos have advantages because they do not pay
Louisiana gaming taxes or admission fees. As a result, increased competition
both inside and outside of the Company's market could have a material adverse
effect on the Company.
MANAGEMENT AGREEMENT
CRC and the Company are parties to a Casino Consulting and Management
Agreement, dated December 11, 1992, as amended (the "Management Agreement"),
pursuant to which, prior to the opening of the Casino Rouge, CRC provided
consulting and technical services to the Company in connection with the
planning, development and equipping of the Casino Rouge. CRC assisted the
Company in preparing the Casino Rouge for operations, including hiring a staff
of employees, designing the Casino Rouge, establishing accounting systems, and
developing marketing and casino operations concepts. Upon opening of the Casino
Rouge, CRC commenced handling all aspects of Casino Rouge's management pursuant
to the terms of the Management Agreement. The Management Agreement expires in
December 2004, subject to extension at the option of CRC for an additional
10-year period. CRC is entitled to an annual management fee equal to 2% of gross
revenues plus 5% of total operating income (as such terms are defined in the
Management Agreement). By separate agreement, CRC has agreed to pay one-half of
its 5% fee of total operating income to Dan S. Meadows, Jerry L. Bayles and
Thomas L. Meehan, aggregate holders of approximately 39% of the Company's Common
Stock. Mr. Meadows also serves as the Company's President and Vice Chairman of
the Board and Mr. Meehan serves as a director of the Company. For the fiscal
years ended November 30, 1998, 1997 and 1996, the amount earned by CRC pursuant
to the Management Agreement was $2,195,000, $2,214,000 and $2,567,000,
respectively. For the fiscal years ended November 30, 1998, 1997 and 1996, the
aggregate amount paid by CRC to Messrs. Meadows, Bayles and Meehan was $369,000,
$407,000 and $516,000, respectively.
In addition to the Casino Rouge, CRC operates Casino Rama, located
north of Toronto, Canada, for the Chippewas of Rama First Nations and the
Ontario Casino Corporation. CRC also develops other casinos and hotels including
a hotel/casino, retail and condominium project near Las Vegas, Nevada, and a
casino development project near Spokane, Washington for the Kalispel Tribe of
Indians.
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On February 17, 1999, CRC announced that it had signed a definitive
agreement to merge with Jackpot Enterprises, Inc. (NYSE:J), which presently
operates one of the largest gaming machine route operations in Nevada
aggregating approximately 4,300 gaming machines at approximately 400 locations.
Gaming machine route operations include the operation of machines at retail
stores (supermarkets, drug stores, merchandise stores and convenience stores),
bars and restaurants. If the merger were consummated, Jackpot Enterprises, Inc.,
as a successor to CRC, would succeed to CRC's ownership interest of the Company,
and responsibility for handling all aspects of the Casino Rouge's management.
There are no assurances, however, when such merger will be consummated, if ever.
EMPLOYEES
The Company maintains a staff of approximately 800 full-time equivalent
employees. None of the employees is covered by a collective bargaining
agreement. In 1995, two separate union elections involving a total of less than
5% of all employees were held and both initiatives were defeated. The Company
believes that its employee relations are good.
REGULATORY MATTERS
General
The Company is subject to regulation by the State of Louisiana and, to
a lesser extent, by federal law. The Company is subject to regulations that
apply specifically to the gaming industry and casinos and regulations that apply
specifically to operators of cruising riverboats, in addition to regulations
applicable to businesses generally. Below is a description of certain
regulations to which the Company is subject. Legislative or administrative
changes in applicable legal requirements have been proposed from time to time.
It is possible that the applicable requirements to operate a Louisiana gaming
facility will become more stringent and burdensome, and that taxes, fees and
expenses may increase, as the state gains further experience in regulating
gaming. Failure to comply with detailed regulatory requirements may be grounds
for the suspension or revocation of a license, which would have a materially
adverse effect upon the Company.
Louisiana Riverboat Gaming Regulation
In July 1991, the Louisiana legislature adopted legislation permitting
certain types of gaming activity on certain rivers and waterways in Louisiana.
Since May 1, 1996, gaming activities have been regulated by the Louisiana Board.
Under the Louisiana Act, local authorities may impose an admission fee of up to
$2.50 per passenger. Currently, Baton Rouge authorities are imposing the full
$2.50 per passenger fee at the two Baton Rouge riverboats.
The Louisiana Act authorized the issuance of up to fifteen licenses to
conduct gaming activities on a riverboat of new construction in accordance with
applicable law. However, no more than six licenses may be granted to riverboats
operating from any one parish. Of the fifteen available licenses, currently
thirteen are in operation, one is being relocated and one has been returned to
the state.
In issuing or renewing a license, the Louisiana Board must find that
the applicant is a person of good character, honesty and integrity and that the
applicant is a person whose prior activities, criminal record, if any,
reputation, habits and associations do not pose a threat to the public interest
of the State of Louisiana or to the effective regulation and control of gaming,
or create or enhance the dangers of unsuitable, unfair or illegal practices,
methods and activities in the conduct of gaming or the carrying on of business
and financial arrangements in connection therewith. The Louisiana Board will
grant or renew a license if it finds that: (a) the applicant can demonstrate the
capability, either through training, education, business experience, or a
combination of the above, to operate a gaming casino; (b) the proposed financing
of the riverboat and the gaming operations is adequate for the nature of the
proposed operation and from a source suitable and acceptable to the Louisiana
Board; (c) the applicant demonstrates a proven ability to operate a vessel of
comparable size, capacity and complexity to a riverboat so as to ensure the
safety of its passengers, with each employee being appropriately Coast Guard
certified; (d) the applicant submits a detailed plan of design of the riverboat
in its application for a license; (e) the applicant designates the docking
facilities to be used by the riverboat; (f) the applicant shows adequate
financial ability to construct and maintain a riverboat; and (g) the applicant
has a good faith plan to recruit, train and upgrade minorities in all employment
classifications.
Riverboat gaming licenses in Louisiana are issued for an initial
five-year term with annual renewals thereafter. The Company's original five-year
gaming license for the Casino Rouge is up for renewal in July 1999. Each of the
Company and its officers, directors, managers, principal shareholders and their
officers and directors and key gaming employees will be subject to strict
scrutiny and full suitability and approval by the Louisiana Board in connection
with the Company's renewal application. The factors that the Louisiana Board has
stated it will consider, among others, in order to renew the Company's license,
include the Company's compliance with all the requirements of the Louisiana Act,
the approval of various systems
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and procedures, the demonstration of good character (including an examination of
criminal and civil records) and methods of business practice. The Louisiana
Board may also seek to impose, as a condition of the license renewal, certain
Louisiana, minority and female employment and procurement goals. As a result of
the Justice Department's recent indictments of former Louisiana Governor Edwin
Edwards and certain other persons on charges relating to, among other things,
gaming licenses in Louisiana, the Louisiana regulators are applying greater
scrutiny to the suitability and business practices of the licensees. The Company
believes it will be successful in receiving a renewal of its license from the
Louisiana Board, but no assurance can be given as to whether or when the license
will be extended, or the extent of any restrictions that may be imposed as a
condition to the issuance thereof. The loss, suspension or failure to obtain a
renewal of such license would have a material adverse effect on the Company.
Other regulations imposed by the Louisiana Act or rules adopted
pursuant thereto include, but are not limited to, the following: (a) the Company
must periodically submit financial and operating reports to the Louisiana Board;
(b) owners holding greater than a 5% interest must be found suitable by the
Louisiana Board; (c) any individual who is found to have a material relationship
to, or involvement with, the Company may be required to be investigated for
suitability; (d) if a director, officer, or key employee were found to be
unsuitable, the Company would have to sever all relationships with that person;
(e) the transfer of a license or permit or an interest in a license or permit is
prohibited without prior approval; (f) the Company must notify the Louisiana
Board of any withdrawals of capital, loans, advances, or distributions in excess
of 5% of retained earnings upon completion of such transaction; and (g) the
Company must give prior notification to the Louisiana Board if it applies or
receives, accepts or modifies the terms of any loan or other financing
transaction. In some cases, the Louisiana Board will be required to investigate
the reported transaction and to either approve or disapprove the transaction.
The Louisiana Act or rules adopted pursuant thereto specify certain
restrictions and conditions relating to the operation of riverboat gaming,
including the following: (a) gaming is not permitted while a riverboat is
docked, other than the forty-five minutes between excursions, and during times
when dangerous weather or water conditions exist as certified by the riverboat's
master; (b) each round-trip riverboat cruise may not be less than three nor more
than eight hours in duration, subject to specified exceptions; (c) agents of the
Louisiana Board are permitted on board at any time during gaming operations; (d)
gaming devices, equipment and supplies may only be purchased or leased from
permitted suppliers; (e) gaming may only take place in the designated gaming
area while the riverboat is upon a designated river or waterway; (f) gaming
equipment may not be possessed, maintained or exhibited by any person on a
riverboat except in the specifically designated gaming area, or a secure area
used for inspection, repair or storage of such equipment; (g) wagers may be
received only from a person present on a licensed riverboat; (h) persons under
21 are not permitted on gaming vessels; (i) except for slot machine play, wagers
may be made only with tokens, chips or electronic cards purchased from the
licensee aboard a riverboat; (j) licensees may only use docking facilities and
routes for which they are licensed and may only board and discharge passengers
at the riverboat's licensed berth; (k) licensees must have adequate protection
and indemnity insurance; (l) licensees must have all necessary federal and state
licenses, certificates and other regulatory approvals prior to operating a
riverboat; and (m) gaming may only be conducted in accordance with the terms of
the license, the Louisiana Act and the rules and regulations adopted by the
Louisiana Board.
Fees for conducting gaming activities on a riverboat pursuant to the
Louisiana Act include (i) $50,000 per riverboat for the first year of operation
and $100,000 per year per riverboat thereafter plus (ii) 18.5% of net gaming
proceeds. The Louisiana Act also authorizes the local governing body to assess a
boarding fee up to $2.50 in East Baton Rouge Parish. The City of Baton Rouge has
imposed an admission fee of $2.50 for each patron boarding the vessel. For
fiscal year ended November 30, 1998, the Company's boarding fee expense was
$3,480,000. For competitive reasons, the Company and its Baton Rouge competitor
have elected not to collect boarding fees from patrons.
Proposals to amend or supplement the Louisiana Act are frequently
introduced in the Louisiana state legislature. In addition, the state
legislature from time to time considers proposals to repeal the Louisiana Act,
which would effectively prohibit riverboat gaming in the State of Louisiana.
Although the Company does not believe that a prohibition of riverboat gaming in
Louisiana is likely, no assurance can be given that changes in the Louisiana
gaming law will not occur or that such changes will not have a material adverse
affect on the Company's business. On November 5, 1996, in the six parishes in
which riverboats are currently located, including East Baton Rouge Parish,
voters approved the continuation of riverboat gaming. In East Baton Rouge Parish
and the six parishes as a whole, the vote in favor of riverboat gaming was 59%
and 66%, respectively.
At the present time, gaming is authorized between cruising excursions
if the vessel is docked for less than forty-five minutes between such excursions
and at such other times as the master of the vessel certifies in writing that
existing weather or water conditions present a danger to the riverboat,
passengers or crew. Legislation may be proposed that could involve the expansion
of cruising requirements; the creation of "phantom" cruises; the establishment
of a minimum number of annual cruises a vessel must take; or the authorization
of unrestricted dockside gaming. An expansion of cruising requirements could
have a negative impact on future gaming revenue and state tax revenue.
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The Company is currently undergoing a scheduled state audit review of
its accounting procedures and reporting of revenue from its Caribbean Stud poker
table games. The review could result in the Company being required to remit
additional taxes for the audit period or receiving a refund for over payment. In
either case a finding in favor of or adverse to the Company is not anticipated
to have a material impact on the Company's operations.
In August 1996, President Clinton signed a bill creating the National
Gambling Impact Study Commission (the "NGISC"), composed of individuals
associated with the gaming industry as well as individuals who are openly
opposed to legalized gaming, to examine the economic and social impact of
gaming. The NGISC began a series of hearings on June 20, 1997 and is scheduled
to release a report on its findings, together with recommended legislation and
administrative action, on or before June 20, 1999. Any additional regulation of
the gaming industry resulting from the NGISC's recommendations could have a
material adverse impact on the gaming industry, including the Company.
United States Coast Guard
Each cruising riverboat also is regulated by the United States Coast
Guard, whose regulations affect boat design and stipulate on-board facilities,
equipment and personnel (including requirements that each vessel be operated by
a minimum complement of licensed personnel) in addition to restricting the
number of persons who can be aboard the boat at any one time. The Company's
riverboat must hold, and currently possesses, a Certificate of Inspection. Loss
of the Certificate of Inspection of a vessel would preclude its use as an
operating riverboat. For vessels of the Company's type, the inspection cycle is
every five years. The Company's riverboat is scheduled to be inspected no later
than December 1999. Although the vessel may be dry-docked periodically for
inspection of the hull, which would result in a temporary loss of service of up
to two weeks, the Company believes that it will be able to avoid a dry-dock
inspection and the potential closure associated with such inspection by
utilizing an alternative underwater inspection.
All shipboard employees of the Company, even those who have nothing to
do with the actual operation of the vessel, such as dealers, cocktail hostesses
and security personnel, may be subject to the Merchant Marine Act of 1920,
which, among other things, exempts those employees from state limits on workers'
compensation awards. The Company believes that it has adequate insurance to
cover employee claims.
The Shipping Act of 1916; The Merchant Marine Act of 1936.
The Shipping Act of 1916, as amended, and the Merchant Marine Act of
1936, as amended, and applicable regulations thereunder contain provisions which
would prevent persons who are not citizens of the United States from holding in
the aggregate more than 25% of the outstanding shares of common stock. The
Company's By-Laws provide that, in the event a shareholder's ownership prevents
the Company from complying with the foreign shareholder limits imposed by these
Acts, such shareholder will be required, within 30 days, to cure such problem,
including through the sale of a requisite percentage of its ownership interest
in the Company, or the Company will be entitled to purchase such requisite
percentage from such shareholder at the price the shareholder paid to acquire
it. Such payment from the Company may be made in cash, notes or preferred stock
which, in the opinion of a nationally recognized investment banking firm, have a
value equal to the amount required to be paid.
General Non-Gaming Regulation
The Company is subject to federal, state and local environmental and
safety and health laws, regulations and ordinances that apply to non-gaming
business generally, such as the Clean Air Act, Federal Water Pollution Control
Act, Occupational Safety and Health Act, Resource Conservation Recovery Act, Oil
Pollution Act and Comprehensive Environmental Response, Compensation and
Liability Act, each as amended. The Company has not incurred, and does not
expect to incur material expenditures with respect to such laws. There can be no
assurances, however, that the Company will not incur material liability pursuant
to such laws in the future.
Paid Advertising and Marketing
The Federal Communications Commission ("FCC") prohibits broadcasters
from accepting advertising that actively promotes gaming, although the FCC does
not ban all advertising for casinos. Federal regulation also restricts the
circulation of certain materials related to gaming through the United States
mail.
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Discouragement of Share Accumulations
Louisiana state law requiring approval of shareholders over certain
thresholds may discourage accumulations over such limits and therefore may
discourage changes in control of the Company. The federal laws referred to above
may also discourage ownership by shareholders that are not United States
citizens.
ITEM 2. PROPERTIES.
The Casino Rouge is located on the east bank of the Mississippi River
in Baton Rouge, Louisiana on an 18-acre leased site. The Company leases the site
pursuant to a 10-year lease entered into in January 1994, the term of which may
be extended at the Company's option for four successive five-year periods. The
annual rent is equal to the greater of (a) 1.25% of all revenue generated on or
by the leased premises or any riverboat docked there or (b) $33,333 per month.
In addition, the Company prepaid rent of approximately $1,756,000 in connection
with the lessor's acquisition of nine acres of the 18-acre site subject to the
lease. Pursuant to the lease, the Company must also pay all property taxes. For
the year ended November 30, 1998 the rental expense for the casino site was
$909,000 (excludes amortization of prepaid rent of $180,000). The Company has
the option to purchase the entire 18-acre site on or after the fifteenth
anniversary of the date of the lease for a purchase price equal to the then
appraised value of the original nine acres subject to the lease (excluding
improvements). In addition, in September 1998 the Company purchased
approximately five acres of land adjacent to its docking facilities for $1.1
million.
The Company also leases a total of approximately 81,600 square feet for
general warehousing, office use and employee parking pursuant to two separate
two-year leases. The rents are $7,476 per month for one lease and $8,190 per
month for the other. Each lease is a triple net lease, has two two-year renewal
options and grants the Company a right of first refusal to purchase the
properties. The Company has agreed, subject to due diligence, to purchase such
properties for $1.4 million, to be evidenced by a purchase money note and
mortgage to be held by the seller of the properties. For the year ended November
30, 1998, the rental expense for the general warehousing, office use and
employee parking sites was $177,000.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a party to pending legal proceedings arising in the
normal course of business, none of which the Company believes is material to its
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no established public trading market for the Company's Common
Stock. Over ninety-eight percent of the outstanding Common Stock is currently
owned by CRC and three individual shareholders. See "Security Ownership of
Certain Beneficial Owners and Management" and "Certain Relationships and Related
Transactions."
On January 27, 1999, the Company issued $55 million of its 11% Senior
Secured Notes due December 1, 2005 (the "1999 Notes") to qualified institutional
buyers and institutional accredited investors in reliance on Rule 144A and
pursuant to exemptions from registration under Section 4(2) of the Securities
Act of 1933, as amended. The initial purchaser for the Senior Secured Notes sold
to the qualified institutional buyers and institutional accredited investors was
Jefferies & Company, Inc.
The 1999 Notes are secured by substantially all of the Company's
assets, other than certain excluded assets. The indenture dated as of January
27, 1999 (the "1999 Indenture") includes certain covenants which limit the
ability of the Company and its restricted subsidiaries, subject to certain
exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or other
distributions, repurchase capital stock or other equity interests or
subordinated indebtedness; (iii) enter into certain transactions with
affiliates; (iv) create certain liens or sell certain assets; and (v) enter into
certain mergers and consolidations
Under the terms of the 1999 Indenture, after December 1, 2002, the
Company may, at its option, redeem all or some of the 1999 Notes at a premium
that will decrease over time from 105.5% to 100% of their face amount, plus
interest. Prior to December 1, 2001, if the Company publicly offers certain
equity securities the Company may, at its option, apply certain of the net
proceeds from those transactions to the redemption of up to one-third of the
principal amount of the 1999 Notes at 111% of their face amount, plus interest.
If the Company goes through a change in control, it must give holders of the
1999 Notes the opportunity to sell their 1999 Notes to the Company at 101% of
their face amount, plus interest.
During the year ended November 30, 1998 the Board of Directors
authorized, and the Company paid, a total of $1,996,000 in dividends to the
holders of the Company's common stock and distributions to common stock
warrantholders. The Company intends to declare and pay dividends to the extent
permitted based on future earnings, the 1999 Indenture, legal limitations and
available cash balances.
REQUIRED DIVESTITURE OF COMMON STOCK
As noted herein, there are various state and federal regulations on the
ownership of the Company's common stock. The Company's By-laws provide that if
any governmental commission, regulatory authority, entity, agency or
instrumentality (collectively, an "Authority") having jurisdiction over the
Company or any affiliate of the Company that has granted a license, certificate
of authority, franchise or similar approval (collectively, a "License") to the
Company or any affiliate of the Company orders or requires any shareholder to
divest any or all of the shares owned by such shareholder (a "Divestiture
Order") and the shareholder fails to do so by the date required by the
Divestiture Order (unless the Divestiture Order is stayed), the Company will
have the right to acquire from the shareholder the shares that the shareholder
failed to divest as required by such Divestiture Order. If, after reasonable
notice and an opportunity for affected parties to be heard, any Authority
determines that continued ownership of the Company's common stock by any
shareholder shall be grounds for the revocation, cancellation, non-renewal,
restriction or withholding of any License granted to or applied for by the
Company or any affiliate of the Company, such shareholder shall divest the
shares that provide the basis for such determination, and if such shareholder
fails to divest such shares within 10 days after the date the Authority's
determination becomes effective (unless the determination is stayed), the
Company shall have the right to acquire such shares from the shareholder.
If the Company determines that persons who are not citizens of the
United States as determined under the Shipping Act of 1916 or the Merchant
Marine Act of 1936 (the "Foreign Citizens") own more than 25% of the Company's
outstanding Common Stock, the Company may require the Foreign Citizen(s) who
most recently acquired the shares that bring total foreign ownership to more
than 25% of the outstanding Common Stock (the "Excess Shares") to divest the
Excess Shares to persons who are United States citizens. If the Foreign
Citizen(s) so directed fail to divest the Excess Shares to United States
citizens within 30 days after the date on which the Company gives a written
notice to the Foreign Citizen(s) to divest the Excess Shares, the Company shall
have the right to acquire the shares that the Foreign Citizen(s) failed to
divest as required by the Company's notice. Such acquisition from the Foreign
Citizen(s) need not be preceded by an order or requirement by an Authority, nor
is there any requirement for notification within a specified period.
Whenever the Company has the right to acquire shares of common stock
from a shareholder pursuant to the provisions described in the preceding
paragraphs, the Company will pay the shareholder a price per share equal to the
price
8
<PAGE>
per share paid by the shareholder to acquire such common stock. Such payment
from the Company may be made cash, notes or preferred stock which, in the
opinion of a nationally recognized banking firm, have a value equal to the
amount required to be paid.
When any Divestiture Order is entered or when the Company tenders the
consideration for which it may acquire shares, as described above, the shares in
question shall no longer be entitled to any voting, dividend or other rights
until such time as they have been appropriately divested. The foregoing
provisions of the By-laws relating to required divestiture are in addition to,
and not in replacement of, any applicable requirements.
The provisions of the By-Laws described above are uncommon and no
controlling precedent has been found to determine how such By-Laws (or
comparable provisions in the Articles of Incorporation) would be enforced or
whether they are enforceable.
REDEEMABLE PREFERRED STOCK
The Company's Articles of Incorporation authorize 50,000 shares of
preferred stock, of which 11,000 shares of redeemable preferred stock were
issued and outstanding and held by Thomas L. Meehan as of November 30, 1997. On
November 30, 1998, the redeemable preferred stock was redeemed and all accrued
and unpaid dividends were paid. The redeemable preferred stock received non-cash
cumulative dividends at the rate of 12% per annum.
9
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial information for each of the fiscal
years presented below has been derived from the Company's financial statements,
which have been audited by PricewaterhouseCoopers LLP, independent accountants.
From inception in August 1991 through December 27, 1994, the Company devoted
substantially all of its efforts to evaluating gaming opportunities in
Louisiana, including seeking a Louisiana gaming license, the development and
construction of the Casino Rouge and the financing thereof. Accordingly, through
the fiscal year ended November 30, 1994, the Company reported net operating
losses and had no earnings from continuing operations. The information presented
below should be read in conjunction with, and is qualified in its entirety by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Company's financial statements and the notes
thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NOVEMBER 30,
---------------------------------------------------------------
1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- -----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Casino $ - $65,187 $74,615 $67,694 $68,845
Food and beverage - 1,382 1,351 1,345 1,407
Other - 514 794 705 593
----------- ----------- ----------- ----------- -----------
Net revenues - 67,083 76,760 69,744 70,485
----------- ----------- ----------- ----------- -----------
Costs and expenses:
Casino - 29,849 33,947 31,826 33,302
Food and beverage - 1,619 1,293 1,318 1,538
Selling, general and administrative - 18,085 21,954 21,039 20,948
Pre-opening expenses 4,389 1,625 - - -
----------- ----------- ----------- ----------- -----------
Total operating expenses 4,389 51,178 57,194 54,183 55,788
----------- ----------- ----------- ----------- -----------
Income (loss) before depreciation, amortization and interest (4,389) 15,905 19,566 15,561 15,057
Depreciation and amortization 34 3,584 4,162 4,334 4,762
----------- ----------- ----------- ----------- -----------
Operating income (loss) (4,423) 12,321 15,404 11,227 10,295
Other income (expense):
Interest income 1,357 344 241 280 428
Interest expense (5,180) (6,675) (7,002) (5,955) (6,376)
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for income taxes (8,246) 5,990 8,643 5,552 4,347
Provision for income taxes - - 1,340 2,045 1,666
----------- ----------- ----------- ----------- -----------
Net income (loss) $(8,246) $5,990 $7,303 $3,507 $2,681
=========== =========== =========== =========== ===========
Ratio of earnings to fixed charges(a) - 1.60 x 2.25 x 1.95 x 1.83 x
Share and Per Share Data (b):
Basic earnings per share $(8.84) $2.71 $6.70 $3.37 $2.57
Diluted earnings per share (8.84) 2.70 6.31 2.97 2.46
Cash dividends declared on common stock
and common equivalent shares - 2.67 3.82 0.42 1.76
Weighted average common shares outstanding 980,333 982,783 982,783 982,783 982,783
Weighted average common equivalent shares
outstanding 1,133,333 1,135,783 1,135,783 1,135,783 1,135,783
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
AT NOVEMBER 30,
--------------------------------------------------------------------------------
1994 1995 1996 1997 1998
-------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Current assets $8,647 $12,059 $11,630 $16,807 $16,531
Total assets 59,030 62,692 58,438 59,757 62,023
Current liabilities(c) 7,995 13,863 12,612 11,625 4,890
Long-term obligations (d) 54,802 49,609 42,656 40,732 50,000
Redeemable preferred stock and common
stock warrants (e) 2,818 5,740 5,872 6,004 4,131
Shareholders' equity (deficit) (6,585) (6,520) (3,683) (790) 8
<FN>
(a) As indicated above, through November 30, 1994 the Company had no earnings
while in the development stage; accordingly, earnings were not adequate to cover
fixed charges. For fiscal year ended November 30, 1994, the deficiency was
approximately $9,877. For the fiscal years ended November 30, 1995, 1996, 1997
and 1998, fixed charges were $9,756, $7,002, $5,955 and $5,208, respectively.
Fixed charges include interest charges, amortization of debt expense and
discounts, and the change to the accreted value of the warrants.
(b) Earnings per share amounts have been restated to conform to the Financial
Accounting Standards Board Statement No. 128 "Earnings per Share." Basic
earnings per share is calculated by dividing net income (loss) assigned to
common shareholders by weighted average common shares outstanding. Diluted
earnings per share is calculated by dividing net income (loss) assigned to
common shareholders before distributions to warrantholders by weighted average
common equivalent shares outstanding.
(c) Amounts as of November 30, 1996 and 1997 include $1,700 for estimated
dispute resolution cost.
(d) Amounts as of November 30, 1994 and 1995 also include $1,700 for estimated
dispute resolution cost.
(e) Such amounts include preferred stock of $1,232, $1,364, $1,496 and $1,628 as
of November 30, 1994, 1995, 1996 and 1997, respectively, and the assigned value
of the warrants of $1,586 as of November 30, 1994, $4,376 as of November 30,
1995, 1996 and 1997 and $4,131 as of November 30, 1998.
</FN>
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
On December 28, 1994, the Company commenced operations of its riverboat
gaming facility in Baton Rouge, Louisiana. The Company's activities from
inception have been financed from (i) cash flow from operations, (ii) equity and
other capital contributions of the shareholders, (iii) secured equipment
financing, (iv) a December 1993 debt offering of 51,000 units, each unit
consisting of $1,000 principal amount of a Senior Secured Note (the "1993
Notes") and three warrants to purchase one share each of the Company's common
stock, (v) a November 1998 offering consisting of $50,000,000 of Senior Secured
Increasing Rate Notes (the "1998 Notes"), which proceeds were used to repay the
1993 Notes, and (vi) the 1999 Notes, which proceeds were used to defease and
redeem the 1998 Notes.
RESULTS OF OPERATIONS
Year ended November 30, 1998 compared to year ended November 30, 1997.
Casino revenues in the two-riverboat Baton Rouge gaming market for the
years ended November 30, 1998 and 1997 were $118,806,000 and $117,058,000,
respectively. Riverboat casino patron counts in Baton Rouge for the same
respective periods were 2,571,000 and 2,768,000. Management believes the
principal factors contributing to the minimal increase in revenues were due to
(i) a reduced number of patron visits and (ii) the maturation of the customer
base which resulted in an increased win per patron from $42.29 to $46.21 per
patron for the years ended November 30, 1997 and 1998, respectively. The
Company's casino revenue increased 1.7% while customer counts declined 6.1% in
1998 compared to 1997. The Company's competitor's riverboat casino revenues
remained flat as its customer counts decreased 8.4%, 1998 compared to 1997. The
Company's share of the Baton Rouge gaming market was 59.3% and 58.6% of casino
revenues and 54.2% and 53.5% of admissions for the years ended November 30, 1998
and 1997, respectively.
Casino revenues for the Company were $68,845,000 and $67,694,000 for
the years ended November 30, 1998 and 1997, respectively. Table revenues,
excluding poker, decreased 11.2% in 1998 compared to 1997 due to a 16.7%
decrease in table game drop offset by an improvement of the hold percentage from
20.1% to 21.7% on an annual basis. Gaming machine revenues increased 5.5% in
1998 compared to 1997 primarily due to a 5.6% increase in coin in. Poker win for
1998 and 1997 was $494,000 and $300,000, respectively. Management believes that
the decline in table game drop is a direct result of patrons converting to
gaming machines due to new, exciting and innovative gaming equipment being
introduced by the casino industry.
For the year ended November 30, 1998 the Company's win per passenger
increased 8.3% to $49.46 compared to $45.69 in the same period of 1997. Revenues
from casino operations were 78.0% from gaming machines and 22.0% from table
games in 1998 compared to 75.2% and 24.8%, respectively, for 1997. Such mix for
gaming machines and gaming table win is attributable to the continuing
popularity of gaming machines among the Company's base casino patrons and
generally conforms to that experienced by riverboats throughout Louisiana.
Casino expenses for the year ended November 30, 1998 and 1997 were
$33,302,000 and $31,826,000, respectively, which represents 48.4% and 47.0% of
casino revenues in each period. Overall casino expenses increased primarily due
to the introduction of the Company's Rouge Arena, a temporary facility used for
concerts, sporting activities, customer parties and other promotional
activities. The facility was in use through July 1998.
Selling, general and administrative expenses were $20,948,000 and
$21,039,000 for the years ended November 30, 1998 and 1997, respectively.
Overall selling, general and administrative expenses for 1998 are lower than
1997 due primarily to a decrease in risk management costs partially offset by an
increase in legal expenses.
Income before depreciation, amortization and interest was $15,057,000
and $15,561,000 for the years ended November 30, 1998 and 1997, respectively.
Such amounts, as a percentage of net revenues (or operating margins), were 21.3%
and 22.3% for 1998 and 1997, respectively. Management believes the decrease in
operating margins was primarily due to the Rouge Arena noted above.
Net interest expense was $5,948,000 and $5,675,000 for the years ended
November 30, 1998 and 1997, respectively. The increase in interest expense is
primarily due to interest and related financing costs being charged on both the
1993 Notes and the 1998 Notes for a six day period during which proceeds from
the 1998 Notes were escrowed to repay the 1993 Notes.
12
<PAGE>
The Company recorded a provision for income taxes of $1,666,000 and
$2,045,000 for the years ended November 30, 1998 and 1997, respectively. For the
year ended November 30, 1998, the Company recorded a current tax provision of
$273,000 and a deferred tax provision of $1,393,000. For the year ended November
30, 1997, the Company recorded a current tax provision of $650,000 and deferred
tax provision of $1,395,000.
The Company recorded a market value warrant adjustment of $245,000 for
the year ended November 30, 1998 to reduce the accreted value of redeemable
common stock warrants to $4,131,000. Pursuant to the terms of the warrants the
Company is obligated to purchase the warrants during fiscal 1999 to the extent
the holders exercised their put rights. Holders of 138,900 warrants exercised
their put rights obligating the Company to purchase such warrants. The actual
purchase price for the 138,900 warrants, as determined by two independent
investment banking firms in accordance with the original agreements issued in
1993, has been established at $3,750,000.
Year ended November 30, 1997 compared to year ended November 30, 1996.
Casino revenues in the two-riverboat Baton Rouge gaming market for the
years ended November 30, 1997 and 1996 were $117,058,000 and $127,491,000,
respectively. Riverboat casino patron counts in Baton Rouge for the same periods
were 2,768,000 and 2,910,000. Management believes the principal factors
contributing to the 8.2% decline in casino revenues for the Baton Rouge market
are (i) milder weather in the first quarter of 1997 compared to the same period
in 1996, allowing persons to become more involved in alternative forms of
outdoor leisure activities, (ii) the negative impact of an accident involving an
overturned barge containing benzene on the Mississippi River in Baton Rouge
during March 1997, (iii) a decline in winning from premium player activity, and
(iv) the additional reasons discussed below. The Company's casino revenues and
customer counts declined 9.6% and 10.5% respectively, in 1997 compared to 1996.
The Company's competitor's riverboat casino revenues decreased 6.1% as its
customer counts increased 2.5% in 1997 compared to 1996. The Company's share of
the Baton Rouge gaming market was 58.6% and 59.5% of casino revenues and 53.5%
and 56.9% of admissions for the years ended November 30, 1997 and 1996,
respectively. Management believes the decrease in the Company's market share of
gaming revenues and admissions is attributable to (i) the Company's competition
having made product improvements, consisting of a new parking garage and an
enclosed entertainment/retail shopping area, which opened during the second
quarter of 1996, and extensive food and cash promotions by such competitor, (ii)
a decrease in the Company's table and slot hold percentages and winnings from
premium player activity, all as discussed below, and (iii) the general decline
in customer visits impacting the Company.
Casino revenues for the Company were $67,694,000 and $74,615,000 for
the years ended November 30, 1997 and 1996, respectively. Table revenues,
excluding poker, decreased 17.8% in 1997 compared to 1996 due to winnings from
premium player activity in he 1996 period that did not occur in 1997, a decrease
in table game hold percentage and a decrease in table drop. Slot revenues
decreased 4.8% in 1997 compared to 1996 primarily due to a 3.7% decline in slot
coin in. Poker win for 1997 and 1996 was $300,000 and $1,103,000, respectively,
as the Company initially eliminated its poker operations in March 1997 and the
reintroduced them for competitive reasons in December 1997. Management believes
the decrease in table drop and slot coin in is reflective of lower customer
visits affecting the entire Baton Rouge marketplace. The decrease in table game
hold percentage, excluding premium player activity in 1996, is due to its
changes in odds on craps tables and increased skill level of blackjack players
in the market combined with the randomness associated with games of chance.
For the year ended November 30, 1997 win per passenger increased 1.3%
to $45.69 compared to $45.09 in the same period of 1996. Revenues from casino
operations were 75.2% from slot machines and 24.8% for table games in 1997
compared to 71.6% and 28.4%, respectively, for 1996. Such mix of slot machine
gaming table win is attributable to the continuing popularity of slot machines
among the Company's base of casino patrons and generally conforms to that
experienced by riverboats throughout Louisiana.
Casino expenses for the years ended November 30, 1997 and 1996 were
$31,826,000 and $33,947,000, respectively, which represented 47.0% and 45.5% of
casino revenues in each period. Overall casino expenses are down reflecting (i)
decreased taxes associated with gaming revenues, (ii) lower expenses for payroll
and related costs in the gaming and casino marketing departments, and (iii)
lower costs for selling and administering the bus program. These decreases in
expenses were partially offset by increased costs for promotional expenses and
casino support departments.
Selling, general and administrative expenses were $21,039,000 and
$21,954,00 for the years ended November 30, 1997 and 1996, respectively. Overall
selling, general and administrative expenses for 1997 were lower than 1996 due
to (i) one time expenses incurred in 1996 related to a campaign in support of
riverboat gaming in Baton Rouge, (ii) decreased insurance premiums and
deductible expenses, and (iii) decreased management fees and land lease expenses
that resulted from lower revenues. These lower expenses were partially offset by
increased marketing, security, human resources and facility department expenses
for 1997 and compared to 1996.
13
<PAGE>
Income before depreciation, amortization and interest was $15,561,000
and $19,566,000 for the years ended November 30, 1997 and 1996, respectively.
Such amounts as a percentage of net revenues (or operating margins) were 22.3%
and 25.5% for the 1997 and 1996 periods, respectively. Management believes the
decrease in operating margins was due to (i) winnings from premium player
activity in the 1996 period that did not occur in 1997, and (ii) the decline of
gaming revenues in the Baton Rouge market without a proportionate decline in
expenses.
Net interest expense was $5,675,000 and $6,761,000 for the years ended
November 30, 1997 and 1996, respectively. The reduction in interest expense is
due to a decline in outstanding debt due to the 1997 and 1996 mandatory 1993
Note repurchases.
The Company recorded a provision for income taxes of $2,045,000 and
$1,340,000 for the years ended November 30, 1997 and 1996, respectively. For the
year ended November 30, 1997, the Company recorded a current tax provision of
$650,000 and a deferred tax provision of $1,395,000. For the year ended November
30, 1996, the Company released the remaining balance of a deferred tax valuation
allowance of $2,399,000 in accordance with SFAS 109. The release of the
valuation allowance partially offset the current tax provision of $1,663,000 and
the deferred tax provision of $2,076,000 for the year ended November 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended November 30, 1998, the Company generated
$6,693,000 in cash flows from operations as compared to $9,621,000 for the year
ended November 30, 1997. The decrease in cash flows from operations was
primarily due to the settlement of the dispute regarding consulting services
described in Note 7 to the November 30, 1998 financial statements included
elsewhere herein, early payment of interest related to the 1993 Notes and a
decrease in net income.
Cash flows used for investing activities were $472,000 and $253,000,
respectively, for the years ended November 30, 1998 and 1997, net of $4,807,000
and $939,000, respectively, of restricted cash, as permitted by the indenture
under which the 1993 Notes were issued (the "1993 Indenture"). The uses of funds
for each of the periods were primarily for capital expenditures for continuing
operations. In addition, in 1998 the Company acquired approximately five acres
of land adjacent to its docking facility for approximately $1,100,000.
Financing activities for the year ended November 30, 1998 used cash
flows of $620,000 for dividend payments to common shareholders and distributions
to warrantholders of $1,996,000, repayment of the 1993 Notes of $43,946,000, and
redemption of preferred stock and payment of related accrued dividends of
$1,760,000, offset by the net proceeds of $47,100,000 from the issuance of the
1998 Notes. The net cash used by financing activities in the year ended November
30, 1997 of $6,121,000 related primarily to the $2,223,000 repayment of
regularly scheduled principal amounts due under the Company's credit agreement,
as amended (which credit agreement subsequently expired on December 1, 1998), an
increase in restricted cash of $2,694,000 as calculated pursuant to the 1993
Indenture, the repurchase of $722,000 of 1993 Notes as required by the 1993
Indenture, and dividend payments to common shareholders and distributions to
warrantholders of $482,000.
Certain warrantholders recently exercised their rights under 14,100
warrants to purchase an equal number of shares of the Company's common stock at
a price per share of $.01. The remaining warrantholders exercised put rights
obligating the Company to purchase 138,900 warrants at a price based on the
value of the Company's common stock on December 1, 1998, as determined by two
investment banking firms, one selected by the Company and the other selected by
the warrantholders. The Company has retained Jefferies & Company, Inc. while the
warrantholders have retained Lehman Brothers, Inc. to determine such value. The
purchase price of the warrants is based upon the average of the values
determined by the two investment banking firms. The actual purchase price of
$3,750,000 for the 138,900 warrants will be funded in the first half of fiscal
1999 from available cash.
Management believes that cash on hand and cash generated from
operations will be sufficient to satisfy working capital requirements and
maintenance capital expenditures for the foreseeable future. Historically, the
Company has incurred annual maintenance capital expenditures of approximately
$2,000,000. The Company anticipates maintenance capital expenditures in 1999 of
$3,000,000, inclusive of approximately $300,000 of expenditures associated with
an underwater hull inspection and $400,000 of expenditures associated with year
2000 readiness.
In addition to capital expenditures noted above, the Company is
presently contemplating various capital improvements to the Casino Rouge
facilities. Financing for any such improvements is anticipated to be provided by
cash flow from operations and future borrowings.
In November 1998, the Company sold $50,000,000 principal amount of 1998
Notes. The net proceeds from such
14
<PAGE>
offering, approximately $47.5 million, were used to repay the outstanding 1993
Notes and redeem the Company's redeemable preferred stock.
In January 1999, the Company issued the 1999 Notes. The Company used
the proceeds to defease and redeem the 1998 Notes and for general corporate
purposes. The Indenture pursuant to which the 1999 Notes were issued includes
certain covenants which limit the ability of the Company and its restricted
subsidiaries, subject to certain exceptions, to: (i) incur additional
indebtedness; (ii) pay dividends or other distributions, repurchase capital
stock or other equity interests or subordinated indebtedness; (iii) enter into
certain transactions with affiliates; (iv) create certain liens or sell certain
assets; and (v) enter into certain mergers and consolidations. As a result of
the restrictions, the ability of the Company to incur additional indebtedness to
fund operations or to make capital expenditures is limited. To the extent that
cash flow from operations is insufficient to cover cash requirements, the
Company would be required to curtail or defer certain capital expenditures under
these circumstances, which could have an adverse effect on the Company's
operations.
YEAR 2000
As the year 2000 approaches, all companies that use computers must
address "Year 2000" issues. Year 2000 issues result from the past practice in
the computer industry of using two digits rather than four to identify the
applicable year. This practice can create breakdowns or erroneous results when
computers perform operations involving years later than 1999.
The Company has devised and commenced an extensive compliance plan with
the objective of bringing all of the Company's information technology ("IT")
systems and its non-IT systems into Year 2000 compliance by the end of fiscal
1999. The IT systems include the Company's computer equipment and software and
non-IT systems include the Company's communication systems, alarm and security
systems, gaming equipment and shipboard equipment (e.g. shipboard navigation,
control and power generation and distribution systems). Each system will be
evaluated and brought into compliance in three phases:
Phase I -- Evaluate and assess compliance of the system
Phase II -- Commit and assign resources needed to implement
compliance plan
Phase III -- Modify or replace non-compliant system
The Company's systems used to maintain financial records and other
critical systems have completed Phases I and II, with completion of Phase III
scheduled by the end of fiscal 1999. Approximately 98% of the Company's
non-critical systems have completed Phase II. The Company anticipates the
non-critical systems will be evaluated and brought into compliance by the end of
the third quarter of 1999.
The Company has also commenced efforts to determine the extent to which
it may be impacted by year 2000 issues of third parties, including its material
vendors and suppliers and certain agencies and regulatory organizations. Year
2000 correspondence was sent to third parties, with continued follow-up for
those that failed to respond and where risks have been identified. The Company
estimates that the process of identifying and evaluating third party risks is
98% complete.
Through November 30, 1998 the Company has not incurred or expensed any
material amounts directly related to year 2000 readiness. The Company is
currently evaluating the expected remaining costs to be incurred in connection
with the year 2000 project, with approximately $400,000 estimated and included
in the 1999 capital expenditure budget. The project is being funded by cash on
hand and internally generated funds, which the Company expects to be adequate to
complete the project.
The failure to correct a material year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the year 2000 problem, resulting in part from the year
2000 readiness of third parties, the Company is unable to determine at this time
whether the consequences of year 2000 failures will have a material impact on
the Company's results of operations, liquidity or financial condition. The year
2000 project is expected to significantly reduce the Company's level of
uncertainty about year 2000 problems, including the year 2000 compliance and
readiness of its material third parties. The Company believes that completion of
the project as scheduled will reduce the possibility of significant
interruptions of normal operations. A contingency plan has not been developed
for dealing with the most reasonably likely worst case scenario, and such
scenario has not yet been clearly identified. The Company currently plans to
complete such analysis and develop and implement any necessary contingency plans
by December 31, 1999.
The costs of the Company's year 2000 project and the dates on which the
Company believes it will complete the
15
<PAGE>
various phases of this project are based upon management's best estimates, which
were derived using numerous assumptions regarding future events, including the
continued availability of certain resources, third-party remediation plans and
other factors. There can be no assurance that these estimates will prove to be
accurate and actual results could differ materially from those currently
anticipated. Specific factors that could cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in year 2000 issues, the ability to identify, assess, remediate and test all
relevant computer code and embedded technology, the performance of new systems
and equipment, the reduction of productivity pending completion of employee
training and similar uncertainties.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information contained herein, the matters
discussed herein are forward looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements involve risks and uncertainties, including but not limited to local
and regional economic and business conditions, changes or developments in laws,
regulations or taxes, actions taken or to be taken by third parties,
competition, the loss of any licenses or permits or the Company's failure to
obtain an unconditional renewal of its gaming license on a timely basis, or
other factors discussed elsewhere in this report and the documents filed by the
Company with the Securities and Exchange Commission. These factors may cause the
Company's results to differ materially from the statements made in this report
or otherwise made by or on behalf of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Index to Financial Statements on page 25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
16
<PAGE>
PART III
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information with respect to the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Sherwood M. Weiser....... 67 Chairman of the Board of Directors
Dan S. Meadows........... 52 President and Vice Chairman of the Board of Directors
Thomas L. Meehan......... 54 Director
Leon R. Tarver II........ 56 Director
W. Peter Temling......... 51 Chief Financial Officer, Secretary, Treasurer and Director
Dale A. Darrough......... 51 General Manager
</TABLE>
The following information summarizes the business experience during at least the
past five years of each director and executive officer of the Company.
SHERWOOD M. WEISER has been the Chairman of the Board of Directors of
the Company since September 1998. Mr. Weiser also is Chairman of the Board of
Directors, President and Chief Executive Officer of CRC and held the same
positions with CHC International, Inc. ("CHC"), a predecessor of CRC, from March
1994 until June 1998. From 1990 to March 1994, Mr. Weiser served as Chairman and
Chief Executive Officer of TCC, a predecessor of CHC. Mr. Weiser is a member of
the Board of Directors of Carnival Corp. (NYSE:CCL) and serves as a member of
the Nominating Committee and Chairman of the Compensation Committee and Plan
Administration Committee of the Board of Directors of Carnival Corp. Mr. Weiser
is also a member of the Board of Directors of Mellon United National Bank, a
subsidiary of Mellon Bank (NYSE:MEL), Winsloew Furniture, Inc. (NASDAQ:WLFI) and
Wyndham International, Inc. (NYSE:PAH) and a trustee of the University of Miami.
DAN S. MEADOWS has been President and a director of the Company since
October 1993 and Vice Chairman of the Board of Directors since September 1998.
From the incorporation of the Company until October 1993, he served as
Secretary/Treasurer. He was elected a director in July 1993. From April 1993 to
April 1995, Mr. Meadows was based in Baton Rouge and was directly responsible
for the development and licensing of the Casino Rouge. Mr. Meadows and Mr.
Thomas L. Meehan are the co-owners of Synura, Inc. ("Synura"), which provided
funding for two corporations in which they own a significant interest:
Sportlite, Inc., an Arizona corporation involved in the development and
marketing of energy saving lighting, and the Company. Prior to co-founding
Synura, Mr. Meadows was involved in real estate development and marketing for 19
years.
THOMAS L. MEEHAN has been a director of the Company since September
1998. Mr. Meehan also served as the Chairman of the Board of Directors of the
Company from its inception until October 1993. Mr. Meehan is President and
Chairman of the Board of Sportlite, Inc. and Chairman of the Board of Synura. In
1979, Mr. Meehan co-founded National Electric, Inc. ("NEI") and served as
President and Director from 1979 until 1989. In 1987, NEI merged its business
with Westinghouse Electric Corporation to become Aptus. Mr. Meehan presently is
a member of the Board of Directors of Manchester Commercial Finance and
Intergenerational Living and Health Care.
LEON R. TARVER II has been a director of the Company since December
1994. Since January 1997, he has been President, and since January 1992,
Professor of Public Administration, of Southern University in Baton Rouge. From
February 1994 through December 1996, Mr. Tarver was Chancellor for
Administration of Southern University. From August 1989 to January 1992, Mr.
Tarver served as the Secretary of the Louisiana Department of Revenue and
Taxation.
W. PETER TEMLING has been Chief Financial Officer, Secretary and
Treasurer of the Company since May 1998 and became a director of the Company in
September 1998. From October 1993 to May 1998 he was Acting Chief Financial
Officer of the Company. He was a director of the Company from November 1993
through November 1994. He also is Executive Vice President/Finance and Chief
Financial Officer and a director of CRC and held the same positions with CHC
from 1994 until June 1998. Prior to the formation of CHC in March 1994, Mr.
Temling held similar positions with TCC. Mr. Temling joined TCC in 1981 after
serving 12 years with the Sheraton Corporation, where his responsibilities
included business planning for more than 100 hotels, the opening of hotels
worldwide and directing the financial functions for the franchise division
consisting of 400 hotels and inns. Mr. Temling also is a certified public
accountant.
17
<PAGE>
DALE A. DARROUGH has been General Manager of the Company since February
1996. From October 1995 to February 1996, he served as Executive Vice President,
Operations, with Shuffle Master Gaming, Inc. Prior thereto, from August 1995,
Mr. Darrough was a Consultant to Hyatt Development Corp. He held positions with
Bally's Casino Resort from April 1991 to July 1995, most recently as Senior Vice
President, Casino Operations.
ITEM 11 EXECUTIVE COMPENSATION
The following table provides a summary of the compensation for the
fiscal years ended November 30, 1998, 1997 and 1996 of the Chairman of the Board
and President of the Company and the other executive officers who received cash
compensation in excess of $100,000 during fiscal 1998 from the Company.
SUMMARY COMPENSATION TABLE
OTHER ANNUAL
NAME AND POSITION YEAR SALARY BONUS COMPENSATION (1)
- ----------------- ---- ------ ----- ----------------
Sherwood M. Weiser (2) 1998 $-- $-- $--
Chairman of the Board
Robert B. Sturges (3) 1998 $-- $-- $--
Chairman of the Board 1997 $-- $-- $--
1996 $-- $-- $--
Dan S. Meadows (4) 1998 $-- $-- $--
President and Vice 1997 $-- $-- $--
Chairman of the Board 1996 $-- $-- $--
Dale A. Darrough 1998 $181,557 $40,000 $--
General Manager 1997 $161,000 $50,000 $--
1996 $120,785 $-- $--
(1) Aggregate amount of other annual compensation does not exceed the lesser of
$50,000 or 10% of executive officer's salary and bonuses.
(2) Mr. Weiser became Chairman of the Board in September 1998.
(3) Mr. Sturges resigned from the position of Chairman of the Board in September
1998.
(4) Mr. Meadows together with Mr. John R. Rauen, Senior Vice
President/Operations of CRC, serve as the only members of the Executive
Committee of the Board of Directors. They do not receive any compensation from
the Company. They are reimbursed their reasonable expenses for Board of
Directors meetings attended as explained below in "Compensation of Directors".
See "Security Ownership of Certain Beneficial Owners and Management" and
"Certain Relationships and Related Transactions."
COMPENSATION OF DIRECTORS
Directors of the Company who are either employees of the Company or
elected pursuant to the Shareholder Agreement, dated October 8, 1993, by and
among the Company, CRC, Jerry L. Bayles, Dan S. Meadows, Leon R. Tarver II and
Thomas L. Meehan (the "Shareholder Agreement"), are reimbursed their reasonable
expenses for meetings attended but do not receive any separate compensation. As
a director, Mr. Tarver receives an annual retainer of $10,000 and reimbursement
of reasonable expenses for meetings attended. On December 1, 1994, the Company
issued 2,450 shares of common stock to Mr. Tarver, which are now fully vested.
In addition, Mr. Tarver receives $24,000 annually to serve as Chairman of the
Company's Minority Business and Economic Advisory Committee. The Company's Audit
Committee consists of Messrs. Meadows, Rauen, Temling, Meehan and Tarver.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no standing Compensation Committee of the Board of
Directors; therefore, all members of the Board of Directors participate in
deliberations concerning executive officer compensation.
18
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding beneficial
ownership of the Company's common stock as of February 25, 1999 (a) by each
person who beneficially owned more than five percent of the Company's common
stock, (b) by each of the Company's directors, (c) by each executive officer
listed in the Summary Compensation Table who is not a director, and (d) by all
executive officers and directors as a group.
COMMON STOCK PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
- ------------------------------------ ---------------------- --------
CRC Holdings, Inc., (3).................. 588,200 59.0%
d/b/a Carnival Resorts and Casinos
3250 Mary Street
Miami, FL 33133
Dan S. Meadows........................... 130,711 13.1%
2422 E. Solano
Phoenix, AZ 85016
Jerry L. Bayles.......................... 130,711 13.1%
2236 Estate Road
Baton Rouge, LA 70808
Thomas L. Meehan......................... 130,711 13.1%
7331 Tilden Lane
Naples, FL 34108
Sherwood M. Weiser (3)................... -- --
CRC Holdings, Inc.
3250 Mary Street
Miami, FL 33133
W. Peter Temling (3)..................... -- --
CRC Holdings, Inc.
3250 Mary Street
Miami, FL 33133
Leon R. Tarver, II....................... 2,450 (2)
16215 Chadsford Avenue
Baton Rouge, LA 70817
Dale A. Darrough......................... -- --
Louisiana Casino Cruises, Inc.
1717 River Road North
Baton Rouge, LA 70802
All directors and executive officers
as a group (six persons)(3).............. 263,872 26.5%
(1) The voting and investment power with regard to the shares of common stock
beneficially owned by all shareholders is restricted by the Shareholder
Agreement.
(2) Less than 1%.
(3) Mr. Weiser and Mr. Temling are principal shareholders and officers of CRC.
Mr. Weiser has the right to vote in excess of 50% of the outstanding common
stock of CRC.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CRC and the Company are parties to the Management Agreement, , pursuant
to which, prior to the opening of the Casino Rouge, CRC provided consulting and
technical services to the Company in connection with the planning,
19
<PAGE>
development and equipping of the Casino Rouge. CRC assisted the Company in
preparing the Casino Rouge for operations, including hiring a full staff of
employees, designing the Casino Rouge, establishing accounting systems, and
developing marketing and casino operations concepts. Upon opening of the Casino
Rouge, CRC commenced handling all aspects of Casino Rouge's management pursuant
to the terms of the Management Agreement. The Management Agreement expires in
December 2004, subject to extension at the option of CRC for an additional
10-year period. CRC is entitled to an annual management fee equal to 2% of gross
revenues plus 5% of total operating income (as such terms are defined in the
Management Agreement). By separate agreement, CRC has agreed to pay one-half of
its 5% fee of total operating income to Dan S. Meadows, Jerry L. Bayles and
Thomas L. Meehan, aggregate holders of approximately 39% of the Company's common
stock. Mr. Meadows also serves as the Company's President and Vice Chairman of
the Board and Mr. Meehan serves as a director of the Company. For the fiscal
years ended November 30, 1998, 1997 and 1996, the amount earned by CRC pursuant
to the Management Agreement was $2,195,000, $2,214,000 and $2,567,000,
respectively. For the fiscal years ended November 30, 1998, 1997 and 1996, the
aggregate amount paid by CRC to Messrs. Meadows, Bayles and Meehan was $369,000,
$407,000 and $516,000, respectively.
On September 22, 1993, CRC extended a $2 million credit facility to the
Company. At the closing of the issuance of the 1993 Notes, CRC converted all of
the $2 million of indebtedness then outstanding under such facility into 20% of
the common stock. In October 1993, the Company issued and sold to CRC 40% of the
then issued and outstanding common stock for $3 million pursuant to a Stock
Purchase Agreement (the "Stock Purchase Agreement") among the Company, CRC and
Messrs. Meadows, Bayles and Meehan. The Company and Messrs. Meadows, Bayles and
Meehan, on the one hand, and CRC on the other, agreed to indemnify each other in
the event of certain breaches of the Stock Purchase Agreement. The Company and
Messrs. Meadows, Bayles and Meehan further agreed to indemnify CRC in the event
of certain liabilities arising out of activities prior to the date of the Stock
Purchase Agreement.
Other than warrantholders who exercised warrants to purchase common
stock, all shareholders are parties to the Shareholder Agreement with regard to
the ongoing operation, management and financing of the Company. Pursuant to the
Shareholder Agreement, all actions by the Board of Directors require the
majority approval of the directors. The Shareholder Agreement also provides for
an Executive Committee of the Board, consisting of one nominee of CRC and one
nominee of the individual shareholders, who currently are Mr. Rauen and Mr.
Meadows, respectively. All actions of the Executive Committee require the
unanimous approval of both members. Unless rescinded by a vote of the holders of
51% of the outstanding common stock, the Shareholder Agreement provides that the
Executive Committee is delegated all of the duties and responsibilities of the
Board of Directors. The Shareholder Agreement also provides that certain actions
cannot be taken without the approval of the holders of either 51% or 67% of the
outstanding common stock, as the case may be, including: (a) the authorization
or issuance of any additional common stock (or any securities convertible into
or rights to acquire common stock); (b) the sale, lease, transfer, mortgage,
pledge or other disposition of or the acquisition of any assets of the Company,
other than in the ordinary course of developing or operating the Casino Rouge;
(c) the authorization or execution of contracts for major landsite improvements,
any amendment to the landsite lease and contracts for acquiring additional land
as part of the Casino Rouge; (d) all submissions to the Louisiana Board and any
modification or amendment of any approvals or licenses; (e) the redemption,
retirement, purchase or other acquisition by the Company of any common stock and
the declaration of any dividend or distribution on account of any capital stock
or any merger, consolidation, split, reverse split or other change of the
capitalization of the Company; (f) the election of any additional members of the
Board of Directors; (g) the approval of the operational budget for the Casino
Rouge presented by CRC pursuant to the Management Agreement; (h) the resolution
of any deadlock between the members of the Executive Committee; (i) any
amendment to the Articles of Incorporation or By-laws of the Company; and (j)
the initiation or settlement of any material litigation or other dispute by or
against the Company.
The Shareholder Agreement also limits the transfer of the common stock
owned by the shareholders party thereto. The shares of common stock to be issued
in connection with the recent exercise of certain warrants are not subject to
the transfer or other restrictions contained in the Shareholder Agreement. Such
restrictions will also lapse upon the consummation of a public offering of
common stock. Additionally, any transfer must be subject to any required
regulatory approvals. The transferee must agree to hold its shares subject to
the terms of the Shareholder Agreement and must be of such character and
reputation so as not to jeopardize any regulatory approval held by the Company
or the shareholders and affiliates thereof. Any transfer, other than to
Permitted Transferees (as defined in the Shareholder Agreement), is subject to a
right of first refusal by the other parties. If the Management Agreement
terminates for any reason, CRC shall have the right to make an offer to sell to
the other shareholders, party to the Shareholder Agreement, all its common stock
or to purchase from such other shareholders all their common stock on the terms
set forth in the offer. The Shareholder Agreement also requires CRC, to the
extent required by any individual vendor or supplier, to negotiate and enter
into a guaranty of the Company's payment obligations under agreements to lease
or purchase gaming equipment. The terms of such guaranties shall be subject to
the approval of CRC.
20
<PAGE>
On September 15, 1998, the Company resolved a regulatory inquiry from
the Louisiana Board relating to a 1994 stock ownership issue whereby the Company
agreed to reimburse the Louisiana Riverboat Gaming Enforcement Division of the
State Police (the "Division") $50,000, constituting the Division's costs and
expenses of conducting the investigation, pay a fine of $200,000 and comply with
a decree to establish a regulatory compliance committee. CRC has reimbursed the
Company for such fine and costs.
On November 30, 1998, the Company redeemed from Thomas L. Meehan the
11,000 outstanding shares of the Company's redeemable preferred stock for an
aggregate payment of $1,760,000, including all accrued dividends. Such
redemption was in accordance with the terms of such preferred stock.
21
<PAGE>
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
a. (1) Financial Statements
The following financial statements of the Company and report of
independent accountants are included on pages 26 through 39 hereto.
Report of Independent Accountants
Balance Sheets- November 30, 1998 and 1997.
Statements of Operations- Years ended November 30, 1998, 1997 and 1996.
Statements of Changes in Shareholders' Equity (Deficit )- Years ended
November 30, 1996, 1997 and 1998.
Statements of Cash Flows- Years ended November 30, 1998, 1997 and 1996.
Notes to Financial Statements
(2) Financial Statement Schedules.
The following schedule and report of independent accountants are
included on pages 40 through 41 attached hereto and should be read in
conjunction with the related financial statements and notes thereto.
Schedule II- Valuation and Qualifying Accounts
(3) Exhibits.
3.1 Amended and Restated Articles of Incorporation of the Company,
as of September 15, 1998.
3.2 By-laws of the Company, as amended as of September 15, 1998
4.1 Warrant Agreement, dated as of November 15, 1993, between the
Company and The Bank of New York, as successor Warrant Agent.
(1)
4.2 Form of Warrant Certificate. (2)
4.3 Form of Certificate for Common Stock. (2)
4.4 Indenture, dated January 27, 1999, by and between the Company
and U.S. Bank Trust National Association, as Trustee.
4.5 Registration Rights Agreement, dated January 27, 1999, by and
between the Company and Jefferies & Company, Inc., as the
Initial Purchaser.
22
<PAGE>
10.1 Shareholder Agreement, dated October 8, 1993, among the
Company, Jerry L. Bayles, Dan S. Meadows, Thomas L. Meehan,
Leon R. Tarver II and CSMC- Management Services, Inc., as
amended. (1)
10.2 Ground Lease Agreement between the Company and Capital Lake
Properties, Inc., dated June 16, 1993, as amended. (1)
10.3 Lease Agreement, dated July 29, 1994 between Anvil Realty,
Inc. and the Company. (3)
10.4 Lease Agreement, dated July 29, 1994, between Anvil Realty,
Inc. and the Company. (3)
10.5 Mortgage, Leasehold Mortgage, Assignment of Rents, Fixture
Filing, Security Agreement and Financing Statement, dated
January 27, 1999, by and between the Company and U.S. Bank
Trust National Association, as Trustee.
10.6 First Preferred Ship Mortgage, dated January 27, 1999, by and
between the Company and U.S. Bank Trust National Association,
as Trustee.
10.7 Security Agreement dated January 27, 1999, by and between the
Company and U.S. Bank Trust National Association, as Trustee.
b. Reports on Form 8-K.
1.) Report dated November 25, 1998.
2.) Report dated January 27, 1999.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-4 (No. 33-73536).
(2) Incorporated by reference from the Company's Registration Statement on Form
S-1 (No. 33-73534).
(3) Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended November 30, 1994.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LOUISIANA CASINO CRUISES, INC.
Dated: MARCH 1, 1999 By: /s/ Dan S. Meadows
-----------------------------
Dan S. Meadows, President and
Vice Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and on the dates indicated.
Dated: MARCH 1, 1999 /s/ Sherwood M. Weiser
-------------------------
Sherwood M. Weiser
Chairman of the Board of Directors
Dated: MARCH 1, 1999 /s/ Dan S. Meadows
------------------------
Dan S. Meadows, President and
Vice Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Thomas L. Meehan
Dated: MARCH 1, 1999 ------------------------
Thomas L. Meehan, Director
/s/ Leon R. Tarver, II
-------------------------
Leon R. Tarver, II, Director
Dated: MARCH 1, 1999 /s/ W. Peter Temling
-------------------------
W. Peter Temling, Chief
Financial Officer, Secretary, Treasurer
and Director (Principal Financial and
Accounting Officer)
24
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants................................... 26
Balance Sheets- November 30, 1998 and 1997.......................... 27
Statements of Operations-
Years ended November 30, 1998, 1997 and 1996........................ 28
Statements of Changes in Shareholders' Equity (Deficit)-
Years ended November 30, 1996, 1997 and 1998........................ 29
Statements of Cash Flows-
Years ended November 30, 1998, 1997 and 1996........................ 30
Notes to Financial Statements....................................... 32
25
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders
of Louisiana Casino Cruises, Inc.
In our opinion, the financial statements listed in the index appearing
under Item 14(a) 1 present fairly, in all material respects, the financial
position of Louisiana Casino Cruises, Inc. at November 30, 1998 and 1997, and
the results of its operations and its cash flows for each of the three years in
the period ended November 30, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
December 11, 1998, except for
Note 12 which is as of March 1, 1999.
26
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
BALANCE SHEETS
(in thousands, except share data)
NOVEMBER 30,
--------------------------------------------------
1998 1997
------------------------- ----------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13,525 $ 7,924
Restricted cash (Notes 1 and 3) - 4,807
Receivables, less allowance for doubtful accounts
of $123 and $298 at 1998 and 1997, respectively 332 479
Prepaid and other current assets 756 1,103
Inventories 452 443
Deferred tax asset (Note 8) 1,466 2,051
------------------------- ----------------------
Total current assets 16,531 16,807
Property and equipment, net 41,504 40,872
Prepaid and other assets 3,988 2,078
------------------------- ----------------------
Total assets $ 62,023 $ 59,757
========================= ======================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 2,428 $ 2,566
Accrued liabilities 2,028 1,642
Accrued interest 102 2,527
First mortgage notes, net of original issue
discount, current portion (Note 3) - 2,932
Notes payable, current portion (Note 3) - 18
Other current liabilities 332 240
Estimated dispute resolution costs (Note 7) - 1,700
------------------------ ----------------------
Total current liabilities 4,890 11,625
First mortgage notes, net of original issue
discount (Note 3) 50,000 40,732
Deferred tax liability (Note 8) 2,994 2,186
------------------------- ----------------------
Total liabilities 57,884 54,543
------------------------- ----------------------
Redeemable preferred stock (Note 4) - 1,628
------------------------- ----------------------
Redeemable common stock warrants (Note 3) 4,131 4,376
------------------------- ----------------------
Commitments and contingencies (Note 7)
Shareholders' equity (deficit):
Common stock, no par value:
10,000,000 shares authorized: 982,783 shares issued
and outstanding at 1998 and 1997, respectively 1 1
Accumulated equity (deficit) 7 (791)
------------------------- ---------------------
Total shareholders' equity (deficit) 8 (790)
------------------------- ---------------------
Total liabilities and shareholders' equity (deficit) $ 62,023 $ 59,757
========================= =====================
</TABLE>
The accompanying notes are an integral
part of these financial statements.
27
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF OPERATIONS
(in thousands, except share data)
YEAR ENDED NOVEMBER 30,
-------------------------------------------------
1998 1997 1996
---------------- -------------- ---------------
<S> <C> <C> <C>
Revenues:
Casino $ 68,845 $ 67,694 $ 74,615
Food and beverage 1,407 1,345 1,351
Other 593 705 794
---------------- -------------- ---------------
Net revenues 70,845 69,744 76,760
---------------- -------------- ---------------
Costs and expenses:
Casino 33,302 31,826 33,947
Food and beverage 1,538 1,318 1,293
Selling, general and administrative 20,948 21,039 21,954
---------------- -------------- ---------------
Total operating expenses 55,788 54,183 57,194
---------------- -------------- ---------------
Income before depreciation,
amortization and interest 15,057 15,561 19,566
Depreciation and amortization 4,762 4,334 4,162
---------------- -------------- ---------------
Operating income 10,295 11,227 15,404
Other income (expense):
Interest income 428 280 241
Interest expense (6,376) (5,955) (7,002)
---------------- -------------- ---------------
Income before provision for income taxes 4,347 5,552 8,643
Provision for income taxes (Note 8) 1,666 2,045 1,340
---------------- -------------- ---------------
Net income 2,681 3,507 7,303
Dividend requirement on redeemable
preferred stock (Note 4) 132 132 132
Market value warrant adjustment (245) - -
Distributions paid to common stock
warrantholders 269 65 584
---------------- -------------- ---------------
Net income assigned to common
shareholders $ 2,525 $ 3,310 $ 6,587
================ ============== ===============
Earnings Per Share (Note 5):
Basic earnings per share $ 2.57 $ 3.37 $ 6.70
================ ============== ===============
Diluted earnings per share $ 2.46 $ 2.97 $ 6.31
================ ============== ===============
Weighted average common shares outstanding 982,783 982,783 982,783
================ ============== ===============
Weighted average common equivalent shares
outstanding 1,135,783 1,135,783 1,135,783
================ ============== ===============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(in thousands, except share data)
COMMON STOCK ACCUMULATED
SHARES AMOUNT EQUITY (DEFICIT) TOTAL
-------------- --------------- ------------------ -----------
<S> <C> <C> <C> <C>
Balance at November 30, 1995 982,783 $ 1 $ (6,521) $ (6,520)
Dividend requirements on
redeemable preferred stock - - (132) (132)
Dividends paid to holders of common
stock and distributions to common
stock warrantholders - - (4,334) (4,334)
Net income - - 7,303 7,303
-------------- --------------- ------------------ -----------
Balance at November 30, 1996 982,783 1 (3,684) (3,683)
-------------- --------------- ------------------ -----------
Dividend requirements on
redeemable preferred stock - - (132) (132
Dividends paid to holders of common
stock and distributions to common
stock warrantholders - - (482) (482)
Net income - - 3,507 3,507
-------------- --------------- ------------------ -----------
Balance at November 30, 1997 982,783 1 (791) (790)
-------------- --------------- ------------------ -----------
Dividend requirements on
redeemable preferred stock - - (132) (132)
Market value warrant adjustment 245 245
Dividends paid to holders of common
stock and distributions to common
stock warrantholders - - (1,996) (1,996)
Net income - - 2,681 2,681
-------------- --------------- ------------------ -----------
Balance at November 30, 1998 982,783 $ 1 $ 7 $ 8
============== =============== ================== ===========
</TABLE>
The accompanying notes are an integral part of
these financial statements.
29
<PAGE>
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CASH FLOWS
Page 1 of 2
(in thousands)
YEAR ENDED NOVEMBER 30,
-------------------------------------------------
1998 1997 1996
-------------- -------------- ---------------
<S> <C> <C> <C>
Net income $ 2,681 $ 3,507 $ 7,303
Net cash flows from operating activities:
Depreciation and amortization 4,762 4,334 4,162
Amortization of deferred costs 958 917 1,404
Loss on note repurchase and warrant valuation reserve 282 - -
Provision for doubtful accounts 52 94 258
Decrease (increase) in receivables 95 (149) (260)
(9) (4) (54)
Decrease (increase) in prepaid and other assets 264 (285) 843
Decrease (increase) in deferred tax assets 585 190 (1,649)
Decrease in accrued interest (2,425) (51) (372)
(Increase) decrease in accounts payable and other liabilities (552) 1,068 1,073
-------------- -------------- ---------------
Net cash provided by operating activities 6,693 9,621 12,708
-------------- -------------- ---------------
Cash flows from investing activities:
Capital expenditures (5,321) (1,214) (1,655)
Proceeds from sale of fixed assets 42 22 8
Decrease in restricted cash 4,807 939 62
-------------- -------------- ---------------
Net cash used by investing activities (472) (253) (1,585)
-------------- -------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of note payable - 440
Repayment of first mortgage notes (43,946) (722) (6,332)
Proceeds from issuance of first mortgage notes 50,000 - -
Payment of deferred financing costs (2,900) - -
(Increase) decrease in restricted cash - (2,694) 1,170
Redemption of preferred stock and payment of accrued dividends (1,760) - -
Repayments of notes payable (18) (2,223) (2,400)
Dividends paid to holders of common stock and
distributions to common stock warrantholders (1,996) (482) (4,334)
-------------- -------------- ---------------
Net cash used by financing activities (620) (6,121) (11,456)
-------------- -------------- ---------------
Net increase (decrease) in cash and cash equivalents 5,601 3,247 (333
Cash and cash equivalents at beginning of year 7,924 4,677 5,010
-------------- -------------- ---------------
Cash and cash equivalents at end of year $13,525 $ 7,924 $ 4,677
============== ============== ===============
</TABLE>
The accompanying notes are an integral
part of these financial statements.
30
<PAGE>
LOUISIANA CASINO CRUISES, INC.
STATEMENTS OF CASH FLOWS
Page 2 of 2
(in thousands)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
YEAR ENDED NOVEMBER 30,
---------------------------------------------
1998 1997 1996
-------------- ------------- ------------
Cash paid for interest $7,567 $5,264 $6,146
============== ============= ============
Cash paid for income taxes $30 $1,077 $2,053
============== ============= ============
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING, INVESTING AND FINANCING
ACTIVITIES:
Redeemable preferred stock dividends of $132,000 were accrued in each of the
years ended November 30, 1998, 1997 and 1996 (see Note 4).
The accompanying notes are an integral part of
these financial statements.
31
<PAGE>
LOUISIANA CASINO CRUISES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Louisiana Casino Cruises, Inc. (the Company), a Louisiana corporation,
was formed in August 1991 for the purpose of developing and operating gaming
activities in Louisiana. For the period March 26, 1993, when the Company
obtained preliminary regulatory approval to construct a riverboat casino based
in Baton Rouge, Louisiana, through December 28, 1994, the commencement date of
operations, the Company's activities consisted of applying for the license
necessary to operate the riverboat; designing, planning and constructing the
Baton Rouge riverboat and land-based facility; negotiating and securing
financing for construction; negotiating contracts; and training for gaming
operations. On July 19, 1994, the Louisiana Riverboat Gaming Enforcement
Division granted the Company a license to conduct riverboat gaming activities
for a period of five years.
Financing for the project included an issuance of common stock for
$3,000,000 to Carnival Management Services, Inc. (renamed CRC Holdings, Inc.,
"CRC" ), a credit facility from CRC for $2,000,000 (subsequently converted to
equity), pre-opening expenditures by Synura, Inc. of $2,200,000 (converted to
redeemable preferred stock and equity), secured bank financing of approximately
$6,000,000 and a private placement offering of $51,000,000 in first mortgage
notes (the "1993 Notes"). The 1993 Notes were issued with detachable warrants to
purchase up to an aggregate amount of 153,000 shares of the Company's common
stock at a price of $0.01 per share. On November 25, 1998 the Company issued
$50,000,000 of Senior Secured Increasing Rate Notes (the "1998 Notes"), the
proceeds from which were used to repay the 1993 Notes (see Note 3). The 1998
Notes were redeemed on January 27, 1999 from the proceeds of a $55,000,000
offering of 11% Senior Secured Notes due December 1, 2005 (the "1999" Notes")
(see Note 12).
CASINO REVENUE AND PROMOTIONAL ALLOWANCES
Casino revenue represents the net win from gaming wins and losses. Food
and beverage and other revenues are recorded at amounts collected from guests
and exclude the retail value of food, beverage and other items provided on a
complimentary and promotional basis to customers. The estimated retail value of
complimentary and promotional items were $4,174,000, $5,216,000 and $5,180,000
for years ended November 30, 1998, 1997 and 1996, respectively. The estimated
costs of such complimentary and promotional items have been classified as casino
costs and totaled $2,793,000, $3,090,000 and $2,979,000 for the years ended
November 30, 1998, 1997 and 1996, respectively.
RESTRICTED CASH
In accordance with the terms of the indenture dated as of November 15,
1993 (the "1993 Indenture") (see Note 3), Cumulative Excess Cash Flow, as
defined, not previously used to repurchase Notes, and Cash Available For
Reinvestment, as defined, , are classified as restricted cash.
INVENTORIES
Inventories consist of food, beverage and supplies and are stated at
the lower of cost or market. Cost is determined on a first-in, first-out basis.
LICENSING AND FINANCING COSTS
All costs incurred which relate to obtaining the regulatory approval of
the Baton Rouge riverboat facility are recorded as deferred licensing charges
and are amortized over the license period, which is five years. Costs incurred
in connection with debt offerings are recorded as deferred offering costs and
are being amortized on the effective interest method over the term of the
related debt. Deferred licensing charges and offering costs are classified under
prepaid and other assets in the accompanying balance sheets.
32
<PAGE>
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation expense of
$4,522,000, $4,162,000 and $4,010,000 for the years ended November 30, 1998,
1997 and 1996, respectively, is calculated on the straight-line basis over the
estimated useful lives of the assets or the expected term of the land lease
(including renewals), whichever is shorter. Useful lives range from four to
thirty years. Expenditures for repairs and maintenance are charged to expenses
as incurred. Expenditures for major renewals and betterments, which
significantly extend the useful lives of existing equipment, are capitalized and
depreciated.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include cash and cash equivalents,
restricted cash, notes payable and warrants. The fair value of the 1998 Notes,
was approximately $50,000,000 at November 30, 1998. The fair value of the 1993
Notes was approximately $44,166,000 at November 30, 1997. The fair value of cash
and cash equivalents, restricted cash, other notes payable and warrants
approximates carrying value.
INCOME TAXES
The Company accounts for income taxes using the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
which recognizes the amount of taxes payable or refundable for the current year
and recognizes deferred tax liabilities and assets for future tax consequences
of events that have been recognized in the Company's financial statements or tax
returns based on currently enacted rates.
ACCOUNTING 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 and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain amounts in the financial statements for the years ended
November 30, 1997 and 1996 have been reclassed to conform to the presentation of
the financial statements for the year ended November 30, 1998. These
reclassifications have no impact on net income, accumulated equity (deficit) or
cash flows for the years ended November 30, 1997 and 1996.
NOTE 2- PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
ESTIMATED AS OF NOVEMBER 30,
USEFUL LIFE 1998 1997
----------------- ---------------- -------------
Vessel 18 years $16,839 $16,673
Building 30 years 20,140 19,062
Furniture and fixtures 5-10 years 6,060 6,025
Gaming equipment 5-15 years 9,468 8,790
Other equipment 4-7 years 4,977 1,918
---------------- -------------
57,484 52,468
Less: accumulated depreciation (15,980) (11,596)
---------------- -------------
$41,504 $40,872
================ =============
Capitalized interest included in the cost of property and equipment at
November 30, 1998 and 1997 was $1,628,000. Unamortized capitalized interest at
November 30, 1998 and 1997 is $1,206,000 and $1,313,000, respectively.
33
<PAGE>
NOTE 3- FIRST MORTGAGE NOTES, NOTES PAYABLE AND REDEEMABLE COMMON STOCK WARRANTS
1998 NOTES
Pursuant to the indenture, dated as of November 15, 1998 between the
Company and U.S. Bank Trust National Association, as Trustee (the "1998
Indenture"), the Company issued in a private placement $50,000,000 of 1998 Notes
due December 1, 2001. On November 25, 1998 the proceeds from the offering were
placed in escrow with The Bank of New York, as successor Trustee, to repay upon
maturity the aggregate principal amount of $43,827,000 and accrued interest
outstanding on the 1993 Notes (see below).
The 1998 Notes were collateralized by substantially all assets of the
Company, bore interest at an initial increasing rate of 12.25% and were defeased
on January 27, 1999 and redeemed on February 24, 1999 from the proceeds of a
$55,000,000 private placement offering of Senior Secured Notes (see Note 12).
1993 NOTES AND REDEEMABLE COMMON STOCK WARRANTS
Pursuant to the 1993 Indenture), between the Company and The Bank of
New York, as successor trustee, the Company issued $51,000,000 of 11 1/2% First
Mortgage Notes due December 1, 1998 in a private placement offering on December
1, 1993. These notes were exchanged in April 1994 for $51,000,000 in aggregate
principal of the Company's 1993 Notes which were registered under the Securities
Act of 1933. The proceeds from the offering were used to finance the development
and construction of the Baton Rouge riverboat facility. Interest was payable
each June 1 and December 1, commencing June 1, 1994. The 1993 Notes were freely
transferable by the holders thereof. The1993 Notes were redeemable at the option
of the Company, in whole or in part after December 1, 1997 at par as provided in
the 1993 Indenture. The aggregate principal amount of the 1993 Notes outstanding
as of November 30, 1997 was $43,946,000.
The private placement offering was made in units, consisting of first
mortgage notes in the principal amount of $1,000 and three warrants to purchase
one share each of the Company's no par value common stock at the price of $.01
per share. The original issue discount on the private placement offering was
$1,301,000, the amount assigned to the value of the warrants at December 1,
1993. The amortization of the original issue discount was $281,000, $253,000,and
$234,000 for the years ended November 30, 1998, 1997, and 1996, respectively. In
addition to original issue discount amortization, for the years ended November
30, 1997 and 1996 the Company recorded a credit of $30,000 and an additional
$134,000, respectively, of the original issue discount as interest expense
relating to the 1993 Notes repurchased by the Company. The unamortized original
issue discount balance at November 30, 1998 and 1997 was $0 and $281,000,
respectively.
As required by the 1993 Indenture the Company made tender offers to
repurchase 1993 Notes at par from Cumulative Excess Cash Flow (as defined). The
repurchased amounts for the years ended November 30, 1998, 1997 and 1996 were
$119,000, $722,000 and $6,332,000, respectively.
The warrantholders had 153,000 put rights whereby the Company has an
obligation to purchase the 153,000 warrants, at the value of the Company's
common stock as of December 1, 1998, as determined by two independent investment
banking firms. The warrants are classified as redeemable equity due to the put
right feature and, at each balance sheet date, are accreted to the amount at
which the Company expects to repurchase these warrants. The estimated accreted
value attributed to the redeemable common stock warrants as of November 30, 1998
and 1997 is $4,131,000 and $4,376,000, respectively. Of the 153,000 warrants,
holders of 14,100 warrants elected to convert to an equivalent number of common
shares while holders of 138,900 warrants elected to have the Company purchase
the warrants.
NOTES PAYABLE
On January 2, 1996, the Company obtained a loan in the amount of
$440,000 from City National Bank of Baton Rouge. The loan amount was payable in
24 equal principal payments plus interest commencing January 1996. The loan bore
interest at 10.5% per annum, payable monthly in arrears, on the outstanding
balance of the loan. The loan agreement required the Company to maintain a
certain cash flow ratio. The loan was collateralized by gaming and other
equipment and limited the sale or encumbrance of such equipment. The outstanding
principal balance as of November 30, 1998 and 1997 was $0 and $18,000,
respectively.
NOTE 4- REDEEMABLE PREFERRED STOCK
The Company has authorized 50,000 shares of preferred stock, of which
11,000 shares of 12% cumulative redeemable preferred stock was issued and
outstanding at November 30, 1997 at a carrying value of $1,628,000, including
accrued non-cash dividends. The preferred stock was redeemed on November 30,
1998 for $1,760,000, including all accrued dividends.
34
<PAGE>
NOTE 5- EARNINGS PER COMMON SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128
"Earnings Per Share" which requires the Company to present basic earnings per
share (EPS) and diluted EPS, as defined in the standard. The new standard has
been adopted by the Company for fiscal 1998, therefore, for the years ended
November 30, 1998, 1997 and 1996, EPS calculations have been made using the new
standard.
For the years ended November 30, 1998, 1997 and 1996, basic EPS is
calculated by dividing net income assigned to common shareholders by the
weighted average common shares outstanding (982,783 shares); diluted EPS is
calculated by dividing net income assigned to common shareholders before
distributions to common stock warrantholders by the weighted average common and
common equivalent shares outstanding (1,135,783 shares). Common equivalent
shares consist of redeemable common stock warrants with the rights to purchase
153,000 shares of the Company's common stock (see Note 3).
NOTE 6- RELATED PARTY TRANSACTIONS
The Company and CRC are party to a separate consulting and management
agreement dated December 11, 1992, as amended, whereby CRC provides consulting
and technical services to the Company in connection with the planning and
development of the riverboat facility and management of the casino operations.
CRC receives an annual management fee of 2% of gross revenues, plus 5% of total
operating income, as such terms are defined in the agreement. The term of the
agreement is ten years from the commencement of casino operations, renewable for
an additional ten years at the option of CRC. CRC entered into a separate
agreement with three individual shareholders whereby the three individual
shareholders receive half of the fee of 5% of total operating income. The amount
earned by CRC under the management agreement and expensed for management fees by
the Company was $2,195,000, $2,214,000 and $2,567,000 for the years ended
November 30, 1998, 1997 and 1996, respectively. Of the amount earned and
expensed, $165,000 and $157,000 was payable and included in current liabilities
at November 30, 1998 and 1997, respectively.
NOTE 7-COMMITMENTS AND CONTINGENCIES
LEGAL MATTERS
At November 30, 1993, the Company was involved in a dispute regarding
consulting services. Although a formal demand had not been made to the Company,
management believed the dispute could lead to litigation and accrued $1,700,000
for the estimated cost of resolution. The Company settled litigation related to
this dispute on May 12, 1998. As a result of the settlement, the Company has
recognized a net reduction of $400,000 within selling, general and
administrative expenses in the year ended November 30, 1998.
On September 15, 1998, the Louisiana Gaming Control Board (the
"Louisiana Board") approved a mutually satisfactory resolution to a regulatory
inquiry relating to a 1994 stock ownership issue whereby the Company agreed to
reimburse the Riverboat Gaming Enforcement Division of the State Police $50,000,
constituting their costs and expenses of conducting the investigation, and to
pay a fine of $200,000. The Company was reimbursed by CRC, the Company's
majority shareholder, in the amount of $250,000.
The Company is also involved in other legal proceedings. In the opinion
of management, the resolution of these matters will not have a material effect
on the financial statements or the results of operations of the Company.
LEASE AGREEMENTS
The Company has an operating lease agreement for property on which the
Company constructed the riverboat facility and parking facility. The initial
lease term is ten years beginning January 1994. The terms of the lease include
payment of minimum monthly rent of $7,500 through October 1, 1994, increasing to
the greater of $33,333 or 1.25% of the gross revenue for the remainder of the
lease term. The Company subsequently entered into an amendment to the lease
agreement to lease an additional parcel of land from the lessor. The Company
prepaid rent of $1,755,707 for this additional property. The prepaid rent is
being amortized over the initial lease term.
The Company has the option to purchase the entire site on or after
fifteen years for the then appraised value of the original site, excluding
improvements. The Company also leases a total of approximately 81,600 square
feet for general warehousing, office use and employee parking pursuant to two
separate two-year leases. The rents are $7,476 per month for one lease and
$8,190 per month for the other. Each lease is a triple net lease, has two
two-year renewal options and grants
35
<PAGE>
the Company a right of first refusal to purchase the properties. The Company has
agreed, subject to due diligence, to purchase such properties for $1.4 million,
for a purchase money note and mortgage to be held by the seller of the
properties.
Rental expense for the years ended November 30, 1998, 1997 and 1996
was $1,266,000, $1,216,000 and $1,316,000, respectively. Rental expense for the
years ended November 30, 1998, 1997 and 1996 includes $509,000, $464,000 and
$574,000, respectively, of contingent rental payments above the monthly minimum
rent with respect to the land lease for the riverboat and parking facilities.
Future minimum lease payments for all leases with non-cancelable terms in excess
of one year are as follows:
YEAR ENDING
NOVEMBER 30,
------------
1999 $ 588,000
2000 557,000
2001 400,000
2002 400,000
2003 400,000
Thereafter 33,000
-------------
Total $ 2,378,000
=============
RELICENSING
Riverboat gaming licenses in Louisiana are issued for an initial
five-year term with annual renewals thereafter. The Company's original five-year
gaming license for the Casino Rouge is up for renewal in July 1999. Each of the
Company and its officers, directors, managers, principal shareholders and their
officers and directors and key gaming employees will be subject to strict
scrutiny and full suitability and approval by the Louisiana Board in connection
with the Company's renewal application. The factors that the Louisiana Board has
stated it will consider, among others, in order to renew the Company's license,
include the Company's compliance with all the requirements of the Louisiana
Riverboat Economic Development and Gaming Control Act (the "Louisiana Act"), the
approval of various systems and procedures, the demonstration of good character
(including an examination of criminal and civil records) and methods of business
practice. The Louisiana Board may also seek to impose, as a condition of the
license renewal, certain Louisiana, minority and female employment and
procurement goals. The Company believes it will be successful in receiving a
renewal of its license from the Louisiana Board, but no assurance can be given
as to whether or when the license will be extended, or the extent of any
restrictions that may be imposed as a condition to the issuance thereof. The
loss, suspension or failure to obtain a renewal of such license would have a
material adverse effect on the Company.
NOTE 8- INCOME TAXES
The provision for income taxes attributable to continuing operations is
comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1998 1997 1996
---------------- ---------------- --------------
<S> <C> <C> <C>
Current tax expense:
Federal $ 271,000 $ 720,000 $ 1,478,000
State 2,000 (70,000) 185,000
---------------- ---------------- --------------
Total current tax expense 273,000 650,000 1,663,000
Deferred tax provision (benefit) 1,393,000 1,395,000 (323,000)
---------------- ---------------- --------------
Total provision for income taxes $ 1,666,000 $ 2,045,000 $ 1,340,000
================ ================ ==============
</TABLE>
36
<PAGE>
The following is a summary of the components of the provision (benefit)
for deferred income taxes:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1998 1997 1996
---------------- ---------------- --------------
<S> <C> <C> <C>
Depreciation $ 434,000 $ 1,191,000 $ 1,801,000
Amortization of deferred pre-opening costs 602,000 602,000 602,000
Alternative minimum tax credit carry forward (371,000) (358,000) (408,000)
Accrued litigation costs 663,000 - 213,000
Other, net 65,000 (40,000) (132,000)
---------------- ---------------- --------------
Provision for deferred income taxes 1,393,000 1,395,000 2,076,000
Release valuation allowance - - (2,399,000)
---------------- ---------------- --------------
Total provision (benefit) for deferred income taxes $ 1,393,000 $ 1,395,000 $ (323,000)
================ ================ ==============
</TABLE>
The difference between the taxes provided for continuing operations at
the United States federal statutory rate and the Company's actual tax provision
is reconciled below for the year ended November 30:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1998 1997 1996
---------------- ---------------- --------------
<S> <C> <C> <C>
Taxes provided at statutory rate $ 1,478,000 $1,888,000 $ 2,939,000
State tax expense, net of federal benefit 217,000 278,000 432,000
Release of valuation allowance - - (2,399,000)
Nondeductible lobbying costs - - 366,000
Other, net (29,000) (121,000) 2,000
---------------- ---------------- --------------
Total provision for income taxes $ 1,666,000 $2,045,000 $ 1,340,000
================ ================ ==============
</TABLE>
The approximate effect of temporary differences and carryforwards that
give rise to deferred tax balances at November 30 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------
1998 1997 1996
---------------- ---------------- --------------
<S> <C> <C> <C>
Deferred pre-openingcosts $ 602,000 $ 602,000 $ 602,000
Accrued litigation costs - 663,000 663,000
Alternative minimum tax credit carry forward 414,000 306,000 526,000
Other, net 450,000 480,000 450,000
---------------- ---------------- --------------
Current deferred tax asset $ 1,466,000 $ 2,051,000 $ 2,241,000
================ ================ ==============
Depreciation $(4,084,000) $(3,650,000) $(2,459,000)
Deferred pre-opening costs 50,000 653,000 1,255,000
Alternative minimum tax credit carry forward 1,064,000 801,000 223,000
Other, net (24,000) 10,000 -
---------------- ---------------- --------------
Noncurrent deferred tax liability $(2,994,000) $(2,186,000) $ (981,000)
================ ================ ==============
</TABLE>
In accordance with SFAS 109, the Company recorded a valuation allowance
for a portion of the deferred tax asset at November 30, 1995 because of
uncertainty regarding the realization of the related tax benefits. The net
decrease in the valuation allowance of $2,399,000 from November 30, 1995 to
November 30, 1996 was due to realization of future tax benefits.
The Company has approximately $182,000 of general business credits
generated by the work opportunity credit and the employee tips credit that are
scheduled to expire in the year ending November 30, 2012. The Company has not
recorded a benefit for the credits because of uncertainty regarding the use of
the credits.
NOTE 9-DIVIDENDS
On March 18 and July 1, 1998 the Board of Directors declared a dividend
of $1.057515 and $0.70, respectively, per share of common stock and an
equivalent distribution per common stock warrant, payable to the holders of
record on March 27 and July 1, 1998, respectively. Aggregate payments of
$1,201,000 and $795,000 were disbursed on March 30 and July 2, 1998,
respectively.
37
<PAGE>
On March 26, 1997 the Board of Directors declared a dividend of
$0.424377 per share of common stock and an equal distribution per common stock
warrant. An aggregate payment of $482,000 was paid on March 28, 1997 to holders
of record on March 26, 1997.
On March 27, July 29 and October 15, 1996 the Board of Directors
declared a dividend of $1.587450, $1.610345 and $0.618080, respectively, per
share of common stock and an equal distribution per common stock warrant,
payable to the holders of record on March 27, July 29 and October 15, 1996,
respectively. Aggregate payments of $1,803,000, $1,829,000 and $702,000 were
disbursed on March 28, July 31 and October 18, 1996, respectively.
NOTE 10- EMPLOYEE BENEFIT PLAN
In January 1996, the Company established a defined contribution plan
(the "Plan") for all employees, qualified under Section 401(k) of the Internal
Revenue Code. The Plan was terminated June 30, 1997, and plan assets and
participant amounts were transferred to the Carnival Resorts and Casinos 401K
Plan-Casino Rouge (the "CRC Plan") effective July 1, 1997 at their then current
value. The provisions of the CRC Plan are substantially the same as those of the
Plan. Contributions to the plans by the Company are based on the participants'
contributions. For the years ended November 30, 1998, 1997 and 1996, the Company
contributed $114,000, $129,000 and $134,000, respectively. The Company paid
certain expenses associated with plan administration.
Effective December 1, 1998, the Company adopted a non-qualified
deferred compensation arrangement for employees earning in excess of $80,000.
NOTE 11-SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER
---------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
---------------------------------------------------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Fiscal 1998:
Income assigned to common shareholders $ 484 $1,080 $ 148 $ 813 $2,525
Basic earnings per share (Note 5) $ 0.49 $ 1.10 $ 0.15 $ 0.83 $ 2.57
Diluted earnings per share (Note 5) $ 0.43 $ 1.09 $ 0.15 $ 0.72 $ 2.46
Fiscal 1997:
Income (loss) assigned to common shareholders $1,073 $1,260 $ 996 $ (19) $3,310
Basic earnings (loss) per share (Note 5) $ 1.09 $ 1.28 $ 1.01 $(0.01) $ 3.37
Diluted earnings (loss) per share (Note 5) $ 0.94 $ 1.17 $ 0.88 $(0.02) $ 2.97
Fiscal 1996:
Income (loss) assigned to common shareholders $2,601 $3,131 $1,124 $ (269) $6,587
Basic earnings (loss) per share (Note 5) $ 2.65 $ 3.19 $ 1.14 $(0.28) $ 6.70
Diluted earnings (loss) per share (Note 5) $ 2.29 $ 2.97 $ 1.14 $(0.28) $ 6.31
</TABLE>
38
<PAGE>
NOTE 12- SUBSEQUENT EVENTS
1999 NOTES
On January 27,1999, the Company issued in a private placement the 1999
Notes with interest due semi-annually beginning June 1, 1999. The Company used
the proceeds to defease and redeem the 1998 Notes and for general corporate
purposes.
The 1999 Notes are secured by substantially all of the Company's
assets, other than certain excluded assets. The indenture dated as of January
27, 1999 (the "1999 Indenture") includes certain covenants which limit the
ability of the Company and its restricted subsidiaries, subject to certain
exceptions, to: (i) incur additional indebtedness; (ii) pay dividends or other
distributions, repurchase capital stock or other equity interest or subordinated
indebtedness; (iii) enter into certain transactions with affiliates; (iv) create
certain liens or sell certain assets; and (v) enter into certain mergers and
consolidations
Under the terms of the 1999 Indenture, after December 1, 2002, the
Company may, at its option, redeem all or some of the notes at a premium that
will decrease over time from 105.5% to 100% of their face amount, plus interest.
Prior to December 1, 2001, if the Company publicly offers certain equity
securities the Company may, at its option, apply certain of the net proceeds
from those transactions to the redemption of up to one-third of the principal
amount of the notes at 111% of their face amount, plus interest. If the Company
goes through a change in control, it must give holders of the notes the
opportunity to sell their notes to the Company at 101% of their face amount,
plus interest.
CRC MERGER
On February 17, 1999, CRC announced that it had signed a definitive
agreement to merge with Jackpot Enterprises, Inc. (NYSE:J), which presently
operates one of the largest gaming machine route operations in Nevada
aggregating approximately 4,300 gaming machines at approximately 400 locations.
Gaming machine route operations include the operation of machines at retail
stores (supermarkets, drug stores, merchandise stores, merchandise stores and
convenience stores), bars and restaurants. If the merger were consummated,
Jackpot Enterprises, Inc., as a successor to CRC, would succeed to CRC's
ownership interest of the company, and responsibility for handling all aspects
of the Casino Rouge's management. There are no assurances, however, when such
merger will be consummated, if ever.
REDEEMABLE COMMON STOCK WARRANTS
On March 1, 1999, the Company received valuations from the two
investment banking firms (see Note 3). Based upon the average of the values
determined by the investment banking firms the Company will pay $3,750,000 to
the holders of 138,900 warrants who exercised their put rights. The holders of
the remaining 14,100 warrants elected to exercise their rights to purchase an
equal number of shares of the Company's common stock at a price per share of
$.01.
39
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors of
Louisiana Casino Cruises, Inc.
Our report on the financial statements of Louisiana Casino Cruises,
Inc. is included in this Form 10-K. In connection with our audits of such
financial statements, we have also audited the financial statement schedule
listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related financial
statements.
PricewaterhouseCoopers LLP
December 11, 1998, except for
Note 12 which is as of March 1, 1999.
40
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
LOUISIANA CASINO CRUISES, INC.
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
BALANCE AT ADDITIONS CHARGED TO BALANCE AT
BEGINNING OF PERIOD COSTS AND EXPENSE DEDUCTION END OF PERIOD
---------------------- ------------------- ---------------- ------------------
<S> <C> <C> <C>
YEAR ENDED NOVEMBER 30, 1996
- ----------------------------------------
Deferred tax asset valuation allowance $ 2,399 $ - $ (2,399) $ -
Allowance for doubtful accounts 97 258 (119) 236
----------------------- ------------------- ---------------- ------------------
TOTAL $ 2,496 $ 258 $ (2,518) $ 236
======================= =================== ================ ==================
YEAR ENDED NOVEMBER 30, 1997
- ----------------------------------------
Allowance for doubtful accounts $ 236 $ 94 $ (32) $ 298
======================= =================== ================ ==================
YEAR ENDED NOVEMBER 30, 1998
- ----------------------------------------
Allowance for doubtful accounts $ 298 $ 52 $ (227) $ 123
======================= =================== ================ ==================
</TABLE>
41
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
3.1 Amended and Restated Articles of Incorporation of the Company,
as of September 15, 1998.
3.2 By-laws of the Company, as amended as of September 15, 1998
4.4 Indenture, dated January 27, 1999, by and between the Company
and U.S. Bank Trust National Association, as Trustee.
4.5 Registration Rights Agreement, dated January 27, 1999, by and
between the Company and Jefferies & Company, Inc., as the
Initial Purchaser.
10.5 Mortgage, Leasehold Mortgage, Assignment of Rents, Fixture
Filing, Security Agreement and Financing Statement, dated
January 27, 1999, by and between the Company and U.S. Bank
Trust National Association, as Trustee.
10.6 First Preferred Ship Mortgage, dated January 27, 1999, by and
between the Company and U.S. Bank Trust National Association,
as Trustee.
10.7 Security Agreement dated January 27, 1999, by and between the
Company and U.S. Bank Trust National Association, as Trustee.
27 Financial Data Schedule.
EXHIBIT 3.1
ARTICLES OF AMENDMENT
TO
RESTATED ARTICLES OF INCORPORATION,
OF
LOUISIANA CASINO CRUISES, INC.
By authority of the Shareholders of Louisiana Casino Cruises, Inc., the
President and Secretary of the Corporation hereby certify that a Resolution
amending the Articles of Incorporation of Louisiana Casino Cruises, Inc., as
restated on November 30, 1993, was duly adopted, in conformance with law, by the
affirmative vote of at least two-thirds (2/3) of the voting power of the
Corporation and of the outstanding shares of common stock entitled to vote
thereon, at a meeting held on the 15th day of September, 1998. Said Resolution
changes and amends the Restated Articles of Incorporation in effect prior to the
date hereof by amending Article V to read as set forth below:
ARTICLE V.
The provisions dealing with directors shall be as follows:
A. Unless and until otherwise provided in the by-laws, all of the
corporate powers of this Corporation shall be vested in, and
all of the business and affairs of this corporation shall be
managed by, a board of no less than three (3) nor more than
five (5) directors.
B. By a vote of all of the directors, the board of directors
shall have authority to make and alter by-laws, including the
right to make and alter by-laws fixing their qualifications,
classifications, or terms of office, or fixing or increasing
their compensation, subject to the power of the shareholders
to change or repeal the by-laws so made.
C. The qualifications, term of office, manner of election, time
and place of meeting, whether within or outside the State of
Louisiana, and the powers and duties of the directors, may be
from time to time fixed, changed, increased or reduced by the
by-laws.
D. The board of directors shall further have authority to
exercise all such other powers and to do all such other lawful
acts and things which this Corporation or its shareholders
might do, unless prohibited from doing so by applicable laws,
or by these Articles of Incorporation, or by the by-laws.
<PAGE>
E. The general annual meeting of the shareholders for the
election of directors shall be held at such place and time as
may be determined by the board of directors or the by-laws.
F. Unless otherwise provided in the by-laws, any director absent
from a meeting may be represented by any other person, whether
or not he is a director or shareholder, who may cast the vote
of the absent director according to the written instructions,
general or special, of the absent director, filed with the
Secretary.
G. Upon the written request of shareholders holding 80 percent of
the voting stock of this Corporation issued and outstanding,
any member of the board of directors of this Corporation may
be replaced by a director designated by such shareholders in
writing at any time, whether or not his or her term of office
shall have expired.
Thus executed in counterpart on the dates and at the places set forth
below.
LOUISIANA CASINO CRUISES, INC.
/S/ DAN MEADOWS
---------------
Dan Meadows, President
Date: OCTOBER 14, 1998
Signed at: Phoenix, Arizona
/S/ W. PETER TEMLING
--------------------
W. Peter Temling, Secretary
Date: OCTOBER 2, 1998
Signed at: Miami, Florida
<PAGE>
ACKNOWLEDGMENT
STATE OF ARIZONA
COUNTY OF MARICOPA
BE IT KNOWN, that on this 14TH day of OCTOBER, 1998, before me, the
undersigned authority, personally came and appeared:
DAN MEADOWS
who, being sworn, deposed that he executed the above and foregoing Articles of
Amendment to the Restated Articles of Incorporation of Louisiana Casino Cruises,
Inc. of his own free will and as his own act and deed for the uses, purposes and
benefits therein expressed.
WITNESSES:
/S/ LYNETTE C. PHILLIPS
/S/ DAN MEADOWS
---------------
DAN MEADOWS, President
/S/ BILL SCHRADER
SHELLEY M. PARKER
NOTARY PUBLIC
COMMISSION EXPIRES MAY 10, 1999
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF DADE
BE IT KNOWN, that on this 2ND day of OCTOBER, 1998, before me, the
undersigned authority, personally came and appeared:
W. PETER TEMLING
who, being sworn, deposed that he executed the above and foregoing Articles of
Amendment to the Restated Articles of Incorporation of Louisiana Casino Cruises,
Inc. of his own free will and as his own act and deed for the uses, purposes and
benefits therein expressed.
WITNESSES:
/S/ DAVID MIZELS
/S/ W. PETER TEMLING
--------------------
W. PETER TEMLING, Secretary
/S/ JONATHON K. COHEN
/S/ NANCY QUINTANA
NOTARY PUBLIC
COMMISSION NO. CC734525
COMMISSION EXPIRES APRIL 16, 2002
<PAGE>
ABSTRACT FROM THE MINUTES
OF THE ANNUAL MEETING
OF THE SHAREHOLDERS OF
LOUISIANA CASINO CRUISES, INC.
The annual meeting of the shareholders of Louisiana Casino Cruises,
Inc. was held at the registered office of the Corporation in Baton Rouge,
Louisiana, on the 15th day of September, 1998.
Upon motion duly made, seconded and carried, it was,
RESOLVED, that the Articles of Incorporation of Louisiana Casino
Cruises, Inc., as Restated on November 30, 1993, be amended in accordance with
the attached Articles of Amendment; and
RESOLVED FURTHER, that the President and Secretary or other appropriate
officers are authorized and directed to certify adoption of the foregoing
Resolution, to file such certificate with the Secretary of State, and to take
all action necessary to effect the attached Amendment to the Restated Articles
of Incorporation of Louisiana Casino Cruises, Inc.
CERTIFICATE
I hereby certify that the above and foregoing is a true and correct
abstract from the minutes of the annual meeting of the Shareholders of Louisiana
Casino Cruises, Inc., held in Baton Rouge, Louisiana, on September 15, 1998,
holders and/or representatives of all of the authorized voting shares being
present and voting.
Thus executed in counterpart.
/S/ W. PETER TEMLING
--------------------
W. Peter Temling, Secretary
ATTEST:
/S/ DAN MEADOWS
- ---------------
Dan Meadows, President
EXHIBIT 3.2
AMENDMENT TO
BY-LAWS
OF
LOUISIANA CASINO CRUISES, INC.
By authority of the Shareholders and the Board of Directors of
Louisiana Casino Cruises, Inc., the President and Secretary of the Corporation
hereby certify that a Resolution amending the By-laws of Louisiana Casino
Cruises, Inc. was duly adopted in conformance with law, by the affirmative vote
of at least two-thirds (2/3) of the voting power of the Corporation and of the
outstanding shares of common stock entitled to vote thereon, at a meeting held
on the 15th day of September, 1998. Said Resolution changes and amends the
By-laws in effect prior to the date hereof by amending Article III to read as
set forth below:
III.
COMMITTEES
SECTION 3.1 COMMITTEES OF THE BOARD OF DIRECTORS
In addition to the executive committee, the Board of Directors
may, by resolutions, designate one or more committees, each committee
shall contain at least one of the directors of the Corporation but may
consist of non-Board members in addition to Board members. The Board
may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any
meeting of the committee. Vacancies in the committee may be filled by
designation of the Board of Directors. In the absence or
disqualification of a member of a committee, the member or members
thereof, present at any meeting and not disqualified from voting,
whether or not the same constitutes a quorum, may unanimously appoint a
member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member. Any such committee shall have and
may exercise all powers of the Board of Directors, to the extent
provided in the Resolution of the Board of Directors; but no such
committee shall have the power or authority to amend the articles of
incorporation, adopt an agreement of merger or consolidation, recommend
to the Shareholders the sale, lease or exchange of assets, recommend to
the Shareholders a dissolution of the Corporation, a revocation of a
dissolution, or amend the by-laws of the Corporation; and unless the
Resolution so provides, no such committee
<PAGE>
shall have the power or authority to declare a dividend, elect officers
and directors, change the committee's membership, or authorize the
issuance of stock. Such committee or committees shall have such name or
names as may be determined from time to time by Resolution adopted by
the Board of Directors. In the absence of specific direction by the
Board to the contrary, a majority of its members shall constitute a
quorum and the affirmative vote of a majority of its members shall be
necessary for the adoption of the Resolution.
SECTION 3.2 EXECUTIVE COMMITTEE
The Board of Directors may delegate the day-to-day managerial
functions of the Corporation to an executive committee delegating
whatever powers to said committee which the Board in its discretion may
deem fit to so delegate. The executive committee shall contain at least
one (1) director and shall consist of two (2) members, and the
committee shall have all of the powers of the Board when the Board is
not in session, except as limited in the foregoing section.
Thus executed in counterpart on the dates and at the places shown below.
LOUISIANA CASINO CRUISES, INC.
/S/ DAN MEADOWS
---------------
Dan Meadows, President
Date: OCTOBER 14, 1998
Signed at: Phoenix, Arizona
/S/ W. PETER TEMLING
--------------------
W. Peter Temling, Secretary
Date: OCTOBER 2, 1998
Signed at: Miami, Florida
<PAGE>
ACKNOWLEDGMENT
STATE OF FLORIDA
COUNTY OF DADE
BE IT KNOWN, that on this 2ND day of OCTOBER, 1998, before me, the
undersigned authority, personally came and appeared:
W. PETER TEMLING
who, being sworn, deposed that he executed the above and foregoing Amendment to
the By-laws of Louisiana Casino Cruises, Inc. of his own free will and as his
own act and deed for the uses, purposes and benefits therein expressed.
WITNESSES:
/S/ DAVID MIZELS
/S/ W. PETER TEMLING
--------------------
W. PETER TEMLING, Secretary
/S/ JONATHON K. COHEN
/S/ NANCY QUINTANA
NOTARY PUBLIC
COMMISSION NO. CC734525
EXPIRES APRIL 16, 2002
<PAGE>
ACKNOWLEDGMENT
STATE OF ARIZONA
COUNTY OF MARICOPA
BE IT KNOWN, that on this 14TH day of OCTOBER, 1998, before me, the
undersigned authority, personally came and appeared:
DAN MEADOWS
who, being sworn, deposed that he executed the above and foregoing Amendment to
the By-laws of Louisiana Casino Cruises, Inc. of his own free will and as his
own act and deed for the uses, purposes and benefits therein expressed.
WITNESSES:
/S/ LYNETTE C. PHILLIPS
/S/ DAN MEADOWS
----------------
DAN MEADOWS, President
/S/ BILL SCHRADER
SHELLEY M. PARKER
NOTARY PUBLIC
COMMISSION EXPIRES MAY 10, 1999
<PAGE>
RESOLUTION OF THE BOARD OF DIRECTORS
OF
LOUISIANA CASINO CRUISES, INC.
At a meeting of the Board of Directors of Louisiana Casino Cruises,
Inc., held at the registered office of the Corporation on the 15th day of
September, 1998,
Upon motion duly made, seconded and carried, it was,
RESOLVED, that the By-laws of Louisiana Casino Cruises, Inc. be amended
as shown on the attached, and said amendment shall be presented for
consideration of the shareholders and that the shareholders are hereby
recommended by the Board of Directors to vote for adoption of said attached
Amendment to the By-laws.
CERTIFICATE
I hereby certify that the above and foregoing is a true and correct
copy of a resolution of the Board of Directors of Louisiana Casino Cruises,
Inc., unanimously adopted at a meeting of the Board of Directors on September
15, 1998, at which meeting all of the directors of the Corporation were present
and voting.
Thus signed in counterpart.
/S/ W. PETER TEMLING
--------------------
W. Peter Temling, Secretary
ATTEST:
/S/ DAN MEADOWS
- ---------------
Dan Meadows, President
<PAGE>
ABSTRACT FROM THE MINUTES
OF THE ANNUAL MEETING
OF THE SHAREHOLDERS OF
LOUISIANA CASINO CRUISES, INC.
The annual meeting of the shareholders of Louisiana Casino Cruises,
Inc. was held at the registered office of the Corporation in Baton Rouge,
Louisiana, on the 15th day of September, 1998.
Upon motion duly made, seconded and carried, it was,
RESOLVED, that the By-laws of Louisiana Casino Cruises, Inc.be amended
in accordance with the attached Amendment;
RESOLVED FURTHER, that the President and Secretary or other appropriate
officers are authorized and directed to certify adoption of the foregoing
Resolution and to take all action necessary to effect the attached Amendment to
the By-laws of Louisiana Casino Cruises, Inc.
CERTIFICATE
I hereby certify that the above and foregoing is a true and correct
abstract from the minutes of the annual meeting of the Shareholders of Louisiana
Casino Cruises, Inc., held in Baton Rouge, Louisiana, on September 15, 1998,
holders and/or representatives of all of the authorized voting shares being
present and voting.
Thus executed in counterpart.
/S/ W. PETER TEMLING
--------------------
W. Peter Temling, Secretary
ATTEST:
/S/ DAN MEADOWS
- ---------------
Dan Meadows, President
EXHIBIT 4.4
LOUISIANA CASINO CRUISES, INC.
as issuer
and the Subsidiary Guarantors referred to herein
11% Senior Secured Notes due 2005
-----------------------------------------------------
INDENTURE
Dated as of January 27, 1999
-----------------------------------------------------
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ----------
<S> <C>
310(a)(1).........................................................7.10
310(a)(2).........................................................7.10
310(a)(3).........................................................N/A
310(a)(4).........................................................N/A
310(a)(5).........................................................7.10
310(b)............................................................7.8; 7.10
310(c)............................................................N/A
311(a)............................................................7.11
311(b)............................................................7.11
311(c)............................................................N/A
312(a)............................................................2.5
312(b)............................................................12.3
312(c)............................................................12.3
313(a)............................................................7.6
313(b)(1).........................................................7.6
313(b)(2).........................................................7.6
313(c)............................................................7.6
313(d)............................................................7.6
314(a)............................................................4.3; 4.4
314(b)............................................................11.1
314(c)(1).........................................................12.4
314(c)(2).........................................................12.4
314(c)(3).........................................................N/A
314(d)............................................................11.4
314(e)............................................................12.5
314(f)............................................................N/A
315(a)............................................................7.1
315(b)............................................................7.5
315(c)............................................................7.1
315(d)............................................................7.1
315(e)............................................................6.11
316(a)(last sentence).............................................2.9
316(a)(1)(A)......................................................6.5
316(a)(1)(B)......................................................6.4
316(a)(2).........................................................N/A
316(b)............................................................9.2
316(c)............................................................9.4
317(a)(1).........................................................6.8
317(a)(2).........................................................6.9
317(b)............................................................2.4
318(a)............................................................12.1
</TABLE>
N/A means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions...................................................................1
Section 1.2 Other Definitions............................................................14
Section 1.3 Incorporation by Reference of Trust Indenture Act............................14
Section 1.4 Rules of Construction........................................................15
ARTICLE II
THE NOTES
Section 2.1 Form and Dating..............................................................15
Section 2.2 Execution and Authentication.................................................16
Section 2.3 Registrar, Paying Agent and Depositary.......................................16
Section 2.4 Paying Agent to Hold Money in Trust..........................................17
Section 2.5 Holder Lists.................................................................17
Section 2.6 Transfer and Exchange........................................................17
Section 2.7 Replacement Notes............................................................20
Section 2.8 Outstanding Notes............................................................20
Section 2.9 Treasury Notes...............................................................21
Section 2.10 Temporary Notes..............................................................21
Section 2.11 Cancellation.................................................................21
Section 2.12 Defaulted Interest...........................................................21
Section 2.13 Legends......................................................................22
ARTICLE III
REDEMPTION
Section 3.1 Notices to Trustee...........................................................22
Section 3.2 Selection of Notes to Be Redeemed............................................23
Section 3.3 Notice of Redemption.........................................................23
Section 3.4 Effect of Notice of Redemption...............................................24
Section 3.5 Deposit of Redemption Price..................................................24
Section 3.6 Notes Redeemed in Part.......................................................24
Section 3.7 Optional Redemption..........................................................24
Section 3.8 Required Regulatory Redemption...............................................25
ARTICLE IV
COVENANTS
Section 4.1 Payment of Notes.............................................................25
Section 4.2 Maintenance of Office or Agency..............................................25
Section 4.3 Reports......................................................................26
Section 4.4 Compliance Certificate.......................................................26
Section 4.5 Taxes........................................................................27
Section 4.6 Stay, Extension and Usury Laws...............................................27
Section 4.7 Limitation on Restricted Payments............................................27
Section 4.8 Limitation on Restrictions on Subsidiary Dividends...........................29
Section 4.9 Limitation on Incurrence of Indebtedness.....................................29
Section 4.10 Limitation on Asset Sales....................................................31
Section 4.11 Limitation on Transactions With Affiliates...................................33
-i-
Section 4.12 Limitation on Liens..........................................................34
Section 4.13 Corporate Existence..........................................................34
Section 4.14 Repurchase Upon a Change of Control..........................................34
Section 4.15 Maintenance of Properties....................................................36
Section 4.16 Maintenance of Insurance.....................................................36
Section 4.17 Restrictions on Sale and Issuance of Subsidiary Stock........................36
Section 4.18 Limitation on Lines of Business..............................................36
ARTICLE V
SUCCESSORS
Section 5.1 When the Company May Merge, etc..............................................36
Section 5.2 Successor Substituted........................................................37
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default............................................................37
Section 6.2 Acceleration.................................................................39
Section 6.3 Other Remedies...............................................................39
Section 6.4 Waiver of Past Defaults; Rescission of Acceleration..........................39
Section 6.5 Control by Majority..........................................................39
Section 6.6 Limitation on Suits..........................................................40
Section 6.7 Rights of Holders to Receive Payment.........................................40
Section 6.8 Collection Suit by Trustee...................................................40
Section 6.9 Trustee May File Proofs of Claim.............................................40
Section 6.10 Priorities...................................................................41
Section 6.11 Undertaking for Costs........................................................41
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee............................................................41
Section 7.2 Rights of Trustee............................................................42
Section 7.3 Individual Rights of Trustee.................................................43
Section 7.4 Trustee's Disclaimer.........................................................43
Section 7.5 Notice of Defaults...........................................................43
Section 7.6 Reports by Trustee to Holders................................................44
Section 7.7 Compensation and Indemnity...................................................44
Section 7.8 Replacement of Trustee.......................................................45
Section 7.9 Successor Trustee by Merger, etc.............................................45
Section 7.10 Eligibility; Disqualification................................................46
Section 7.11 Preferential Collection of Claims Against Company............................46
ARTICLE VIII
DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Discharge; Option to Effect Legal or Covenant Defeasance.....................46
Section 8.2 Legal Defeasance and Discharge...............................................46
Section 8.3 Covenant Defeasance..........................................................47
Section 8.4 Conditions to Legal or Covenant Defeasance...................................47
Section 8.5 Deposits to be Held in Trust; Other Miscellaneous Provisions.................48
Section 8.6 Repayment to the Company.....................................................48
Section 8.7 Reinstatement................................................................49
-ii-
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders...................................................49
Section 9.2 With Consent of Holders......................................................50
Section 9.3 Compliance with Trust Indenture Act..........................................51
Section 9.4 Revocation and Effect of Consents............................................51
Section 9.5 Notation on or Exchange of Notes.............................................51
Section 9.6 Trustee to Sign Amendments, etc..............................................52
ARTICLE X
SUBSIDIARY GUARANTIES
Section 10.1 Subsidiary Guaranty..........................................................52
Section 10.2 Execution and Delivery of the Subsidiary Guaranties..........................53
Section 10.3 Limitation on Subsidiary Guarantor's Liability...............................54
Section 10.4 Rights under the Subsidiary Guaranties.......................................54
Section 10.5 Primary Obligations..........................................................54
Section 10.6 Guarantee by Future Subsidiaries.............................................55
Section 10.7 Release of Subsidiary Guarantors.............................................55
ARTICLE XI
SECURITY INTEREST
Section 11.1 Assignment of Security Interest..............................................55
Section 11.2 Suits to Protect the Collateral..............................................56
Section 11.3 Further Assurances and Security..............................................57
Section 11.4 Release of Collateral........................................................57
Section 11.5 Reliance on Opinion of Counsel...............................................58
Section 11.6 Purchaser May Rely...........................................................58
Section 11.7 Payment of Expenses..........................................................58
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls.................................................59
Section 12.2 Notices......................................................................59
Section 12.3 Communication by Holders with Other Holders..................................60
Section 12.4 Certificate and Opinion as to Conditions Precedent...........................60
Section 12.5 Statements Required in Certificate or Opinion................................61
Section 12.6 Rules by Trustee and Agents..................................................61
Section 12.7 Legal Holidays...............................................................61
Section 12.8 No Recourse Against Others...................................................61
Section 12.9 Governing Law................................................................61
Section 12.10 No Adverse Interpretation of Other Agreements................................62
Section 12.11 Successors...................................................................62
Section 12.12 Severability.................................................................62
Section 12.13 Counterpart Originals........................................................62
Section 12.14 Table of Contents, Headings, etc.............................................62
EXHIBIT A - Form of Note......................................................................A-1
EXHIBIT B - Certificate to Be Delivered upon Exchange or Registration of Transfer of Notes....B-1
EXHIBIT C - Form of Subsidiary Guaranty.......................................................C-1
</TABLE>
-iii-
<PAGE>
This Indenture, dated as of January 27, 1999, is entered into by and
among Louisiana Casino Cruises, Inc., a Louisiana corporation (the "COMPANY"),
the Subsidiary Guarantors (as defined below) and U.S. Bank Trust National
Association, a national banking organization, as trustee (the "TRUSTEE").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders (as defined below) of
the Company's 11% Senior Secured Notes due 2005.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 DEFINITIONS.
"ACQUIRED DEBT" means Indebtedness of a Person existing at the time
such Person is merged with or into the Company or a Restricted Subsidiary or
becomes a Restricted Subsidiary, other than Indebtedness incurred in connection
with, or in contemplation of, such Person merging with or into the Company or a
Restricted Subsidiary or becoming a Restricted Subsidiary.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, will mean
(a) the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise or (b) beneficial
ownership of 10% or more of the voting securities of such Person.
Notwithstanding the foregoing, neither the Initial Purchaser nor any of its
Affiliates will be deemed to be Affiliates of the Company.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET SALE" means any (a) direct or indirect sale, assignment,
transfer, lease, conveyance, or other disposition (including, without
limitation, by way of merger or consolidation) (collectively, a "TRANSFER"),
other than in the ordinary course of business, of any assets of the Company or
any Restricted Subsidiary; (b) direct or indirect issuance or sale of any
Capital Stock of any Restricted Subsidiary (other than directors' qualifying
shares), in each case to any Person (other than the Company or a Restricted
Subsidiary); or (c) Event of Loss. For purposes of this definition, (i) any
series of transactions that are part of a common plan shall be deemed a single
Asset Sale and (ii) the term "Asset Sale" shall not include (1) any series of
transactions that have a fair market value (or result in gross proceeds) of less
than $1 million, until the aggregate fair market value and gross proceeds of the
transactions excluded from the definition of Asset Sale pursuant to this clause
(ii)(1) exceed $5 million or (2) any disposition of all or substantially all of
the assets of the Company that is governed under and complies with the terms of
Article V.
"BANKRUPTCY LAW" means title 11, U.S. Code, or any similar federal,
state or foreign law for the relief of debtors.
"BENEFICIAL OWNER" has the meaning attributed to it in Rules 13d-3 and
13d-5 under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"BOARD OF DIRECTORS" means the board of directors or any duly
constituted committee thereof of any corporation or of a corporate general
partner of a partnership and any similar body empowered to direct the affairs of
any other entity.
1
<PAGE>
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP, and the amount of such obligations at
any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"CAPITAL STOCK" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (b) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"CASH EQUIVALENT" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (b) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition; (c) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (a) and (b) above; and (d) repurchase obligations for
underlying securities of the types and with the maturities described above.
"CASINO ROUGE" means the riverboat casino and related facilities
operated by the Company in Baton Rouge, Louisiana, as more fully described in
the Security Documents.
"CHANGE OF CONTROL" means the occurrence of any of the following
events:
(a) any merger or consolidation of the Company with or into
any Person or any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of the Company, on
a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such
transaction(s), any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) (other than an Excluded Person) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of the Voting Stock of the
transferee(s) or surviving entity or entities,
(b) any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable) (other than an Excluded Person) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of the Voting Stock of the Company,
(c) during any period of 12 consecutive months after the Issue
Date, individuals who at the beginning of any such 12-month period
constituted the Board of Directors of the Company (together with any
new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved
by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved, including new
directors designated in or provided for in an agreement regarding the
merger, consolidation or sale, transfer or other conveyance, of all or
substantially all of the assets of the Company, if such agreement was
approved by a vote of such majority of directors) cease for any reason
to constitute a majority of the Board of Directors of the Company then
in office, or
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(d) the Company adopts a plan of liquidation.
Notwithstanding anything to the contrary contained herein, "Change of
Control" shall not be deemed to include any transaction between CRC and Jackpot
Enterprises, Inc. or any of its Affiliates or among the Company, CRC and Jackpot
Enterprises, Inc. or any of its Affiliates, in any such case contemplated by the
letter of intent dated October 29, 1998, as amended.
"COLLATERAL" has the meaning provided in the Security Agreement.
"COLLATERAL ACCOUNT" has the meaning provided in the Security
Agreement.
"COLLATERAL PROCEEDS" means any Net Proceeds received or receivable by
the Company or any Restricted Subsidiary as a result of an Asset Sale involving
any of the Collateral, and all interest or other earnings on amounts on deposit
in the Collateral Account.
"COMMISSION" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Exchange Act,
the Securities Act or the TIA, as the case may be, then the body performing such
duties at such time.
"COMPANY" means the party named as such above, until a successor
replaces such Person in accordance with the terms of this Indenture, and
thereafter means such successor.
"COMPANY ORDER" means a written request or order signed in the name of
the Company by its Chairman of the Board, President, Chief Executive Officer or
Senior or Executive Vice President, and by its Chairman of the Board, President,
Chief Executive Officer, Senior or Executive Vice President Treasurer, Secretary
or an Assistant Treasurer or an Assistant Secretary and delivered to the
Trustee.
"CONSOLIDATED EBITDA" means, with respect to any Person (the referent
Person) for any period, consolidated income (loss) from operations of such
Person and its subsidiaries for such period, determined in accordance with GAAP,
plus (to the extent such amounts are deducted in calculating such income (loss)
from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees, fees and charges
relating to the issuance and redemption of the 1998 Notes, and other intangibles
but excluding (a) non-cash charges incurred after the Issue Date that require an
accrual of or a reserve for cash charges for any future period, (b) normally
recurring accruals such as reserves against accounts receivables and (c)
Pre-Opening Expenses); PROVIDED, that (i) the income from operations of any
Person that is not a Wholly Owned Subsidiary of the referent Person or that is
accounted for by the equity method of accounting will be included only to the
extent of the amount of dividends or distributions paid during such period to
the referent Person or a Wholly Owned Subsidiary of the referent Person, (ii)
the income from operations of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition will be
excluded, and (iii) the income from operations of any Restricted Subsidiary will
not be included to the extent that declarations of dividends or similar
distributions by that Restricted Subsidiary are not at the time permitted,
directly or indirectly, by operation of the terms of its organization documents
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its owners.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person for
any period, (a) the consolidated interest expense of such Person and its
subsidiaries for such period, whether paid or accrued (including amortization of
original issue discount, noncash interest payment, and the interest component of
Capital Lease Obligations), to the extent such expense was deducted in computing
Consolidated Net Income of such Person for such period less (b) amortization
expense, write-off of deferred financing costs and any
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charge related to any premium or penalty paid, in each case accrued during such
period in connection with redeeming or retiring any Indebtedness before its
stated maturity, as determined in accordance with GAAP, to the extent such
expense, cost or charge was included in the calculation made pursuant to clause
(a) above.
"CONSOLIDATED NET INCOME" means, with respect to any Person (the
referent Person) for any period, the aggregate of the Net Income of such Person
and its subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; PROVIDED, that (a) the Net Income of any Person relating
to any portion of such period that such Person (i) is not a Wholly Owned
Subsidiary of the referent Person or (ii) is accounted for by the equity method
of accounting will be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Wholly Owned Subsidiary of the
referent Person during such portion of such period, (b) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition will be excluded, and (c) the Net Income of any
Restricted Subsidiary will not be included to the extent that declarations of
dividends or similar distributions by that Restricted Subsidiary are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its owners.
"CONSOLIDATED NET WORTH" means, with respect to any Person, the total
stockholders' equity of such Person determined on a consolidated basis in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Stock or treasury stock of such Person and its consolidated
subsidiaries, and (b) all upward revaluations and other write-ups in the book
value of any asset of such Person or a consolidated subsidiary of such Person
subsequent to the Issue Date, and (c) all Investments in subsidiaries of such
Person that are not consolidated subsidiaries and in Persons that are not
subsidiaries of such Person.
"CORPORATE TRUST OFFICE" shall be at the address of the Trustee
specified in Section 12.2 or such other address as the Trustee may specify by
notice to the Company.
"CRC" means CRC Holdings, Inc., doing business as Carnival Resorts and
Casinos.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"DEFAULT" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"DEPOSITARY" means the Person specified in Section 2.3 as the
Depositary with respect to the Notes issuable in global form, until a successor
shall have been appointed and become such pursuant to the applicable provision
of this Indenture, and, thereafter, "Depositary" shall mean or include such
successor.
"DISQUALIFIED STOCK" means any Equity Interest that (a) either by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable) is or upon the happening of an event would be required to be
redeemed or repurchased prior to the final stated maturity of the Notes or is
redeemable at the option of the holder thereof at any time prior to such final
stated maturity, or (b) is convertible into or exchangeable at the option of the
issuer thereof or any other Person for debt securities.
"DTC" means The Depository Trust Company.
"ENTERTAINMENT FACILITY" means a multi-purpose meeting and
entertainment facility, owned by the Company or a Restricted Subsidiary, to be
constructed on a portion of the Undeveloped Parcel.
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"EQUITY INTERESTS" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF LOSS" means, with respect to any property or asset, any (a)
loss, destruction or damage of such property or asset or (b) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE OFFER" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"EXCLUDED ASSET" means any asset encumbered by Liens permitted under
clauses (h), (i) or (k) of the definition of Permitted Liens.
"EXCLUDED PERSON" means any of CRC, Jackpot Enterprises, Inc., Dan S.
Meadows, Jerry L. Bayles and Thomas L. Meehan, and all Related Persons of each
such Person.
"GAAP" or "GAAP" means generally accepted accounting principles, as in
effect from time to time, set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession, and in the rules and
regulations of the Commission.
"GAMING LICENSES" means every material license, material franchise or
other material approval or authorization required to own, lease, operate or
otherwise conduct or manage riverboat, dockside or land-based gaming in any
state or jurisdiction in which the Company or any of its Restricted Subsidiaries
conduct business, and all applicable liquor licenses.
"GAMING VESSEL" means a riverboat casino (a) which is substantially
similar in size and space to the Casino Rouge, (b) with at least the same
overall qualities and amenities as the Casino Rouge, and (c) that is developed,
constructed and equipped to be in compliance with all federal, state and local
laws, including, without limitation, the cruising requirements of the Louisiana
Act. In the event the laws of the State of Louisiana change to permit the
development and operation of additional land-based casinos, the term "Gaming
Vessel" shall be deemed to include a land-based casino meeting the requirements
of clauses (a), (b) and (c) above.
"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, and any maritime authority.
"GUARANTY" or "GUARANTEE," used as a noun, means any guaranty (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness or other Obligation. "GUARANTEE," used as
a verb, has a correlative meaning.
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"HEDGING OBLIGATIONS" means, with respect to any Person, the
Obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDER" means the Person in whose name a Note is registered in the
register of the Notes.
"HOTEL FACILITY" means a hotel facility, owned by the Company or a
Restricted Subsidiary, to be constructed on a portion of the Undeveloped Parcel.
"INDEBTEDNESS" of any Person means (without duplication) (a) all
liabilities and obligations, contingent or otherwise, of such Person (i) in
respect of borrowed money (regardless of whether the recourse of the lender is
to the whole of the assets of such Person or only to a portion thereof), (ii)
evidenced by bonds, debentures, notes or other similar instruments, (iii)
representing the deferred purchase price of property or services (other than
trade payables on customary terms incurred in the ordinary course of business),
(iv) created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (v) representing
Capital Lease Obligations, (vi) under bankers' acceptance and letter of credit
facilities, (vii) to purchase, redeem, retire, defease or otherwise acquire for
value any Disqualified Stock, or (viii) in respect of Hedging Obligations; (b)
all Indebtedness of others that is guaranteed by such Person; and (c) all
Indebtedness of others that is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, PROVIDED, that the amount of such
Indebtedness shall (to the extent such Person has not assumed or become liable
for the payment of such Indebtedness) be the lesser of (x) the fair market value
of such property at the time of determination and (y) the amount of such
Indebtedness. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
Notwithstanding the foregoing, the term Indebtedness shall not include
obligations arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument drawn against insufficient funds in the
ordinary course of business, PROVIDED, that such obligation is extinguished
within two Business Days of its incurrence.
"INDENTURE" means this Indenture as amended or supplemented from time
to time.
"INITIAL PURCHASER" means Jefferies & Company, Inc.
"INTEREST COVERAGE RATIO" means, for any period, the ratio of (a)
Consolidated EBITDA of the Company for such period, to (b) Consolidated Interest
Expense of the Company for such period. In calculating Interest Coverage Ratio
for any period, PRO FORMA effect shall be given to the incurrence, assumption,
guarantee, repayment, repurchase, redemption or retirement by the Company or any
of its Subsidiaries of any Indebtedness subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated, as if the same
had occurred at the beginning of the applicable period. For purposes of making
the computation referred to above, acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including all mergers and
consolidations, subsequent to the commencement of such period shall be
calculated on a PRO FORMA basis, assuming that all such acquisitions, mergers
and consolidations had occurred on the first day of such period and Consolidated
EBITDA for such period shall be calculated without giving effect to clause (ii)
of the proviso set forth in the definition of Consolidated EBITDA. Without
limiting the foregoing, the financial information of the Company with respect to
any portion of such period that falls before the Issue Date shall be adjusted to
give PRO FORMA effect to the issuance of the Notes and the application of the
proceeds therefrom as if they had occurred at the beginning of such period.
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"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans,
guaranties, advances or capital contributions (excluding (a) payroll commission,
travel and similar advances to officers and employees of such Person made in the
ordinary course of business and (b) bona fide accounts receivable arising from
the sale of goods or services in the ordinary course of business consistent with
past practice), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, and any other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"ISSUE DATE" means the date upon which the Series A Notes are first
issued.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, regardless of whether filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means any liquidated damages payable pursuant to
Section 4 of the Registration Rights Agreement.
"LOUISIANA ACT" means the Louisiana Riverboat Economic Development and
Gaming Control Act, as amended from time to time.
"NET INCOME" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with
GAAP, excluding (a) any gain or loss, together with any related provision for
taxes on such gain or loss, realized in connection with any Asset Sales and
dispositions pursuant to sale-leaseback transactions, (b) any extraordinary gain
or loss (including any losses, fees and charges related to the issuance and
redemption of the 1998 Notes), together with any related provision for taxes on
such gain or loss and (c) any Pre-Opening Expenses.
"NET PROCEEDS" means the aggregate proceeds received in the form of
cash or Cash Equivalents in respect of any Asset Sale (including insurance or
other payments received in an Event of Loss and payments in respect of deferred
payment obligations and any cash or Cash Equivalents received upon the sale or
disposition of any non-cash consideration received in any Asset Sale, in each
case when received), net of (a) the reasonable and customary direct
out-of-pocket costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions), other than
any such costs and expenses payable to an Affiliate of the Company, (b) taxes
actually payable directly as a result of such Asset Sale (after taking into
account any available tax credits or deductions (to the extent reasonably
allocable thereto) and any tax sharing arrangements), (c) amounts required to be
applied to the permanent repayment of Indebtedness in connection with such Asset
Sale, and (d) appropriate amounts provided as a reserve by the Company or any
Restricted Subsidiary, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or such Restricted
Subsidiary, as the case may be, after such Asset Sale (including, without
limitation, as applicable, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations arising from such Asset Sale).
"1998 NOTES" means the $50 million aggregate principal amount of Senior
Secured Increasing Rate Notes due 2001 issued by the Company in November 1998.
"NOTES" means, collectively, the Series A Notes and the Series B Notes.
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"OBLIGATION" means any principal, premium, interest, penalty, fee,
indemnification, reimbursement, damage and other obligation and liability
payable under the documentation governing any liability.
"OFFICERS" means the Chairman of the Board, the President, the Chief
Financial Officer, the Chief Operating Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary, any Assistant Secretary or Senior Vice
President of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the Chairman of the
Board, President, Chief Executive Officer, Chief Financial Officer, Treasurer,
Controller or a Senior or Executive Vice President of the Company.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"PERMITTED INVESTMENTS" means:
(a) Investments in the Company or in any Restricted
Subsidiary;
(b) Investments in Cash Equivalents;
(c) Investments in a Person, if, as a result of such
Investment, such Person (i) becomes a Restricted Subsidiary, or (ii) is
merged, consolidated or amalgamated with or into, or transfers or
conveys substantially all of its assets to, or is liquidated into, the
Company or a Restricted Subsidiary;
(d) Hedging Obligations;
(e) Investments as a result of consideration received in
connection with an Asset Sale made in compliance with Section 4.10;
(f) Investments existing on the Issue Date;
(g) Investments paid for solely with Capital Stock (other than
Disqualified Stock) of the Company;
(h) credit extensions to gaming customers in the ordinary
course of business, consistent with industry practice;
(i) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the
Company in satisfaction of judgments; and
(j) loans or advances to employees of the Company and its
Subsidiaries made in the ordinary course of business in an aggregate
amount not to exceed $250,000 at any one time outstanding.
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"PERMITTED LIENS" means:
(a) Liens arising by reason of any judgment, decree or order
of any court for an amount and for a period not resulting in an Event
of Default with respect thereto, so long as such Lien is being
contested in good faith and is adequately bonded, and any appropriate
legal proceedings that may have been duly initiated for the review of
such judgment, decree or order shall not have been finally adversely
terminated or the period within which such proceedings may be initiated
shall not have expired;
(b) security for the performance of bids, tenders, trade,
contracts (other than contracts for the payment of money) or leases,
surety bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business, consistent with industry
practice;
(c) Liens (other than Liens arising under ERISA) for taxes,
assessments or other governmental charges not yet due or that are being
contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP;
(d) Liens of carriers, warehousemen, mechanics, landlords,
material men, repairmen or other like Liens arising by operation of law
in the ordinary course of business consistent with industry practices
(other than Liens arising under ERISA) and Liens on deposits made to
obtain the release of such Liens if (i) the underlying obligations are
not overdue for a period of more than 30 days or (ii) such Liens are
being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of
the Company in accordance with GAAP;
(e) easements, rights of way, zoning and similar restrictions
and other similar encumbrances or title defects incurred in the
ordinary course of business consistent with industry practices that, in
the aggregate, are not substantial in amount, and that do not in any
case materially detract from the value of the property subject thereto
(as such property is used by the Company or a Subsidiary) or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries; PROVIDED, that such Liens are not incurred in connection
with any borrowing of money or any commitment to loan any money or to
extend any credit;
(f) pledges or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security legislation;
(g) Liens securing Refinancing Indebtedness incurred in
compliance with this Indenture to refinance Indebtedness secured by
Liens, PROVIDED, that (i) such Liens do not extend to any additional
property or assets; (ii) if the Liens securing the Indebtedness being
Refinanced were subordinated to or PARI PASSU with the Liens securing
the Notes, the Subsidiary Guaranties or any intercompany loan, as
applicable, such new Liens are subordinated to or PARI PASSU with such
Liens to the same extent, and any related subordination or
intercreditor agreement is confirmed; and (iii) such Liens are no more
adverse to the interests of Holders than the Liens replaced or extended
thereby;
(h) Liens that secure Acquired Debt, PROVIDED, that such Liens
do not extend to or cover any property or assets other than those of
the Person being acquired and were not put in place in anticipation of
such acquisition;
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(i) (i) Liens that secure Purchase Money Obligations permitted
to be incurred under this Indenture or (ii) Capital Lease Obligations
permitted to be incurred under this Indenture, PROVIDED, that such
Liens do not extend to or cover any property or assets other than those
being leased;
(j) Liens securing Obligations under this Indenture, the Notes
or the Security Documents;
(k) Liens on furnitures, fixtures and equipment of the Company
and the Subsidiaries, and the proceeds of any or all the foregoing,
securing Indebtedness incurred pursuant to Section 4.9(b)(i);
(l) with respect to any vessel included in the Collateral,
certain maritime Liens, including Liens for crew's wages and salvage;
(m) Liens existing on the Issue Date securing Indebtedness
outstanding under the 1998 Notes; PROVIDED, such Liens are released on
or prior to March 1, 1999;
(n) leases or subleases granted in the ordinary course of
business not materially interfering with the conduct of the business of
the Company or any of the Restricted Subsidiaries; and
(o) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by
the Company or any of its Subsidiaries in the ordinary course of
business.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, unincorporated organization, government or any
agency or political subdivision thereof, or any other entity.
"PRE-OPENING EXPENSES" means all pre-opening costs incurred in the
construction and development of any of the Undeveloped Parcel, which are
expenses in accordance with GAAP.
"PUBLIC EQUITY OFFERING" means a bona fide underwritten public offering
of Qualified Capital Stock of the Company, pursuant to a registration statement
filed with and declared effective by the Commission in accordance with the
Securities Act.
"PURCHASE MONEY OBLIGATIONS" means Indebtedness representing, or
incurred to finance (or to refinance Indebtedness incurred to finance), the cost
(a) of acquiring any assets and (b) of construction or build-out of facilities
(including Purchase Money Obligations of any other Person at the time such other
Person is merged with or into or is otherwise acquired by the Company);
PROVIDED, that (i) the principal amount of such Indebtedness does not exceed 80%
of such cost, including construction charges, (ii) any Lien securing such
Indebtedness does not extend to or cover any other asset or property other than
(1) the asset or property being so acquired, constructed or built and (2) in the
case of the Hotel Facility or the Entertainment Facility, that portion of the
Undeveloped Parcel on which such facility is constructed or built, and (iii)
such Indebtedness is (or the Indebtedness being refinanced was) incurred, and
any Liens with respect thereto are granted, within 180 days of the acquisition
or commencement of construction or build-out of such property or asset.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"QUALIFIED CAPITAL STOCK" means, with respect to any Person, Capital
Stock of such Person other than Disqualified Stock.
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"RELATED BUSINESS" means the gaming, entertainment and hotel businesses
conducted (or proposed to be conducted) by the Company and its Subsidiaries as
of the Issue Date and any and all businesses that in the good faith judgment of
the Board of Directors of the Company are materially related businesses.
"RELATED PERSON" means any Person who controls, is controlled by or is
under common control with an Excluded Person; PROVIDED, that for purposes of
this definition "control" means the beneficial ownership of more than 50% of the
total voting power of the Voting Stock of a Person.
"REQUIRED REGULATORY REDEMPTION" means a redemption by the Company of
any Holder's Notes pursuant to, and in accordance with, any order of any
Governmental Authority with appropriate jurisdiction and authority relating to a
Gaming License, or to the extent necessary in the reasonable, good faith
judgment of the Board of Directors of the Company to prevent the loss, failure
to obtain or material impairment or to secure the reinstatement of any Gaming
License, where such redemption or acquisition is required because the Holder or
beneficial owner of Notes is required to be found suitable or to otherwise
qualify under any gaming laws and is not found suitable or so qualified within a
reasonable period of time.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the Initial
Purchaser as such agreement may be amended, modified or supplemented from time
to time.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee located at the
Corporate Trust Office (or any successor group of the Trustee) or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the designated officers, and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SECURITIES" means Notes that bear or are required to bear
the legends relating to restrictions on transfer set forth on Exhibit A hereto.
"RESTRICTED SUBSIDIARY" means a Subsidiary other than an Unrestricted
Subsidiary.
"RETURN FROM UNRESTRICTED SUBSIDIARIES" means (a) 50% of any dividends
or distributions received by the Company or a Restricted Subsidiary from an
Unrestricted Subsidiary, to the extent that such dividends or distributions were
not otherwise included in Consolidated Net Income of the Company, plus (b) to
the extent not otherwise included in Consolidated Net Income of the Company, an
amount equal to the net reduction in Investments in Unrestricted Subsidiaries
resulting from (i) repayments of the principal of loans or advances or other
transfers of assets to the Company or any Restricted Subsidiary from
Unrestricted Subsidiaries or (ii) the sale or liquidation of any Unrestricted
Subsidiaries, plus (c) to the extent that any Unrestricted Subsidiary of the
Company is designated to be a Restricted Subsidiary, the fair market value of
the Company's Investment in such Subsidiary on the date of such designation.
"REVOLVING CREDIT FACILITY" means any revolving credit agreement or
similar instrument, including, without limitation, working capital or equipment
purchase lines of credit, entered into by the Company governing the terms of a
BONA FIDE borrowing by the Company from (a) a third party financial institution
that is primarily engaged in the business of commercial banking or (b) a vendor
or other provider of financial accommodations in connection with the purchase of
equipment, in either case for valid business purposes, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith.
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"RULE 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"RULE 144A" means Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" means the Security Agreement dated January 27,
1999 executed by the Company in favor of the Trustee for its benefit and the
benefit of the Holders.
"SECURITY DOCUMENTS" means this Indenture, the Security Agreement, the
Ship Mortgage, the Shore Mortgage and any other mortgage, deed of trust,
security agreement or similar instrument securing the Company's Obligations
under this Indenture and the Notes.
"SERIES A NOTES" means the Company's 11% Series A Senior Secured Notes
due 2005, as authenticated and issued under this Indenture.
"SERIES B NOTES" means the Company's 11% Series B Senior Secured Notes
due 2005, as authenticated and issued under this Indenture.
"SHIP MORTGAGE" means the First Preferred Ship Mortgage dated January
27, 1999 executed by the Company in favor of the Trustee for its benefit and the
benefit of the Holders.
"SHORE MORTGAGE" means the Mortgage, Leasehold Mortgage, Assignment of
Rents, Security Agreement and Financing Statement dated January 27, 1999
executed by the Company in favor of the Trustee for its benefit and the benefit
of the Holders.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation,
association or other business entity (including a limited liability company) of
which more than 50% of the total voting power of shares of Voting Stock thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other subsidiaries of that Person or a combination thereof
and (b) any partnership in which such Person or any of its subsidiaries is a
general partner.
"SUBSIDIARY" means any subsidiary of the Company.
"SUBSIDIARY GUARANTOR" means any Subsidiary that has executed and
delivered in accordance with this Indenture a Subsidiary Guaranty, and such
Person's successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date hereof until such time as
this Indenture is qualified under the TIA, and thereafter as in effect on the
date on which this Indenture is qualified under the TIA, unless the context
requires reference thereto as in effect from time to time.
"TRANSFER" has the meaning given to such term in the definition of the
term "Asset Sale."
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UNDEVELOPED PARCEL" means that portion of the land owned or leased by
the Company at which the Casino Rouge is based (including, without limitation,
five undeveloped acres of land located adjacent to the
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Casino Rouge's docking facilities) used for the development and construction of
the Hotel Facility and/or the Entertainment Facility.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that, at or prior to the
time of determination, shall have been designated by the Board of Directors of
the Company (by written notice to the Trustee as provided below) as an
Unrestricted Subsidiary; PROVIDED, that such Subsidiary (a) is not a Subsidiary
in existence on the Issue Date and (b) does not hold any Indebtedness or Capital
Stock of, or any Lien on any assets of, the Company or any Restricted
Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary as of such date. The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED, that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under the Interest Coverage Ratio test set forth in
Section 4.9 calculated on a pro forma basis as if such designation had occurred
at the beginning of the four-quarter reference period, and (ii) no Default or
Event of Default would be in existence following such designation. The Company
shall be deemed to make an Investment in each Subsidiary designated as an
Unrestricted Subsidiary immediately following such designation in an amount
equal to the Investment in such Subsidiary and its subsidiaries immediately
prior to such designation. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a certified
copy of the Board of Directors resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complies with the
foregoing conditions and is permitted by Section 4.9.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of the United
States of America, or any agency or instrumentality thereof for the payment of
which the full faith and credit of the United States of America is pledged.
"VOTING STOCK" means, with respect to any Person, (a) one or more
classes of the Capital Stock of such Person having general voting power to elect
at least a majority of the Board of Directors, managers or trustees of such
Person (regardless of whether at the time Capital Stock of any other class or
classes have or might have voting power by reason of the happening of any
contingency) and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) above.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (a) the then outstanding principal amount of
such Indebtedness into (b) the total of the product obtained by multiplying (i)
the amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
"WHOLLY OWNED SUBSIDIARY" of any Person means a subsidiary of such
Person all the Capital Stock of which (other than directors' qualifying shares)
is owned directly or indirectly by such Person; PROVIDED, that with respect to
the Company, the term Wholly Owned Subsidiary shall exclude Unrestricted
Subsidiaries.
Section 1.2 OTHER DEFINITIONS.
<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
- ---- ----------
<S> <C>
"AFFILIATE TRANSACTION".......................................... 4.11
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
- ---- ----------
<S> <C>
"CHANGE OF CONTROL OFFER"........................................ 4.14
"CHANGE OF CONTROL PAYMENT"...................................... 4.14
"CHANGE OF CONTROL PAYMENT DATE"................................. 4.14
"COLLATERAL RELEASE DATE"........................................ 11.4
"COVENANT DEFEASANCE"............................................ 8.3
"DEFINITIVE NOTES"............................................... 2.1
"EVENT OF DEFAULT"............................................... 6.1
"EXCESS PROCEEDS"................................................ 4.10
"EXCESS PROCEEDS OFFER".......................................... 4.10
"EXCESS PROCEEDS OFFER PERIOD"................................... 4.10
"EXCESS PROCEEDS PAYMENT DATE"................................... 4.10
"GLOBAL NOTES"................................................... 2.1
"INCUR".......................................................... 4.9
"INITIAL FACILITY" ...................................... 4.8
"LEGAL DEFEASANCE"............................................... 8.2
"PAYING AGENT"................................................... 2.3; 8.5 (solely for
purposes of Section
8.5)
"PURCHASE AMOUNT"................................................ 4.10
"REFINANCE"...................................................... 4.9
"REFINANCING INDEBTEDNESS"....................................... 4.9
"REGISTRAR"...................................................... 2.3
"REPLACEMENT VESSEL"............................................. 4.10
"RESTRICTED PAYMENTS"............................................ 4.7
"SECURITY INTEREST".............................................. 11.1
"SUBSIDIARY GUARANTY"............................................ 10.1
</TABLE>
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
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<PAGE>
"OBLIGOR" on the Notes means the Company, the Subsidiary Guarantors and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute, or defined by Commission rule under
the TIA have the meanings so assigned to them.
Section 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the
plural include the singular;
(e) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision, and the terms "Article," "Section," "Exhibit" and
"Schedule," unless otherwise specified or indicated by the context in
which used, mean the corresponding Article or Section of, or the
corresponding Exhibit or Schedule to, this Indenture;
(f) references to agreements and other instruments include
subsequent amendments, supplements and waivers to such agreements or
instruments but only to the extent not prohibited by this Indenture;
and
(g) provisions apply to successive events and transactions.
ARTICLE II
THE NOTES
Section 2.1 FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A attached hereto, the terms of which are
incorporated in and made a part of this Indenture. Each Note shall include the
Subsidiary Guaranty executed by each of the Subsidiary Guarantors in the form of
Exhibit C attached hereto, the terms of which are incorporated in and made a
part of this Indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is subject
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be issued in denominations of $1,000 and integral multiples thereof.
The Notes will be issued (i) in global form (the "GLOBAL NOTES"),
substantially in the form of Exhibit A attached hereto (including the text
referred to in footnote 1 thereto) and (ii) under certain circumstances, in
definitive form (the "DEFINITIVE NOTES"), substantially in the form of Exhibit A
attached hereto (excluding the text referred to in footnote 1 thereto). Each
Global Note shall represent the aggregate amount of outstanding Notes from time
to time endorsed thereon; PROVIDED, that the aggregate amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or
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<PAGE>
decrease in the amount of outstanding Notes represented thereby shall be made by
the Trustee, in accordance with instructions given by the Holder thereof, as
required by Section 2.6.
Section 2.2 EXECUTION AND AUTHENTICATION.
The Notes shall be executed on behalf of the Company, by manual or
facsimile signature, by its Chairman of the Board, its President or one of its
Vice Presidents and attested by another Officer by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time the Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Notes shall be substantially as
set forth in Exhibit A attached hereto.
The Trustee shall, upon a Company Order, authenticate for original
issue Notes in any aggregate principal amount. The aggregate principal amount of
Notes that may be authenticated and delivered under this Indenture is unlimited.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authenticating by the Trustee includes
authenticating by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Note is registered as the owner of such
Note for the purpose of receiving payment of principal of and (subject to the
provisions of this Indenture and the Notes with respect to record dates)
interest on such Note and for all other purposes whatsoever, regardless of
whether such Note is overdue, and neither the Company, the Trustee nor any agent
of the Company or the Trustee shall be affected by notice to the contrary.
Section 2.3 REGISTRAR, PAYING AGENT AND DEPOSITARY.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR") and (ii) an
office or agency where Notes may be presented for payment ("PAYING AGENT"). The
Company initially appoints the Trustee as Registrar and Paying Agent. The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to appoint or maintain another entity as Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries may act as Paying Agent or Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent.
The Company initially appoints DTC to act as Depositary with respect to
the Global Notes. The Trustee shall act as custodian for the Depositary with
respect to the Global Notes.
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<PAGE>
Section 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes and shall notify the
Trustee in writing of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company or a Subsidiary of the Company acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
Section 2.5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount of Notes held by each such Holder, and
the Company shall otherwise comply with TIA ss. 312(a).
Section 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request (1) to
register the transfer of the Definitive Notes or (2) to exchange such
Definitive Notes for an equal principal amount of Definitive Notes of
other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met; PROVIDED, that the Definitive Notes so presented
(A) have been duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such
Holder or by his attorney, duly authorized in writing; and (B) in the
case of a Restricted Security, such request shall be accompanied by the
following additional documents:
(i) if such Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification to that effect (in
substantially the form of Exhibit B attached hereto); or
(ii) if such Restricted Security is being transferred
to a QIB in accordance with Rule 144A or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect (in substantially the form of
Exhibit B attached hereto); or
(iii) if such Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form of
Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to the Company and the Registrar to the
effect that such transfer is in compliance with the Securities
Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN
A GLOBAL NOTE. A Definitive Note may be exchanged for a beneficial
interest in a Global Note only upon receipt by the
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<PAGE>
Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the
Trustee, together with:
(i) written instructions directing the Trustee to
make an endorsement on the appropriate Global Note to reflect
an increase in the aggregate principal amount of the Notes
represented by such Global Note, and
(ii) if such Definitive Note is a Restricted
Security, a certification (in substantially the form of
Exhibit B attached hereto) and, if applicable, a legal
opinion, in each case similar to that required pursuant to
clauses (i), (ii) or (iii) of Section 2.6(a), as applicable;
in which case the Trustee shall cancel such Definitive Note and cause
the aggregate principal amount of Notes represented by the appropriate
Global Note to be increased accordingly. If no Global Note is then
outstanding, the Company shall issue and the Trustee shall authenticate
a new Global Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be
effected through the Depositary in accordance with this Indenture and
the procedures of the Depositary therefor, which shall include
restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE. Upon receipt by the Trustee of written transfer
instructions (or such other form of instructions as is customary for
the Depositary) at least 20 days prior to the proposed transfer, from
the Depositary (or its nominee) on behalf of any Person having a
beneficial interest in a Global Note, the Trustee shall, in accordance
with the standing instructions and procedures existing between the
Depositary and the Trustee, cause the aggregate principal amount of
Global Notes to be reduced accordingly and, following such reduction,
the Company shall execute and the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate
principal amount; PROVIDED, that in the case of a Restricted Security,
such instructions shall be accompanied by the following additional
documents:
(i) if such beneficial interest is being transferred
to the Person designated by the Depositary as being the
beneficial owner, a certification to that effect (in
substantially the form of Exhibit B attached hereto); or
(ii) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect (in substantially the form of
Exhibit B attached hereto); or
(iii) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form of
Exhibit B attached hereto) and an opinion of counsel
reasonably acceptable to the Company and to the Registrar to
the effect that such transfer is in compliance with the
Securities Act.
Definitive Notes issued in exchange for a beneficial interest in a
Global Note shall be registered in such names and in such authorized
denominations as the Depositary shall instruct the Trustee.
(e) TRANSFER AND EXCHANGE OF GLOBAL NOTES. Notwithstanding any
other provision of this Indenture, the Global Note may not be
transferred as a whole except by the Depositary to a
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<PAGE>
nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such
successor Depositary; PROVIDED, that if:
(i) the Depositary notifies the Company that the
Depositary is unwilling or unable to continue as Depositary
and a successor Depositary is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Depositary has ceased to be a clearing
agency registered under the Exchange Act; or
(iii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of
Definitive Notes under this Indenture; or
(iv) there shall have occurred and be continuing to
occur a Default or an Event of Default with respect to the
Notes,
then the Company shall execute and the Trustee shall authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
aggregate principal amount of the Global Note in exchange for such
Global Note.
(f) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in the Global Note have either been
exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
Global Note shall be returned to (or retained by) and cancelled by the
Trustee. At any time prior to such cancellation, if any beneficial
interest in the Global Note is exchanged for Definitive Notes,
redeemed, repurchased or cancelled, the aggregate principal amount of
Notes represented by such Global Note shall be reduced accordingly and
an endorsement shall be made on such Global Note by the Trustee to
reflect such reduction.
(g) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. To
permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Definitive Notes and Global
Notes at the Registrar's request. All Definitive Notes and Global Notes
issued upon any registration of transfer or exchange of Definitive
Notes or Global Notes shall be legal, valid and binding obligations of
the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Definitive Notes or Global Notes
surrendered upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange (without transfer to another person) pursuant to Sections
2.10, 3.7, 3.8, 4.10, 4.14 and 9.5).
The Company shall not be required to (i) issue, register the
transfer of or exchange Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for
redemption under Section 3.2 and ending at the close of business on the
day of selection; or (ii) register the transfer of or exchange any Note
so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part; or (iii) register the
transfer of or exchange a Note between a record date and the next
succeeding interest payment date.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the
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<PAGE>
absolute owner of such Note for all purposes, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the contrary.
(h) EXCHANGE OF SERIES A NOTES FOR SERIES B NOTES. The Series
A Notes may be exchanged for Series B Notes pursuant to the terms of
the Exchange Offer. The Trustee and Registrar shall make the exchange
as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying that upon issuance of the Series B Notes, the
transactions contemplated by the Exchange Offer have been consummated.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (1) to the effect that the Series B Notes
have been registered under Section 5 of the Securities Act and this
Indenture has been qualified under the TIA and (2) with respect to the
matters set forth in Section 6(p) of the Registration Rights Agreement
and (iii) a Company Order, shall authenticate (A) a Global Note for
Series B Notes in aggregate principal amount equal to the aggregate
principal amount of Series A Notes represented by a Global Note
properly tendered in the Exchange Offer and (B) Definitive Notes
representing Series B Notes registered in the names of, and in the
principal amounts of, the Series A Notes represented by Definitive
Notes accepted for exchange in the Exchange Offer.
The Trustee shall make available for delivery such Definitive
Notes for Series B Notes to the Holders thereof as indicated in such
Officers' Certificate.
Section 2.7 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements for replacements of Notes are
met. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company or the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.8 as not outstanding.
If a Note is replaced pursuant to Section 2.7, the replaced Note ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1, it ceases to be outstanding and interest on it ceases to accrue.
Subject to Section 2.9, a Note does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Note.
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Section 2.9 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that a Responsible Officer of the Trustee knows to be so owned shall be
considered as not outstanding.
Section 2.10 TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company (and the
Subsidiary Guarantors) may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company (and the Subsidiary
Guarantors) shall cause definitive Notes to be prepared without unreasonable
delay. The definitive Notes shall be printed, lithographed or engraved, or
provided by any combination thereof, or in any other manner permitted by the
rules and regulations of any principal national securities exchange, if any, on
which the Notes are listed, all as determined by the Officers executing such
definitive Notes. After the preparation of definitive Notes, the temporary Notes
shall be exchangeable for definitive Notes upon surrender of the temporary Notes
at the office or agency maintained by the Company for such purpose pursuant to
Section 4.2, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Notes, the Company (and the Subsidiary Guarantors)
shall execute, and the Trustee shall authenticate and make available for
delivery, in exchange therefor the same aggregate principal amount of definitive
Notes of authorized denominations. Until so exchanged, the temporary Notes shall
in all respects be entitled to the same benefits under this Indenture as
definitive Notes.
Section 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment and
not previously received by the Trustee. The Trustee and no one else shall cancel
all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall retain or destroy cancelled Notes in
accordance with its normal practices (subject to the record retention
requirement of the Exchange Act) unless the Company directs them to be returned
to it. The Company may not issue new Notes to replace Notes that have been
redeemed or paid or that have been delivered to the Trustee for cancellation.
Section 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be at the earliest practicable
date but in all events at least ten Business Days prior to the payment date, in
each case at the rate provided in the Notes and in Section 4.1. The Company
shall, with the consent of the Trustee, fix or cause to be fixed each such
special record date and payment date. At least 30 days before the special record
date, the Company (or the Trustee, in the name of and at the expense of the
Company, upon 15 days written notice to the Trustee) shall mail to
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the Holders a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
Section 2.13 LEGENDS.
(a) Except as permitted by subsections (b) or (c) of this
Section 2.13, each Note shall bear legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set
forth on Exhibit A attached hereto.
(b) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act:
(i) in the case of any Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder thereof
to exchange such Restricted Security for a Definitive Note
that does not bear the legends required by subsection (a)
above; and
(ii) in the case of any Restricted Security
represented by a Global Note, such Restricted Security shall
not be required to bear the legends required by subsection (a)
above, but shall continue to be subject to the provisions of
Section 2.6(c); PROVIDED, that with respect to any request for
an exchange of a Restricted Security that is represented by a
Global Note for a Definitive Note that does not bear the
legends required by subsection (a) above, which request is
made in reliance upon Rule 144, the Holder thereof shall
certify in writing to the Registrar that such request is being
made pursuant to Rule 144.
(c) The Company (and the Subsidiary Guarantors) shall issue
and the Trustee shall authenticate Series B Notes in exchange for
Series A Notes accepted for exchange in the Exchange Offer. The Series
B Notes shall not bear the legends required by subsection (a) above
unless the Holder of such Series A Notes is either:
(i) a broker-dealer who purchased such Series A Notes
directly from the Company to resell pursuant to Rule 144A or
any other available exemption under the Securities Act,
(ii) a Person participating in the distribution of
the Series A Notes, or
(iii) a Person who is an affiliate (as defined in
Rule 144) of the Company.
ARTICLE III
REDEMPTION
Section 3.1 NOTICES TO TRUSTEE.
If the Company elects or is required to redeem Notes pursuant to
Section 3.7 or 3.8, it shall furnish to the Trustee, at least 45 days but not
more than 60 days before a redemption date (except in the case of a Required
Regulatory Redemption requiring less notice), an Officers' Certificate setting
forth (i) the clause of Section 3.7 or 3.8 pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
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Section 3.2 SELECTION OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed pursuant to Section 3.7,
the Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, PRO RATA, by lot or by
such method as the Trustee deems to be fair and reasonable.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date
(except in the case of a Required Regulatory Redemption requiring less notice),
the Company shall mail a notice of redemption by first class mail to each Holder
whose Notes are to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part only, the portion of
the principal amount of such Note to be redeemed and that, after the
redemption date, upon cancellation of the original Note, a new Note or
Notes in principal amount equal to the unredeemed portion shall be
issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes or portions of Notes called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or the section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at the Company's expense; PROVIDED
that the Company shall deliver to the Trustee, at least 45 days (unless a
shorter period is acceptable to the Trustee) prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
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Section 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption has been mailed to the Holders in accordance
with Section 3.3, Notes called for redemption become due and payable on the
redemption date at the redemption price. At any time prior to the mailing of a
notice of redemption to the Holders pursuant to Section 3.3, the Company may
withdraw, revoke or rescind any notice of redemption delivered to the Trustee
without any continuing obligation to redeem the Notes as contemplated by such
notice of redemption.
Section 3.5 DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with the
Trustee (to the extent not already held by the Trustee) or with the Paying Agent
money in immediately available funds sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the redemption price of, and accrued interest on, all Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on the
applicable redemption date, regardless of whether such Notes are presented for
payment, if the Company makes or deposits the redemption payment in accordance
with this Section 3.5. If any Note called for redemption shall not be paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes.
Section 3.6 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.
Section 3.7 OPTIONAL REDEMPTION.
(a) Except as set forth in Sections 3.7(b) and 3.8, the Notes
are not redeemable at the Company's option prior to December 1, 2002.
Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon, if any, to the applicable redemption date, if
redeemed during the 12-month period beginning on December 1 of the
years indicated below:
YEAR PERCENTAGE
---- ----------
2002 105.50%
2003 102.75%
2004 and thereafter 100.00%
(b) At any time or from time to time prior to December 1,
2001, the Company may, at its option, redeem up to one-third of the
original principal amount of the Notes issued on or after the Issue
Date, at a redemption price of 111.00% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the applicable redemption
date, with the net cash proceeds of one or more
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Public Equity Offerings; PROVIDED, that (i) such redemption shall occur
within 60 days of the date of closing of such Public Equity Offering
and (ii) at least two-thirds of the aggregate principal amount of Notes
issued on or after the Issue Date remains outstanding immediately after
giving effect to each such redemption.
Section 3.8 REQUIRED REGULATORY REDEMPTION.
The Notes shall be redeemable, in whole or in part, at any time upon
not less than 20 Business Days nor more than 60 days notice (or such earlier
date as may be required by any Governmental Authority) at 100% of the principal
amount thereof plus accrued and unpaid interest thereon to the redemption date,
pursuant to a Required Regulatory Redemption. Any Required Regulatory Redemption
shall be made in accordance with the applicable provisions of Sections 3.3, 3.4
and 3.5 unless other procedures are required by any Governmental Authority.
ARTICLE IV
COVENANTS
Section 4.1 PAYMENT OF NOTES.
The Company shall pay the principal and premium, if any, of, and
interest on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, if other than the Company or a Subsidiary of the
Company, holds on or before that date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than three Business Days following the date of
payment, any money that exceeds such amount of principal, premium, if any, and
interest then due and payable on the Notes. The Company shall pay Liquidated
Damages, if any, and any other amounts due under the Registration Rights
Agreement on the dates and in the manner required under the Registration Rights
Agreement.
The Company shall pay interest (including post-petition interest) on
overdue principal at the rate equal to the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest) on overdue installments of interest (without regard to any applicable
grace period) at the same rate to the extent lawful.
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be an office
of the Trustee, Registrar or co-registrar) in the Borough of Manhattan, the City
of New York, where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
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The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.3.
Section 4.3 REPORTS.
(a) The Company shall file with the Trustee, within 15 days
after the date of filing with the Commission, copies of the reports,
information and other documents (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe)
that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. If the Company is not subject
to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall file with the Trustee all such reports, information and
other documents as it would be required to file if it were subject to
the requirements of Section 13 or 15(d) of the Exchange Act, within the
period applicable to such report, information or other document
pursuant to the Exchange Act. From and after the time the Company files
a registration statement with the Commission with respect to the Notes,
the Company shall file such information with the Commission; PROVIDED,
that the Company shall not be in default of the provisions of this
Section 4.3 for any failure to file reports with the Commission solely
by refusal by the Commission to accept the same for filing. The Company
shall deliver (or cause the Trustee to deliver) copies of all reports,
information and documents required to be filed with the Trustee
pursuant to this Section 4.3 to the Holders at their addresses
appearing in the register of Notes maintained by the Registrar. The
Company shall also comply with the provisions of TIA ss. 314(a).
(b) So long as is required for an offer or sale of the Notes
to qualify for an exemption under Rule 144A, the Company (and the
Subsidiary Guarantors) shall, upon request, provide the information
required by clause (d)(4) thereunder to each Holder and to each
beneficial owner and prospective purchaser of Notes identified by any
Holder of Restricted Securities.
Section 4.4 COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate (provided
that one of the signatories to such Officers' Certificate shall be the
Company's principal executive officer, principal financial officer or
principal accounting officer) stating that a review of the activities
of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view
to determine whether each has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that, to the best of his or her
knowledge, each of the Company and its Subsidiaries has kept, observed,
performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions hereof or thereof (or, if a
Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what
action each is taking or proposes to take with respect thereto).
(b) So long as any of the Notes are outstanding, the Company
shall deliver to the Trustee within 5 Business Days after any Officer
becomes aware of (i) any Default or Event of Default or (ii) any event
of default under any mortgage, indenture or instrument referred to in
Section 6.1(e), an Officers' Certificate specifying such Default, Event
of Default or other event of default and what action the Company is
taking or proposes to take with respect thereto.
Section 4.5 TAXES.
The Company shall, and shall cause its Subsidiaries to, file all tax
returns required to be filed and to pay prior to delinquency all material taxes,
assessments and governmental levies except as contested in
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good faith and by appropriate proceedings or where the failure to effect such
payment is not adverse in any material respect to the Holders of the Notes.
Section 4.6 STAY, EXTENSION AND USURY LAWS.
The Company (and each Subsidiary Guarantor) covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension, usury or other law, wherever enacted, now or at any time hereafter in
force, that would prohibit or forgive the payment of all or any portion of the
principal of or interest on the Notes, or that may affect the covenants or t he
performance of this Indenture, and the Company and each Subsidiary Guarantor (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.7 LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly (i) declare or pay
any dividend or make any distribution on account of any Equity
Interests of the Company or any of its Subsidiaries or make any other
payment to any Excluded Person or Affiliate thereof (other than (1)
dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or (2) amounts payable to the
Company or any Restricted Subsidiary); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interest of the
Company, any Subsidiary or any other Affiliate of the Company (other
than any such Equity Interest owned by the Company or any Restricted
Subsidiary); (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of
the Company or any Subsidiary Guarantor that is subordinated in right
of payment to the Notes or such Subsidiary Guarantor's Subsidiary
Guaranty thereof, as the case may be, prior to any scheduled principal
payment, sinking fund payment or other payment at the stated maturity
thereof; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being
collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time
of such Restricted Payment:
(i) no Default or Event of Default has occurred and
is continuing or would occur as a consequence thereof,
(ii) immediately after giving effect to such
Restricted Payment on a PRO FORMA basis, the Interest Coverage
Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available
immediately preceding the date on which such Restricted
Payment is made would have been not less than 2.0 to 1.0, and
(iii) such Restricted Payment (the value of any such
payment, if other than cash, being determined in good faith by
the Board of Directors of the Company and evidenced by a
resolution set forth in an Officers' Certificate delivered to
the Trustee), together with the aggregate of all other
Restricted Payments made after the Issue Date (including
Restricted Payments permitted by clauses (i) and (ii) of
Section 4.7(b) and excluding Restricted Payments permitted by
the other clauses of Section 4.7(b)), is less than the sum of:
(1) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting
period) from December 1, 1997 to the end of the
Company's most recently ended fiscal quarter for
which internal financial statements are available at
the time of such Restricted Payment
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(or, if such Consolidated Net Income for such period
is a deficit, 100% of such deficit), PLUS
(2) 100% of the aggregate net cash proceeds
(or of the net cash proceeds received upon the
conversion of non-cash proceeds into cash) received
by the Company from the issuance or sale, other than
to a Subsidiary, of Equity Interests of the Company
(other than Disqualified Stock) after the Issue Date
and on or prior to the time of such Restricted
Payment, PLUS
(3) 100% of the aggregate net cash proceeds
(or of the net cash proceeds received upon the
conversion of non-cash proceeds into cash) received
by the Company from the issuance or sale, other than
to a Subsidiary, of any convertible or exchangeable
debt security of the Company that has been converted
or exchanged into Equity Interests of the Company
(other than Disqualified Stock) pursuant to the terms
thereof after the Issue Date and on or prior to the
time of such Restricted Payment (including any
additional net proceeds received by the Company upon
such conversion or exchange), PLUS
(4) the aggregate Return from Unrestricted
Subsidiaries after the Issue Date and on or prior to
the time of such Restricted Payment.
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of
declaration such payment would not have been prohibited by the
provisions of this Indenture;
(ii) the redemption, purchase, retirement or other
acquisition of any Equity Interests of the Company or
Indebtedness of the Company or any Restricted Subsidiary in
exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary) of, other Equity
Interests of the Company (other than Disqualified Stock);
(iii) the satisfaction of the Company's obligations
with respect to its Redeemable Common Stock Warrants, in
accordance with the terms thereof as in effect on the Issue
Date;
(iv) the redemption, repurchase or payoff of any
Indebtedness of the Company or a Restricted Subsidiary with
proceeds of any Refinancing Indebtedness permitted to be
incurred pursuant to Section 4.9;
(v) transactions contemplated by the Casino
Consulting and Management Agreement dated as of December 11,
1992, as amended, between the Company and CRC, as in effect on
the Issue Date; and
(vi) (1) employment agreements, arrangements and
plans (including stock plans) entered into by the Company or
any Restricted Subsidiary (and the granting of awards
thereunder) in each case in the ordinary course of business
with the approval of the disinterested members of the Board of
Directors of the Company or, if none, unanimously by such
Board of Directors;
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(2) reasonable and customary fees and
compensation paid to and indemnity provided on behalf
of directors of the Company; and
(3) customary reimbursement of travel and
similar expenses in the ordinary course of business.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating
that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.7 were computed,
which calculations may be based upon the Company's latest available
financial statements.
Section 4.8 LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions to the Company
or any of its Restricted Subsidiaries (i) on such Restricted Subsidiary's
Capital Stock or (ii) with respect to any other interest or participation in, or
measured by, such Restricted Subsidiary's profits, or (b) pay any Indebtedness
owed to the Company or any of its Restricted Subsidiaries, or (c) make loans or
advances to the Company or any of its Restricted Subsidiaries, or (d) transfer
any of its assets to the Company or any of its Restricted Subsidiaries, except,
with respect to clauses (a) through (d) above, for such encumbrances or
restrictions existing under or by reason of (1) the Revolving Credit Facility
entered into during the six month period commencing on the Issue Date (the
"INITIAL FACILITY") or any other Revolving Credit Facility containing dividend
or other payment restrictions that are not more restrictive than those contained
in the documents governing the Initial Facility; (2) this Indenture, the
Security Documents and the Notes; (3) applicable law; (4) Acquired Debt;
PROVIDED, that such encumbrances and restrictions are not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired; (5) customary non-assignment and
net worth provisions of any contract, lease or license entered into in the
ordinary course of business; (6) customary restrictions on the transfer of
assets subject to a Permitted Lien imposed by the holder of such Lien; and (7)
the agreements governing permitted Refinancing Indebtedness, PROVIDED, that such
restrictions contained in any agreement governing such Refinancing Indebtedness
are no more restrictive than those contained in any agreements governing the
Indebtedness being Refinanced.
Section 4.9 LIMITATION ON INCURRENCE OF INDEBTEDNESS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (i) create, incur,
issue, assume, guaranty or otherwise become directly or indirectly
liable with respect to, contingently or otherwise (collectively,
"INCUR"), any Indebtedness (including, without limitation, Acquired
Debt) or (ii) issue any Disqualified Stock; PROVIDED, that the Company
may incur Indebtedness (including, without limitation, Acquired Debt)
and issue shares of Disqualified Stock (and a Restricted Subsidiary may
incur Acquired Debt) if (1) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving
effect on a PRO FORMA basis to such incurrence or issuance, and (2) the
Interest Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been not less
than 2.5 to 1.0, determined on a PRO FORMA basis (including a PRO FORMA
application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter
period; PROVIDED, that in the case of Indebtedness (other than
Indebtedness outstanding under the Revolving Credit Facility, Purchase
Money Obligations, Capital Lease Obligations or Acquired Debt), the
Weighted Average Life to Maturity and final stated
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maturity of such Indebtedness is greater than the Weighted Average Life
to Maturity and final stated maturity of the Notes. Accrual of
interest, accretion of accreted value, and the payment of interest in
the form of additional Indebtedness shall not be deemed to be the
incurrence of Indebtedness for purpose of this Section 4.9(a).
(b) Notwithstanding the foregoing, the limitations of Section
4.9(a) shall not prohibit the incurrence of:
(i) Indebtedness under the Revolving Credit Facility;
PROVIDED, that the aggregate principal amount of Indebtedness
so incurred on any date, together with all other Indebtedness
incurred pursuant to this clause (i) and outstanding on such
date, shall not exceed $5,000,000 less the aggregate amount of
commitment reductions contemplated by clause (iii) of the
first paragraph of Section 4.10(a);
(ii) Purchase Money Obligations; PROVIDED, that the
aggregate principal amount of Indebtedness so incurred on any
date, together with all other Indebtedness incurred pursuant
to this clause (ii) and outstanding on such date, shall not
exceed $2,500,000;
(iii) performance bonds, appeal bonds, surety bonds,
insurance obligations or bonds and other similar bonds or
obligations (including Obligations under letters of credit)
incurred in the ordinary course of business;
(iv) Hedging Obligations incurred to fix the interest
rate on any variable rate Indebtedness otherwise permitted by
this Indenture; PROVIDED, that the notional principal amount
of each such Hedging Obligation does not exceed the principal
amount of the Indebtedness to which such Hedging Obligation
relates;
(v) Indebtedness outstanding on the Issue Date,
including the Notes outstanding on the Issue Date and the
Subsidiary Guaranties thereof; and
(vi) Indebtedness issued in exchange for, or the
proceeds of which are contemporaneously used to extend,
refinance, renew, replace, or refund (collectively,
"REFINANCE"), Indebtedness incurred pursuant to the Interest
Coverage Ratio test set forth in Section 4.9(a), clause (v)
above or this clause (vi) (collectively, the "REFINANCING
INDEBTEDNESS"); PROVIDED, that (1) the principal amount of
such Refinancing Indebtedness does not exceed the principal
amount of Indebtedness so Refinanced (including any required
premiums and out-of-pocket expenses reasonably incurred in
connection therewith), (2) the Refinancing Indebtedness has a
final scheduled maturity that equals or exceeds the final
stated maturity, and a Weighted Average Life to Maturity that
is equal to or greater than the Weighted Average Life to
Maturity, of the Indebtedness being Refinanced and (3) the
Refinancing Indebtedness ranks, in right of payment, no more
favorable to the Notes than the Indebtedness being Refinanced.
Section 4.10 LIMITATION ON ASSET SALES.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Sale not less than the fair market value of the assets subject to such
Asset Sale; (ii) at least 80% of the consideration for such Asset Sale
is in the form of cash or Cash Equivalents or liabilities of the
Company or any Restricted Subsidiary (other than liabilities that are
by their terms subordinated to the Notes or any Subsidiary Guaranty)
that are assumed by the transferee of such assets (PROVIDED, that
following such Asset Sale there is no further recourse to the Company
or its
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Restricted Subsidiaries with respect to such liabilities); and (iii)
within 270 days of such Asset Sale, the Net Proceeds thereof are (1)
invested in assets related to the business of the Company or its
Restricted Subsidiaries (which, in the case of an Event of Loss of the
Casino Rouge or any replacement Gaming Vessel (a "REPLACEMENT VESSEL"),
must be a Gaming Vessel having a fair market value, as determined by an
independent appraisal, at least equal to the fair market value of the
Casino Rouge or such Replacement Vessel immediately preceding such
Event of Loss); (2) applied to repay Indebtedness under Purchase Money
Obligations incurred in connection with the asset so sold; (3) applied
to repay Indebtedness under the Revolving Credit Facility and
permanently reduce the commitment thereunder in the amount of the
Indebtedness so repaid; or (4) to the extent not used as provided in
clauses (1), (2) or (3), applied to make an offer to purchase Notes as
described below (an "EXCESS PROCEEDS OFFER"); PROVIDED, that the
Company shall not be required to make an Excess Proceeds Offer until
the amount of Excess Proceeds is greater than $5,000,000. Pending the
final application of any such Net Proceeds, the Company may temporarily
reduce Indebtedness under the Revolving Credit Facility or temporarily
invest such Net Proceeds in Cash Equivalents. Notwithstanding the
foregoing, the Company shall not be permitted to directly or indirectly
sell, assign, lease, convey or otherwise dispose of the Casino Rouge or
any Replacement Vessel (other than in connection with an Event of Loss)
unless, within 60 days of such disposition, the Company replaces the
Casino Rouge or such Replacement Vessel with a Gaming Vessel having a
fair market value, as determined by an independent appraisal, at least
equal to the fair market value of the Casino Rouge or such Replacement
Vessel immediately preceding such disposition.
Net Proceeds not invested or applied as set forth in the
preceding clauses (1), (2) or (3) constitute "EXCESS PROCEEDS." If the
Company elects, or becomes obligated to make an Excess Proceeds Offer,
the Company shall offer to purchase Notes having an aggregate principal
amount equal to the Excess Proceeds (the "PURCHASE AMOUNT"), at a
purchase price equal to 100% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, to the purchase date. The
Company must commence such Excess Proceeds Offer not later than 30 days
after the expiration of the 270 day period following the Asset Sale
that produced such Excess Proceeds. If the aggregate purchase price for
the Notes tendered pursuant to the Excess Proceeds Offer is less than
the Excess Proceeds, the Company and its Restricted Subsidiaries may
use the portion of the Excess Proceeds remaining after payment of such
purchase price for general corporate purposes.
Each Excess Proceeds Offer shall remain open for a period of
20 Business Days and no longer, unless a longer period is required by
law (the "EXCESS PROCEEDS OFFER PERIOD"). Promptly after the
termination of the Excess Proceeds Offer Period (the "EXCESS PROCEEDS
PAYMENT DATE"), the Company shall purchase and mail or deliver payment
for the Purchase Amount for the Notes or portions thereof tendered, PRO
RATA or by such other method as may be required by law, or, if less
than the Purchase Amount has been tendered, all Notes tendered pursuant
to the Excess Proceeds Offer. The principal amount of Notes to be
purchased pursuant to an Excess Proceeds Offer may be reduced by the
principal amount of Notes acquired by the Company through purchase or
redemption (other than pursuant to a Change of Control Offer)
subsequent to the date of the Asset Sale and surrendered to the Trustee
for cancellation.
Each Excess Proceeds Offer shall be conducted in compliance
with all applicable laws, including, without limitation, Regulation 14E
under the Exchange Act and all other applicable federal and state
securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.10,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations
under this Section 4.10 by virtue thereof. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, create or
suffer to exist or become effective any restriction that would impair
the ability of the Company to make an Excess Proceeds Offer upon an
Asset Sale or, if such Excess Proceeds Offer is made, to pay for the
Notes tendered for purchase.
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(b) The Company shall, no later than 30 days following the
expiration of the 270-day period following the Asset Sale that produced
Excess Proceeds, commence the Excess Proceeds Offer by mailing to the
Trustee and each Holder, at such Holder's last registered address, a
notice, which shall govern the terms of the Excess Proceeds Offer, and
shall state:
(i) that the Excess Proceeds Offer is being made
pursuant to this Section 4.10, the principal amount of Notes
which shall be accepted for payment and that all Notes validly
tendered shall be accepted for payment on a PRO RATA basis;
(ii) the purchase price and the date of purchase;
(iii) that any Notes not tendered or accepted for
payment pursuant to the Excess Proceeds Offer shall continue
to accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the purchase price with respect to any Notes tendered,
Notes accepted for payment pursuant to the Excess Proceeds
Offer shall cease to accrue interest after the Excess Proceeds
Payment Date;
(v) that Holders electing to have Notes purchased
pursuant to an Excess Proceeds Offer shall be required to
surrender their Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, to the Company prior to the close of business on
the third Business Day immediately preceding the Excess
Proceeds Payment Date;
(vi) that Holders shall be entitled to withdraw their
election if the Company receives, not later than the close of
business on the second Business Day preceding the Excess
Proceeds Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder,
the principal amount of Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in
part shall be issued Notes representing the unpurchased
portion of the Notes surrendered; PROVIDED, that each Note
purchased and each new Note issued shall be in principal
amount of $1,000 or whole multiples thereof; and
(viii) the instructions that Holders must follow in
order to tender their Notes.
On or before the Excess Proceeds Payment Date, the Company
shall, to the extent lawful, (i) accept for payment the Notes or
portions thereof (or an allocable amount thereof) tendered pursuant to
the Excess Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof
so accepted and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate stating that the Notes or
portions thereof (or an allocable amount thereof) tendered to the
Company are accepted for payment. The Paying Agent shall promptly mail
to each Holder of Notes so accepted payment in an amount equal to the
purchase price of such Notes, and the Trustee shall promptly
authenticate and mail (or cause to be transferred by book entry) to
such Holders new Notes equal in principal amount to any unpurchased
portion of the Notes surrendered. After payment to the Holders of the
purchase price of all Notes or portions thereof so accepted, the Paying
Agent, if other than the Company, shall deliver promptly to the Company
the balance, if any, of any money so deposited by the Company with the
Paying Agent remaining after such payment to the Holders.
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The Company shall make a public announcement of the results of
the Excess Proceeds Offer as soon as practicable after the Excess
Proceeds Payment Date.
Section 4.11 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guaranty with, or for the
benefit of, any Affiliate (each of the foregoing, an "AFFILIATE
TRANSACTION"), except for:
(i) Affiliate Transactions that, together with all
related Affiliate Transactions, have an aggregate value of not
more than $1,000,000; PROVIDED, that such transactions are
conducted in good faith and on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction at such time by the Company or such Restricted
Subsidiary on an arm's-length basis from a Person that is not
an Affiliate of the Company or such Restricted Subsidiary;
(ii) Affiliate Transactions that, together with all
related Affiliate Transactions, have an aggregate value of not
more than $5,000,000; PROVIDED, that a majority of the
disinterested members of the Board of Directors of the Company
determines that such transactions are conducted in good faith
and on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction at such time by the
Company or such Restricted Subsidiary on an arm's-length basis
from a Person that is not an Affiliate of the Company or such
Restricted Subsidiary; or
(iii) Affiliate Transactions for which the Company
delivers to the Trustee an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point
of view issued by an accounting, appraisal or investment
banking firm of national standing.
(b) Notwithstanding the foregoing, the following will be
deemed not to be Affiliate Transactions: (i) transactions between or
among the Company and/or any or all of the Subsidiary Guarantors, and
(ii) Restricted Payments permitted by Section 4.7 (including, without
limitation, transactions contemplated by the Casino Consulting and
Management Agreement dated as of December 11, 1992, as amended, between
the Company and CRC).
Section 4.12 LIMITATION ON LIENS.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset (including, without limitation, all real, tangible or intangible
property) of the Company or any Restricted Subsidiary, whether now owned or
hereafter acquired, or on any income or profits therefrom, or assign or convey
any right to receive income therefrom, except Permitted Liens.
Section 4.13 CORPORATE EXISTENCE.
Subject to Article V, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with their respective organizational documents (as
the same may be amended from time to time) and (ii) its (and its Subsidiaries')
rights (charter and statutory), licenses and
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franchises; PROVIDED, that the Company shall not be required to preserve, with
respect to itself or any of its Subsidiaries, any such right, license or
franchise, or the corporate, partnership or other existence of any Subsidiary,
if the Board of Directors on behalf of the Company shall determine in good faith
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Holders.
Section 4.14 REPURCHASE UPON A CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company
shall notify the Trustee in writing thereof and shall make an offer to
purchase all of the Notes then outstanding as described below (the
"CHANGE OF CONTROL OFFER") at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase (the "CHANGE OF CONTROL PAYMENT").
(b) The Change of Control Offer shall be made in compliance
with all applicable laws, including, without limitation, Regulation 14E
under the Exchange Act and the rules thereunder and all other
applicable federal and state securities laws. To the extent that the
provisions of any securities laws or regulations conflict with the
provisions of this Section 4.14, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section 4.14 by virtue
thereof.
(c) Within 30 days following any Change of Control, the
Company shall commence the Change of Control Offer by mailing to the
Trustee and each Holder a notice, which shall govern the terms of the
Change of Control Offer, and shall state:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered will
be accepted for payment;
(ii) the purchase price and the purchase date, which
shall be a Business Day no earlier than 30 days nor later than
45 days from the date such notice is mailed (the "CHANGE OF
CONTROL PAYMENT DATE");
(iii) that any Note not tendered for payment pursuant
to the Change of Control Offer shall continue to accrue
interest in accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment
of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to
accrue interest on the Change of Control Payment Date;
(v) that any Holder electing to have Notes purchased
pursuant to a Change of Control Offer shall be required to
surrender such Notes, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day preceding
the Change of Control Payment Date;
(vi) that any Holder shall be entitled to withdraw
such election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder,
the principal amount of Notes such Holder delivered for
purchase, and a statement that such Holder is withdrawing his
election to have such Notes purchased;
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(vii) that a Holder whose Notes are being purchased
only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof;
(viii) the instructions that Holders must follow in
order to tender their Notes; and
(ix) the circumstances and relevant facts regarding
such Change of Control.
(d) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment the Notes or portions
thereof tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount equal to the Change of Control Payment
in respect of all Notes or portions thereof so tendered and not
withdrawn, and (iii) deliver or cause to be delivered to the Trustee
the Notes so accepted together with an Officers' Certificate stating
that the Notes or portions thereof tendered to the Company are accepted
for payment. The Paying Agent shall promptly mail to each Holder of
Notes so accepted payment in an amount equal to the purchase price for
such Notes, and the Trustee shall authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any;
PROVIDED, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof.
(e) The Company shall make a public announcement of the
results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
(f) The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Section 4.14 and
purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.15 MAINTENANCE OF PROPERTIES.
The Company shall, and shall cause each of its Subsidiaries to,
maintain their properties and assets in normal working order and condition as on
the date of this Indenture (reasonable wear and tear excepted) and make all
necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct of
the business of the Company and its Subsidiaries taken as a whole; PROVIDED,
that nothing herein shall prevent the Company or any of its Subsidiaries from
discontinuing any maintenance of any such properties if the Company determines
that such discontinuance is desirable in the conduct of the business of the
Company and its Subsidiaries taken as a whole.
Section 4.16 MAINTENANCE OF INSURANCE.
The Company shall, and shall cause each of its Subsidiaries to,
maintain liability, casualty and other insurance (including self-insurance
consistent with prior practice) with responsible insurance companies in such
amounts and against such risks as is in accordance with customary industry
practice in the general areas in which the Company and its Subsidiaries operate.
Section 4.17 RESTRICTIONS ON SALE AND ISSUANCE OF SUBSIDIARY
STOCK.
The Company shall not, and shall not permit any Restricted Subsidiary
to, issue or sell any Equity Interests (other than directors' qualifying shares)
of any Restricted Subsidiary to any Person other than the Company or a Wholly
Owned Subsidiary of the Company; PROVIDED, that the Company and its Restricted
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Subsidiaries may sell all (but not less than all) of the Capital Stock of a
Restricted Subsidiary owned by the Company and its Restricted Subsidiaries if
the Net Proceeds from such Asset Sale are used in accordance with the terms of
Section 4.10.
Section 4.18 LIMITATION ON LINES OF BUSINESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, engage to any substantial extent in any
line or lines of business activity other than that which, in the reasonable good
faith judgment of the Board of Directors of the Company, is a Related Business.
ARTICLE V
SUCCESSORS
Section 5.1 WHEN THE COMPANY MAY MERGE, ETC.
The Company shall not consolidate or merge with or into (regardless of
whether the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets (determined on a consolidated basis for the Company and its Restricted
Subsidiaries) in one or more related transactions to, any other Person unless:
(a) the Company is the surviving Person or the Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia,
(b) the Person formed by or surviving any such consolidation
or merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition has been
made assumes all the Obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee, under the Notes, this Indenture, the Security Documents and
the Registration Rights Agreement,
(c) immediately after giving effect to such transaction on a
PRO FORMA basis, no Default or Event of Default exists, and
(d) the Company, or any Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made, (i) has
Consolidated Net Worth (immediately after the transaction but prior to
any purchase accounting adjustments resulting from the transaction)
equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (ii) will be permitted, at
the time of such transaction and after giving PRO FORMA effect thereto
as if such transaction had occurred at the beginning of the applicable
four-quarter period, to incur at least $1.00 of additional Indebtedness
pursuant to Section 4.9(a).
The Company shall deliver to the Trustee prior to the consummation of
any proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, stating that all conditions precedent to the proposed
transaction provided for in this Indenture have been complied with.
For purposes of this Section 5.1, the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be
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the sale, assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the properties and assets of the Company.
Section 5.2 SUCCESSOR SUBSTITUTED.
In the event of any transaction (other than a lease) contemplated by
Section 5.1 in which the Company is not the surviving Person, the successor
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, conveyance or other disposition is made,
or formed by such reorganization, as the case may be, shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under,
and the Company shall be discharged from its Obligations under, this Indenture,
the Notes, the Security Documents and the Registration Rights Agreement, with
the same effect as if such successor Person had been named as the Company herein
or therein.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT.
"EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment of interest on any
Note when the same becomes due and payable and the default continues
for a period of 30 days;
(b) the Company defaults in the payment of the principal (or
premium, if any) on any Note when the same becomes due and payable at
maturity, upon redemption, by acceleration, in connection with an
Excess Proceeds Offer or a Change of Control Offer or otherwise;
(c) the Company defaults in the performance of or breaches the
provisions of Sections 4.10 or 4.14, or Article V;
(d) the Company or any Subsidiary Guarantor fails to comply
with any of its other agreements or covenants in, or provisions of, the
Notes, this Indenture or the Security Documents and the default
continues for 60 days after written notice thereof has been given to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the then
outstanding Notes, such notice to state that it is a "Notice of
Default;"
(e) a default occurs under (after giving effect to any
applicable grace periods or any extension of any maturity date) any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary),
whether such Indebtedness or guaranty now exists or is created after
the Issue Date, if (i) either (1) such default results from the failure
to pay principal of or interest on such Indebtedness or (2) as a result
of such default the maturity of such Indebtedness has been accelerated,
and (ii) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness with respect to which
such a payment default (after the expiration of any applicable grace
period or any extension of the maturity date) has occurred, or the
maturity of which has been so accelerated, exceeds $5,000,000 in the
aggregate;
(f) a final non-appealable judgment or judgments for the
payment of money (other than judgments as to which a reputable
insurance Company has accepted full liability) is or are entered by a
court or courts of competent jurisdiction against the Company or any
Subsidiary and such
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judgment or judgments remain undischarged, unbonded or unstayed for a
period of 60 days after entry, PROVIDED that the aggregate of all such
judgments exceeds $5,000,000;
(g) the cessation of substantially all gaming operations of
the Company for more than 60 days, except as a result of an Event of
Loss;
(h) any revocation, suspension, expiration (without previous
or concurrent renewal) or loss of any Gaming License for more than 60
days;
(i) any event of default under a Security Document;
(j) the Company or any Subsidiary Guarantor pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of
its creditors,
(v) admits in writing its inability to pay debts as
the same become due; or
(k) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Subsidiary Guarantor in an involuntary case,
(ii) appoints a Custodian of the Company or any
Subsidiary Guarantor or for all or substantially all of their
property,
(iii) orders the liquidation of the Company, or any
Subsidiary Guarantor, and the order or decree remains unstayed
and in effect for 60 days.
Section 6.2 ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clause (j) or (k) of Section 6.1) occurs and is continuing, the Trustee by
written notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Notes by written notice to the Company and the
Trustee, may declare the unpaid principal of and any accrued interest on all the
Notes to be due and payable. Upon such declaration the principal and interest
shall be due and payable immediately. If an Event of Default specified in clause
(j) or (k) of Section 6.1 occurs, all outstanding Notes shall IPSO FACTO become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.
Section 6.3 OTHER REMEDIES.
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If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy (under this Indenture or otherwise) to collect the payment
of principal or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
Section 6.4 WAIVER OF PAST DEFAULTS; RESCISSION OF ACCELERATION.
Holders of a majority of the aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of the Holders
of all of the Notes (a) waive any existing Default or Event of Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of the principal of, or interest on, any Note or a
Default or an Event of Default with respect to any covenant or provision which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected, and/or (b) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.5 CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of other Holders, or that may involve the Trustee in personal
liability.
Section 6.6 LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the
Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
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Section 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder.
Section 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or 6.1(b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Notes and interest on overdue
principal (and premium, if any) and, to the extent lawful, interest on overdue
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel.
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor under the Notes), their creditors or their property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel, and any other amounts due the Trustee under
Section 7.7. To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7 out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be secured
by a Lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other properties that the Holders of the Notes may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article VI, it shall
pay out the money in the following order:
FIRST: to the Trustee and its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for
principal and interest, respectively;
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THIRD: without duplication, to Holders for any other
Obligations owing to the Holders under the Notes, this Indenture, the
Security Documents or the Registration Rights Agreement; and
FOURTH: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee, upon written notice to the Company, may fix a record date
and payment date for any payment to Holders.
Section 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.6, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) The duties of the Trustee shall be determined
solely by the express provisions of this Indenture, and the
Trustee need perform only those duties that are specifically
set forth in this Indenture, and no others, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and
opinions to determine whether they conform to the requirements
of this Indenture (but need not confirm the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section 7.1.
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts.
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(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
6.5.
(d) Regardless of whether therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it
receives security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
Section 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of
Counsel. The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company, on behalf of the
Company.
(f) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in
Article IV. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.1(a), 6.1(b) and 4.1, or (ii)
any Default or Event of Default of which the Trustee shall have
received written notification or a Responsible Officer of the Trustee
shall have obtained actual knowledge.
(g) Delivery of reports, information and documents to the
Trustee under Section 4.3 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained herein or determinable from
information contained therein, including the Company's compliance with
any of their covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officers' Certificates).
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Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4 TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision hereof,
it shall not be responsible for the use or application of any money received by
any Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section 7.5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if the
Trustee has actual knowledge thereof (within the meaning of Section 7.2(f)), the
Trustee shall mail to the Holders a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in the payment of principal of, premium, if any, or interest on any
Note, the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interest of the Holders of the Notes.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to the Holders a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to the Holders shall be filed
with the Commission and each stock exchange on which the Notes are listed. The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed to in writing by the Company and the Trustee for
its acceptance of this Indenture and services hereunder. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee promptly upon request for
all reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel, except such disbursements, advances and expenses as may be attributable
to its negligence or bad faith.
The Company shall indemnify the Trustee and any predecessor against any
and all losses, liabilities, damages, claims or expenses incurred by it without
negligence or bad faith on its part arising out of or in connection with the
acceptance or administration of its duties under this Indenture (including the
costs and expenses of enforcing this Indenture against Company and defending
itself against any claim (regardless of
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whether asserted by Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder), except as set forth below. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company shall not relieve the Company of its obligations
hereunder. The Company shall defend the claim and the Trustee shall cooperate in
the defense. In the event that a conflict of interest or conflicting defenses
would arise in connection with the representation of the Company and the Trustee
by the same counsel, the Trustee may have separate counsel and the Company shall
pay the reasonable fees and expenses of such counsel. The Company need not pay
for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or bad
faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(j) or (k) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.7 shall survive the termination of
this Indenture.
Section 7.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8 and upon the Company's receipt of
notice from the successor Trustee of such appointment.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, PROVIDED that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee, and the Company shall pay to any such replaced
or removed Trustee all amounts owed under Section 7.7 upon such replacement or
removal.
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation or
banking association, the successor corporation without any further act shall be
the successor Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that shall (a) be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof or of the District of Columbia authorized under
such laws to exercise corporate trustee power, (b) be subject to supervision or
examination by Federal or state or the District of Columbia authority, and (c)
have a combined capital and surplus of at least $25,000,000 as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.ss. 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to TIA ss. 310(b); PROVIDED, HOWEVER, that there shall be excluded from
the operations of TIA ss. 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 DISCHARGE; OPTION TO EFFECT LEGAL OR COVENANT
DEFEASANCE.
This Indenture shall cease to be of further effect (except that the
Company's and the Subsidiary Guarantors' obligations under Section 7.7 and the
Trustee's and the Paying Agent's obligations under Sections
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8.6 and 8.7 shall survive) when all outstanding Notes theretofore authenticated
and issued have been delivered (other than destroyed, lost or stolen Notes that
have been replaced or paid) to the Trustee for cancellation and the Company or
the Subsidiary Guarantors have paid all sums payable hereunder. In addition, the
Company may elect at any time to have Section 8.2 or Section 8.3, at the
Company's option, of this Indenture applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article VIII.
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, except as set forth below, the Company and the Subsidiary
Guarantors shall be deemed to have been discharged from their respective
obligations with respect to all outstanding Notes on the date the conditions set
forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). Following such
Legal Defeasance, (a) the Company shall be deemed to have paid and discharged
the entire indebtedness outstanding hereunder, and this Indenture shall cease to
be of further effect as to all outstanding Notes and Subsidiary Guaranties, and
(b) the Company and the Subsidiary Guarantors shall be deemed to have satisfied
all other of their respective obligations under the Notes, the Subsidiary
Guaranties and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder:
(a) the rights of Holders to receive payments in respect of
the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on such Notes when such payments are due from the
trust described in Section 8.5;
(b) the Company's obligations under Sections 2.4, 2.6, 2.7,
2.10, 4.2, 8.5, 8.6 and 8.7; and
(c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's and the Subsidiary Guarantors'
obligations in connection therewith.
Subject to compliance with the provisions of this Article VIII, the Company may
exercise its option under this Section 8.2 notwithstanding the prior exercise of
its option under Section 8.3.
Section 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company and the Subsidiary Guarantors shall be released
from their respective obligations under the covenants contained in Sections 4.3,
4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17 and 4.18 and
Article V on and after the date the conditions set forth below are satisfied
(hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. Following such Covenant Defeasance, (a)
neither the Company nor any Subsidiary Guarantor need comply with, and none of
them shall have any liability in respect of, any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document, but,
except as specified above, the remainder of this Indenture, the Notes and the
Subsidiary Guaranties shall be unaffected thereby, and (b) Sections 6.1(c)
through 6.1(i) shall not constitute Events of Default with respect to the Notes.
Section 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
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The following shall be the conditions to the application of either
Section 8.2 or 8.3 to the outstanding Notes:
(a) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 who shall agree to comply with the
provisions of this Article VIII applicable to it), in trust, for the
benefit of the Holders, cash in U.S. dollars, non-callable U.S.
Government Obligations, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest (and Liquidated Damages, if any) on such outstanding
Notes on the stated maturity or on the applicable redemption date, as
the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the Issue Date, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the
Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit);
(e) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders over the other
creditors of the Company with the intent of defeating, hindering,
delaying or defrauding other creditors of the Company or others;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating, subject
to certain factual assumptions and bankruptcy and insolvency
exceptions, that the conditions precedent provided for in, in the case
of the Officers' Certificate, (a) through (f) and, in the case of the
opinion of counsel, clauses (b), (c) and (e) of this paragraph, have
been complied with; and
(h) in the event all or any portion of the Notes are to be
redeemed through such irrevocable trust, Company must make arrangements
satisfactory to the Trustee, at the time of such
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deposit, for the giving of notice of such redemption or redemptions by
the Trustee in the name and at the expense of Company.
Section 8.5 DEPOSITS TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS.
Subject to Section 8.6, all cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "PAYING AGENT")
pursuant to Section 8.4 in respect of the outstanding Notes shall be held in
trust and applied by the Paying Agent, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any other
Paying Agent as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest (and Liquidated Damages, if any).
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Notes.
Section 8.6 REPAYMENT TO THE COMPANY.
(a) The Trustee or the Paying Agent shall deliver or pay to
the Company from time to time upon the request of the Company any cash
or U.S. Government Obligations held by it as provided in Section 8.4
which in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under
Section 8.4(a)), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
(b) Any cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if any) on any
Note and remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall be paid
to the Company on its request; and the Holder of such Note shall
thereafter look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; PROVIDED, HOWEVER, that the Trustee
or such Paying Agent, before being required to make any such repayment,
shall at the expense of the Company cause to be published once, in the
NEW YORK TIMES and THE WALL STREET JOURNAL (national edition), notice
that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
Section 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case may
be, of this Indenture by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, or if any event occurs at any time in the period ending on the 91st
day after the date of deposit pursuant to Section 8.2 or 8.3 which event would
constitute an Event of Default under Section 6.1(j) or (k) had Legal Defeasance
or Covenant Defeasance, as the case may be, not occurred, then the Company's and
the Subsidiary Guarantors' obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.2 or 8.3 until such time as the Trustee or Paying Agent is permitted to apply
such money in accordance with Section 8.2 or 8.3, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, or interest (and
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Liquidated Damages, if any) on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the cash or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.1 WITHOUT CONSENT OF HOLDERS.
(a) The Company and the Trustee may amend or supplement this
Indenture and the Notes without the consent of any Holder:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(iii) to comply with Article V and Section 10.6;
(iv) to make any change that would provide any
additional rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights hereunder or
thereunder of any Holder;
(v) to comply with requirements of the Commission in
order to effect or maintain the qualification of this
Indenture under the TIA; or
(vi) to release any Subsidiary Guaranty of the Notes
permitted to be released under Section 10.7.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 required or requested by the Trustee, the
Trustee shall join with the Company in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and shall make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 WITH CONSENT OF HOLDERS.
(a) Subject to Sections 6.4 and 6.7, the Company and the
Trustee, as applicable, may amend, or waive any provision of, this
Indenture or the Notes, with the written consent of the Holders of at
least a majority of the principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or
exchange offer for Notes).
(b) Upon the request of the Company, accompanied by a
resolution of the Board of Directors of the Company authorizing the
execution of any such supplemental indenture or amendment, and upon
filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders as aforesaid, and upon receipt by the Trustee of
the documents described in Section 9.6, the Trustee shall join with the
Company in the execution of such supplemental indenture or amendment
unless such supplemental indenture or amendment affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
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(c) It shall not be necessary for the consent of the Holders
under this Section 9.2 to approve the particular form of any proposed
supplemental indenture or amendment, but it shall be sufficient if such
consent approves the substance thereof.
(d) After a supplemental indenture or amendment under this
Section 9.2 becomes effective, the Company shall mail to the Holders of
each Note affected thereby a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture, amendment or waiver.
(e) Notwithstanding any other provision hereof, without the
consent of each Holder affected, an amendment or waiver under this
Section 9.2 may not (with respect to any Notes held by a non-consenting
Holder):
(i) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(ii) reduce the rate of or change the time for
payment of interest, including default interest, on any Note;
(iii) reduce the principal of, or the premium
(including, without limitation, redemption premium) on, or
change the fixed maturity of any Note or alter the provisions
with respect to payment on redemption of the Notes or the
price at which the Company shall offer to purchase such Notes
pursuant to Section 4.10 or 4.14;
(iv) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on, or
redemption payment with respect to, any Note (other than a
Default in the payment of an amount due as a result of an
acceleration if the Holder rescinds such acceleration pursuant
to Section 6.2);
(v) make any Note payable in money other than that
stated in the Notes;
(vi) make any change in Section 6.4 or 6.7 or in this
Section 9.2 with respect to the requirement for the consent of
any affected Holder;
(vii) waive a redemption payment with respect to any
Note; or
(viii) make any change adversely affecting the
contractual ranking of the Obligations of the Company under
the Notes, this Indenture and the Security Documents or of the
Subsidiary Guarantors under their respective Subsidiary
Guaranties.
Section 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
If, at the time of an amendment to this Indenture or the Notes, this
Indenture shall be qualified under the TIA, every amendment to this Indenture or
the Notes shall be set forth in a supplemental indenture that complies with the
TIA as then in effect.
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of
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a Note that evidences the same debt as the consenting Holder's Note, even if
notation of the consent is not made on any Note. A supplemental indenture,
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
The Company may fix a record date for determining which Holders must
consent to such supplemental indenture, amendment or waiver. If the Company
fixes a record date, the record date shall be fixed at (i) the later of 30 days
prior to the first solicitation of such consent or the date of the most recent
list of Holders furnished to the Trustee prior to such solicitation pursuant to
Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about a supplemental
indenture, amendment or waiver on any Note thereafter authenticated. The Company
in exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment or waiver.
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article IX if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.1, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it shall be valid and binding upon the
Company in accordance with its terms. The Company may not sign an amendment or
supplemental indenture until the Board of Directors of the Company approves it.
ARTICLE X
SUBSIDIARY GUARANTIES
Section 10.1 SUBSIDIARY GUARANTY.
(a) For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, subject to Section 10.3,
each Subsidiary Guarantor, jointly and severally, hereby
unconditionally guarantees (such guaranties being referenced herein
individually as a "SUBSIDIARY GUARANTY" and collectively, together with
additional guaranties granted from time to time pursuant to Section
10.6, as the "SUBSIDIARY GUARANTIES") to each Holder and the Trustee,
irrespective of the validity or enforceability of this Indenture, the
Notes, the Registration Rights Agreement or the Obligations of the
Company hereunder or thereunder: (i) the due and punctual payment of
the principal and premium, if any, of, and interest on, the Notes
(including, without limitation, interest after the filing of a petition
initiating any proceedings referred to in clause (j) or (k) of Section
6.1), whether at maturity or on an interest payment date, by
acceleration, call for redemption or otherwise; (ii) the due and
punctual payment of interest on the overdue principal and premium, if
any, of, and interest on, the Notes, if lawful; (iii) the due and
punctual payment and performance of all other Obligations of the
Company under the Notes, this Indenture and the Registration Rights
Agreement, all in accordance with the terms set forth herein and in the
Notes; and (iv) in case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, the due and punctual
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payment or performance thereof in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise.
(b) Failing payment when due by the Company of any amount so
guaranteed for whatever reason, the Subsidiary Guarantors shall be
jointly and severally obligated to pay the same immediately.
(c) Each Subsidiary Guarantor hereby agrees that (i) its
Obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes, this Indenture,
the Registration Rights Agreement or the Obligations of the Company
hereunder or thereunder, the absence of any action to enforce the same,
any waiver or consent by any Holder with respect to any provisions
hereof or thereof, any amendment of this Indenture or the Notes, the
recovery of any judgment against the Company or any of its
Subsidiaries, any action to enforce the same, or any other circumstance
that might otherwise constitute a legal or equitable discharge or
defense of a guarantor and (ii) each Subsidiary Guaranty will not be
discharged except by complete performance of the Obligations of the
Company under the Notes, this Indenture and the Registration Rights
Agreement.
(d) Each Subsidiary Guarantor hereby agrees that it shall not
be entitled to and irrevocably waives diligence, presentment, demand of
payment, filing of claim with a court in the event of insolvency or
bankruptcy of the Company, any Subsidiary Guarantor, any other
Subsidiary of the Company or any other obligor under the Notes, any
right to require a proceeding first against the Company, any Subsidiary
Guarantor, any other Subsidiary of the Company or any other obligor
under this Indenture or the Notes, protest, notice and all demands
whatsoever.
(e) Each Subsidiary Guarantor shall be subrogated to all
rights of the Holders of the Notes upon which its Subsidiary Guaranty
is endorsed against the Company in respect of any amounts paid by such
Subsidiary Guarantor on account of such Note pursuant to the provisions
of its Subsidiary Guaranty or this Indenture, and each Subsidiary
Guarantor shall have the right to seek contribution from any non-paying
Subsidiary Guarantor; PROVIDED, HOWEVER, that no Subsidiary Guarantor
shall be entitled to enforce or receive any payments arising out of, or
based upon, such rights of subrogation or contribution until the
principal of (and premium, if any) and interest on the Notes issued
hereunder shall have been paid in full (and, if any such payments shall
be paid to or recovered by such Subsidiary Guarantor (whether directly
or by way of set-off, recoupment or counterclaim), such payments shall
be held in trust by such Subsidiary Guarantor for the benefit of the
Trustee and the Holders of the Notes, not commingled with any of such
Subsidiary Guarantor's other funds and forthwith paid over to the
Trustee, in the exact for received, together with any necessary
endorsements, to be applied and credited against, or held as security
for the Obligations hereunder.
(f) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Subsidiary Guarantor, any other
Subsidiary of the Company or any other obligor under this Indenture or
the Notes, or any trustee, liquidator or other similar official, any
amount paid by the Company, any Subsidiary Guarantor, any other
Subsidiary of the Company or any other obligor under this Indenture or
the Notes to the Trustee or such Holder, the Subsidiary Guaranties, to
the extent theretofore discharged, shall be reinstated in full force
and effect.
(g) Each Subsidiary Guarantor agrees that, as between the
Subsidiary Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (i) the maturity of the Obligations of the
Company guaranteed hereby may be accelerated as provided in Section 6.2
for the purposes of the Subsidiary Guaranties, notwithstanding any
stay, injunction or other prohibition preventing such acceleration as
to the Company of the Obligations guaranteed hereby, and (ii) in the
event of
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any declaration of acceleration of those Obligations as provided in
Section 6.2, those Obligations (regardless of whether due and payable)
will forthwith become due and payable by each of the Subsidiary
Guarantors for the purpose of the Subsidiary Guaranties.
Section 10.2 EXECUTION AND DELIVERY OF THE SUBSIDIARY GUARANTIES.
(a) To evidence the Subsidiary Guaranties set forth in Section
10.1, the Company and each Subsidiary Guarantor hereby agrees that (i)
a notation of the Subsidiary Guaranties substantially as set forth on
Exhibit C hereto shall be endorsed on each Note authenticated and
delivered by the Trustee, (ii) such endorsement shall be executed on
behalf of each Subsidiary Guarantor by its Chairman of the Board,
President, Chief Financial Officer, Chief Operating Officer, Treasurer,
Secretary or any Vice President and (iii) a counterpart signature page
to this Indenture shall be executed on behalf of each Subsidiary
Guarantor by its Chairman of the Board, President or one of its Vice
Presidents and attested to by another officer acknowledging such
Subsidiary Guarantor's agreement to be bound by the provisions hereof
and thereof.
(b) Each Subsidiary Guarantor hereby agrees that its
Subsidiary Guaranty set forth in Section 10.1 shall remain in full
force and effect notwithstanding any failure to endorse on each Note a
notation of such Subsidiary Guaranty.
(c) If an officer whose signature is on this Indenture no
longer holds that office at the time the Trustee authenticates the
Notes on which a Subsidiary Guaranty is endorsed, the Subsidiary
Guaranty shall nevertheless be valid.
(d) The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guaranties set forth in this Indenture on behalf of the
Subsidiary Guarantors.
Section 10.3 LIMITATION ON SUBSIDIARY GUARANTOR'S LIABILITY.
Each Subsidiary Guarantor and by its acceptance hereof each Holder
hereby confirms that it is the intention of all such parties that the guaranty
by such Subsidiary Guarantor pursuant to its Subsidiary Guaranty not constitute
a fraudulent transfer or conveyance for purposes of any federal or state law. To
effectuate the foregoing intention, the Holders and the Subsidiary Guarantors
hereby irrevocably agree that the obligations of each Subsidiary Guarantor under
its Subsidiary Guaranty shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and to any collections from or payments made by or on behalf of any
other Subsidiary Guarantor in respect of the Obligations of such other
Subsidiary Guarantor under its Subsidiary Guaranty, result in the Obligations of
such Subsidiary Guarantor under its Subsidiary Guaranty not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law or
rendering such Subsidiary Guarantor insolvent.
Section 10.4 RIGHTS UNDER THE SUBSIDIARY GUARANTIES.
(a) No payment by any Subsidiary Guarantor pursuant to the
provisions hereof shall give rise to any claim of the Subsidiary
Guarantors against the Trustee or any Holder.
(b) Each Subsidiary Guarantor waives notice of the issuance,
sale and purchase of the Notes and notice from the Trustee or the
Holders from time to time of any of the Notes of their acceptance and
reliance on its Subsidiary Guaranty.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance
by the Subsidiary Guarantors of their obligations
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hereunder) that any Subsidiary Guarantor may have or assert against the
Trustee or any Holder shall be available hereunder to such Subsidiary
Guarantor.
(d) Each Subsidiary Guarantor shall pay all costs, expenses
and fees, including all reasonable attorneys' fees, that may be
incurred by the Trustee in enforcing or attempting to enforce the
Subsidiary Guaranties or protecting the rights of the Trustee or the
Holder, if any, in accordance with this Indenture.
Section 10.5 PRIMARY OBLIGATIONS.
The Obligations of each Subsidiary Guarantor hereunder shall constitute
a guaranty of payment and not of collection. Each Subsidiary Guarantor agrees
that it is directly liable to each Holder hereunder, that the Obligations of
each Subsidiary Guarantor hereunder are independent of the Obligations of the
Company or any other Subsidiary Guarantor, and that a separate action may be
brought against each Subsidiary Guarantor, whether such action is brought
against the Company or any other Subsidiary Guarantor or whether the Company or
any other Subsidiary Guarantor is joined in such action. Each Subsidiary
Guarantor agrees that its liability hereunder shall be immediate and shall not
be contingent upon the exercise or enforcement by the Trustee or the Holders of
whatever remedies they may have against the Company or any other Subsidiary
Guarantor. Each Subsidiary Guarantor agrees that any release that may be given
by the Trustee or the Holders to the Company or any other Subsidiary Guarantor
shall not release such Subsidiary Guarantor.
Section 10.6 GUARANTEE BY FUTURE SUBSIDIARIES.
The Company shall cause (a) each Person that becomes a Restricted
Subsidiary after the Issue Date (regardless of whether through formation,
acquisition, merger or otherwise) to, concurrently with so becoming a Restricted
Subsidiary to become a Subsidiary Guarantor hereunder and execute and deliver to
the Trustee an endorsement of its Subsidiary Guaranty in the form of Exhibit C
attached hereto and a supplemental indenture in form reasonably satisfactory to
the Trustee, pursuant to which such Restricted Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes, this Indenture and
the Registration Rights Agreement as set forth in Section 10.1, and (b) such
Restricted Subsidiary to deliver to the Trustee an Opinion of Counsel, in form
reasonably satisfactory to the Trustee, to the effect that (i) such supplemental
indenture and such Subsidiary Guaranty have been duly authorized, executed and
delivered by such Restricted Subsidiary and (ii) such supplemental indenture and
such Subsidiary Guaranty constitute a legal, valid, binding and enforceable
obligation of such Restricted Subsidiary, subject to customary exceptions for
bankruptcy, fraudulent transfer and equitable principles.
Each Note issued after the date of execution by any Subsidiary
Guarantor of a Subsidiary Guaranty shall be endorsed with a form of Subsidiary
Guaranty that has been executed by such Subsidiary Guarantor. However, the
failure of any Note to have endorsed thereon a Subsidiary Guaranty executed by
such Subsidiary Guarantor shall not affect the validity or enforceability of
such Subsidiary Guaranty against such Subsidiary Guarantor.
Section 10.7 RELEASE OF SUBSIDIARY GUARANTORS.
If all of the Capital Stock of any Subsidiary Guarantor is sold by the
Company or any of its Subsidiaries to a Person (other than the Company or any of
its Subsidiaries) and the Net Proceeds from such Asset Sale are used in
accordance with Section 4.10, then such Subsidiary Guarantor will be released
and discharged from all of its Obligations under its Subsidiary Guaranty of the
Notes and this Indenture.
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ARTICLE XI
SECURITY INTEREST
Section 11.1 ASSIGNMENT OF SECURITY INTEREST.
(a) In order to secure the performance of the Company's
obligation to pay the principal amount of, premium, if any, and
interest on the Notes when and as the same shall be due and payable,
whether at maturity or on an interest payment date, by acceleration,
call for redemption or otherwise, and interest on the overdue principal
of and premium, if any, and interest, if lawful, on the Notes and
performance of all other Obligations of the Company to the Holders and
the Trustee under this Indenture and the Notes, according to their
terms hereunder or thereunder, the Company pursuant to the Security
Documents has unconditionally and absolutely assigned to the Trustee
for the benefit of itself and all Holders, a first priority security
interest in the Collateral, subject to the limitations set forth in
Section 4.12 (the "SECURITY INTEREST").
(b) The Security Interest as now or hereafter in effect shall
be held for the Trustee and for the equal and ratable benefit and
security of the Notes without preference, priority or distinction of
any thereof over any other by reason, or difference in time, of
issuance, sale or otherwise, and for the enforcement of the payment of
principal of, premium, if any, and interest on the Notes in accordance
with their terms.
(c) The Company represents and warrants that it has executed
and delivered, filed and recorded and/or will execute and deliver, file
and record, all instruments and documents, and has done or will do or
cause to be done all such acts and other things as are necessary to
subject the Collateral to the Lien of the Security Documents. The
Company shall execute and deliver, file and record all instruments and
do all acts and other things as may be reasonably necessary or
advisable to perfect, maintain and protect the Security Interest and
shall pay all filing, recording, mortgage or other taxes or fees
incidental thereto.
(d) The Company shall furnish to the Trustee (i) promptly
after the recording or filing, or re-recording or re-filing of the
Security Documents and other security filings, an Opinion of Counsel
(who may be counsel for the Company) stating that in the opinion of
such counsel the Security Documents and other security filings have
been properly recorded, filed, re-recorded or refiled so as to make
effective and perfect the Security Interest intended to be created
thereby and reciting the details of such action; and (ii) at least
annually on the anniversary date of the execution and delivery of this
Indenture, an Opinion of Counsel (who may be counsel for the Company)
either stating that in the opinion of such counsel such action with
respect to the recording, filing, rerecording or re-filing of the
Security Documents and other security filings has been taken as is
necessary to maintain the Lien and Security Interest of the Security
Documents and other security filings, and reciting the details of such
action, or stating that in the opinion of such counsel no such action
is necessary to maintain such Lien and Security Interest. In giving the
opinions required by this Section 11.1(d), such counsel may rely, to
the extent recited in such opinions, on (i) certificates of relevant
public officials; (ii) certificates of an officer or officers of the
Company; (iii) photocopies of filed and recorded documents certified by
public officials as being accurate copies of such documents; (iv) the
opinions of other counsel reasonably acceptable to the Trustee with
respect to matters governed by law of any jurisdiction other than the
state in which such counsel is licensed to practice law; and (v) title
insurance policies and commitments. In addition, such opinions may
contain such qualifications, exceptions and limitations as are
appropriate for similar opinions relating to the nature of the
Collateral.
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Section 11.2 SUITS TO PROTECT THE COLLATERAL.
To the extent permitted under the Security Documents and this
Indenture, the Trustee shall have power to institute and maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any acts which may be unlawful or in violation of this Indenture or the
Security Documents and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interest of the Holders
in the Collateral and in the profits, rents, revenues and other income arising
therefrom (including power to institute an maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the Security Interest thereunder or be prejudicial to the interest
of the Holders or of the Trustee).
Section 11.3 FURTHER ASSURANCES AND SECURITY.
The Company represents and warrants that at the time the Security
Documents and this Indenture are executed, the Company (i) will have full right,
power and lawful authority to grant, bargain, sell, release, convey,
hypothecate, assign, mortgage, pledge, transfer and confirm, absolutely, the
Collateral, in the manner and form done, or intended to be done, in the Security
Documents, free and clear of all Liens, except for the Lines (1) created by the
Security Documents, (2) to the extent otherwise provided in the Security
Documents and (3) Liens contested in good faith or arising by operation of law
and not by contract, and will forever warrant and defend the title to the same
against the claims of all Persons whatsoever; (ii) will execute, acknowledge and
deliver to the Trustee, at the Company's expense, at any time and from time to
time such further assignments, transfer, assurances or other instruments as may,
in the opinion of the Trustee, be required to effectuate the terms of this
Indenture or the Security Documents; and (iii) will at any time and from time to
time do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the Trustee, to assure and confirm to the
Trustee the Security Interest in the Collateral contemplated hereby and by the
Security Documents. Notwithstanding the foregoing, but subject to Section 4.12,
Collateral may be encumbered by a Lien if, immediately after the creation of the
Lien, the Collateral encumbered by the Lien constitutes Excluded Assets.
Section 11.4 RELEASE OF COLLATERAL.
(a) The Trustee shall release Collateral that is sold,
conveyed or disposed of in compliance with Section 4.10(a); PROVIDED,
that the Company shall apply the Net Proceeds in accordance with
Section 4.10(a) hereof, and the Officer's Certificate referred to below
shall certify that the Net Proceeds have been or will be so applied.
(b) If a portion of the Collateral becomes an Excluded Asset
after the Issue Date, the Trustee shall, simultaneous with the granting
of the applicable Permitted Lien, release the Lien in favor of the
Trustee in such Excluded Asset; PROVIDED, that the Officer's
Certificate referred to below shall certify that the assets
constituting the Collateral following such release include all of the
assets (including, without limitation, sufficient parking space)
necessary to permit the Company to conduct the Related Business in the
same manner as such business is conducted on the Issue Date.
(c) The Company shall cause the Net Proceeds of any Asset Sale
pursuant to Section 4.10 that involves Collateral to be deposited in
the Collateral Account on the Business Day on which such Net Proceeds
are received by the Company or such Subsidiary. Collateral Proceeds may
be released from the Collateral Account in order to, and only in order
to, apply such Collateral Proceeds in accordance with Section 4.10(a);
PROVIDED, that upon application of such Collateral proceeds in
accordance with Section 4.10(a)(iii)(1) the Trustee shall have received
a first priority security
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interest in the assets invested in by the Company or any of its
Restricted Subsidiaries in connection therewith.
(d) Prior to releasing any Collateral pursuant to this Section
11.4, the Company shall deliver to the Trustee each of the following:
(i) an Officers' Certificate, dated the date on which
Collateral shall be released (the "COLLATERAL RELEASE DATE"),
stating in substance as to certain matters (which statements
shall, on the Collateral Release Date, be true), including the
following:
(1) the reason the Company is requesting a
release of the Collateral and a description of the
use to be made of the Collateral to be released;
(2) that, in case of the application of Net
Proceeds in accordance with Section 4.10(a)(iii)(1),
the Company and/or its Restricted Subsidiaries, as
the case may be, have taken all steps necessary or
desirable so that upon such application of Net
Proceeds the Trustee shall receive a first priority
security interest in the assets invested in by the
Company or its Restricted Subsidiaries;
(3) that no Default or Event of Default has
occurred and is continuing at the time of or after
giving effect to such release of Collateral; and
(4) that all conditions precedent in this
Indenture and the Security Documents relating to the
release of the Collateral have been complied with.
(ii) An Opinion of Counsel stating that the
certificate, opinions or other instruments which have been or
are therewith delivered to and deposited with the Trustee
conform to the requirements of this Indenture, that the
Collateral to be released may be lawfully released from the
Lien of the Security Documents and that all conditions
precedent in this Indenture and the Security Documents
relating to such release (including, without limitation, the
requirement that the Trustee receive a first priority security
interest in any assets invested in) have been complied with.
Upon receipt of such Officer's Certificate and Opinion of
Counsel, the Trustee shall execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release
to evidence the release of any Collateral permitted to be released
pursuant to this Indenture.
Section 11.5 RELIANCE ON OPINION OF COUNSEL.
The Trustee shall, before taking any action under this Article XI, be
entitled to receive an Opinion of Counsel, stating the legal effect of such
action, the steps necessary to consummate the same and to perfect the Trustee's
priority with respect to any Lien in connection therewith and that such action
will not be in contravention of the provisions thereof or this Indenture and
such opinion shall be full protection to the Trustee for any action taken or
omitted to be taken in reliance thereon.
Section 11.6 PURCHASER MAY RELY.
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A purchaser in good faith of the Collateral or any part thereof or
interest therein which is purported to be transferred, granted or released by
the Trustee as provided in this Article XI shall not be bound to ascertain, and
may rely on the authority of the Trustee to execute, transfer, grant or release,
or to inquire as to the satisfaction of any conditions precedent to the exercise
of such authority, or to see to the application of the purchase price therefor.
Section 11.7 PAYMENT OF EXPENSES.
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for the payment of all reasonable expenditures incurred
by the Trustee under this Article XI, including, without limitation, the costs
of title insurance, surveys, attorneys' fees and expenses, recording fees and
taxes, transfer taxes, taxes on indebtedness and other expenses incidental
thereto and al such sums shall be a Lien upon the Collateral prior to the Notes
and shall be secured thereby.
Section 11.8 ADDITIONAL COLLATERAL.
The Company shall, and shall cause each of the Subsidiary Guarantors
to, grant to the Trustee a first priority security interest in all Collateral,
whether owned on the Issue Date or thereafter acquired, and to execute and
deliver all documents and take all action necessary or desirable to perfect and
protect such a security interest in favor of the Trustee.
ARTICLE XII
MISCELLANEOUS
Section 12.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
Section 12.2 NOTICES.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' addresses:
If to the Company:
Louisiana Casino Cruises, Inc.
1717 North River Road
Baton Rouge, Louisiana 70802
Attention: General Manager
Telecopier No.: (225) 709-7770
with copies to:
W. Peter Temling
Carnival Resorts & Casinos
3250 Mary Street, 5th Floor
Miami, Florida 33133
Telecopier No.: (305) 445-4261
and
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Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.
150 West Flagler Street, Suite 2200
Miami, Florida 33130
Attention: Richard E. Schatz
Telecopier No.: (305) 789-3395
If to the Trustee:
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration
Telecopier No.: (651) 244-0711
The Company or the Trustee by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; upon receipt, if deposited in the mail, postage prepaid; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
All notices and communications to the Trustee shall be deemed to have been duly
given only if actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by first-class
mail, to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice communication is mailed in the manner provided above within
the time prescribed, it is duly given, regardless of whether the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other person shall have the protection of TIA ss.
312(c).
Section 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
59
<PAGE>
Section 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to regardless of whether such covenant
or condition has been complied with; and
(d) a statement as to regardless of whether, in the opinion of
such Person, such condition or covenant has been complied with,
PROVIDED that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 12.6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.7 LEGAL HOLIDAYS.
If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
Section 12.8 NO RECOURSE AGAINST OTHERS.
No director, officer, employee, incorporator, stockholder or
controlling person of the Company or any Subsidiary Guarantor, as such, shall
have any liability for any obligations of the Company or any Subsidiary
Guarantor under the Notes, this Indenture or the Registration Rights Agreement
or for any claim based on, in respect of, or by reason of such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issuance of the Notes and the Subsidiary Guaranties. Notwithstanding the
foregoing, nothing in this provision shall be construed as a waiver or release
of any claims under the federal securities laws.
Section 12.9 GOVERNING LAW.
THIS INDENTURE SHALL BE CONSTRUED AND INTERPRETED, AND THE RIGHTS OF
THE PARTIES DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(b). THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
60
<PAGE>
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS ADDRESS SET FORTH HEREIN,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
Section 12.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 12.11 SUCCESSORS.
All agreements of the Company and any Subsidiary Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successor.
Section 12.12 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.13 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 12.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
(SIGNATURE PAGES FOLLOW.)
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Indenture as of the date first written above.
COMPANY:
LOUISIANA CASINO CRUISES, INC.
By:
-----------------------------------------
Name:
Title:
Attest:
- ----------------------------------
Name:
TRUSTEE:
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee
By:
-----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH
OTHER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(k) AS PERMITTING
RESALES OF RESTRICTED SECURITIES BY NON-AFFILIATES WITHOUT RESTRICTION) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
LOUISIANA CASINO CRUISES, INC.
11% Senior Secured Note due 2005
No. $_____________________
CUSIP NO.
Louisiana Casino Cruises, Inc., a Louisiana corporation (the
"Company"), as obligor, for value received promises to pay to _________________
or registered assigns, the principal sum of____________________ Dollars on
December 1, 2005.
Interest Payment Dates: June 1 and December 1 and on the maturity date.
Record Dates: May 15 and November 15 (regardless of whether a Business
Day).
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
LOUISIANA CASINO CRUISES, INC.
Dated:
Attest: By:
----------------------------------------
- ----------------------------------
Name:
Title:
This is one of the Notes referred to in the within-mentioned Indenture:
Authenticated:
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------------
AUTHORIZED SIGNATORY
- ------------------------------------------
1/This paragraph should be included only if the Note is issued in
global form.
A-1
<PAGE>
(Back of Security)
LOUISIANA CASINO CRUISES, INC.
11% Senior Secured Note due 2005
1. INTEREST. Louisiana Casino Cruises, Inc., a Louisiana corporation (the
"Company"), as obligor, promises to pay interest on the principal amount of this
Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal amount of this
Note, at the rate of 11.00% per annum. The Company shall pay interest
semi-annually on June 1 and December 1 of each year, and on the maturity date,
commencing on June 1, 1999, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date").
Interest shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. Interest shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from January 27, 1999.
To the extent lawful, the Company shall pay interest on overdue principal at the
then applicable interest rate on the Notes; the Company shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate to the extent lawful.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the record date next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or before such
Interest Payment Date. The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company shall pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company may pay principal and interest
by check to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee shall act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-registrar without notice to any Holder. Subject to certain exceptions, the
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company has issued the Notes under an Indenture dated as
of January 27, 1999 (the "Indenture") among the Company, any future Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (the "TIA") (15 U.S. Code ss.ss. 77aaa-77bbbb) as in
effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA and thereafter as in effect on the date the Indenture is
so qualified. The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
Terms not otherwise defined herein shall have the meanings assigned in the
Indenture. The aggregate principal amount of Notes that may be authenticated and
delivered under the Indenture is unlimited.
5. OPTIONAL REDEMPTION. Except as set forth below, the Notes are not
redeemable at the Company's option prior to December 1, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable redemption date, if redeemed during the 12-month period beginning on
December 1 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2002........................................... 105.50%
2003........................................... 102.75%
2004 and thereafter............................ 100.00%
A-2
<PAGE>
Notwithstanding the foregoing, at any time or from time to time prior to
December 1, 2001, the Company may, at its option, redeem up to one-third of the
original principal amount of the Notes issued on or after the Issue Date, at a
redemption price of 111.00% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the applicable redemption date, with the net cash
proceeds of one or more Public Equity Offerings; PROVIDED, that (a) such
redemption shall occur within 60 days of the date of closing of such public
offering and (b) at least two-thirds of the aggregate principal amount of Notes
issued on or after the Issue Date remains outstanding immediately after giving
effect to each such redemption.
6. MANDATORY REDEMPTION. There shall be no mandatory redemption of the
Notes.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar and the Company need not exchange or
register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
8. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes, subject to the provisions of the Indenture with
respect to the record dates for the payment of interest.
9. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the Indenture or
the Notes may be amended with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes), and any
existing Default or Event of Default (except certain payment defaults) may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes). Without the consent of any Holders, the
Indenture and the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for assumption of the Company's obligations
to the Holders in the case of a merger or consolidation, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to make
any change that would provide any additional rights or benefits to the Holders
of the Notes, or that does not adversely affect the legal rights under the
Indenture of any Holder, to release any Subsidiary Guaranty of the Notes
permitted to be released under the terms of the Indenture or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
10. DEFAULTS AND REMEDIES. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare by written notice to the Company and the Trustee
all the Notes to be due and payable immediately, except that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes become due and payable immediately without further action or
notice. Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Company must furnish an
annual compliance certificate to the Trustee.
11. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
A-3
<PAGE>
12. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator, stockholder or controlling person of the Company or Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or any Subsidiary Guarantor under the Notes, the Indenture or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes and the Subsidiary Guaranties.
Notwithstanding the foregoing, nothing in this provision shall be construed as a
waiver or release of any claims under the Federal securities laws.
13. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
15. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
16. GOVERNING LAW. This Note and the Indenture shall be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of New York, without regard to principles of conflicts of law,
except Section 5-1401 of the New York General Obligations Law.
17. HOLDERS' COMPLIANCE WITH REGISTRATION RIGHTS AGREEMENT. Each Holder of
a Note, by its acceptance thereof, acknowledges and agrees to the provisions of
the Registration Rights Agreement, dated as of January 27, 1999, between the
Company and the Initial Purchaser (the "Registration Rights Agreement"),
including but not limited to the obligations of the Holders with respect to a
registration and the indemnification of the Company and the Initial Purchaser to
the extent provided therein.2
Indenture and/or the Registration Rights Agreement. Requests may be made
to: Louisiana Casino Cruises, Inc., 1717 North River Road, Baton Rouge,
Louisiana 70802, Attention: General Manager.
- --------
2/This paragraph should be included only in the Series A Notes.
A-4
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to:
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________ as agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
________________________________________________________________________________
Date:_________________________
Your Signature:_____________________________
(Sign exactly as your name
appears on the face of this
Note)
Tax Identification Number:__________________
Signature Guaranty*
_____________________________
* NOTICE: The signature must be guaranteed by an institution
which is a member of one of the following recognized
signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-5
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the
case may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_____________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guaranty*
___________________________
* NOTICE: The signature must be guaranteed by an institution
which is a member of one of the following recognized
signature guarantee programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program
(MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-6
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES3
The following exchanges of a part of this Global Note for
Definitive Notes have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN THIS GLOBAL NOTE
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF FOLLOWING SUCH DECREASE SIGNATURE OF AUTHO-
DATE OF EXCHANGE THIS GLOBAL NOTE THIS GLOBAL NOTE (OR INCREASE) RIZED OFFICER OF TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
3/This should only be included if the Note is issued in global form.
A-7
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series A] [Series B] 11% Senior Secured Notes due 2005 (the "Notes")
of Louisiana Casino Cruises, Inc.
This Certificate relates to $_________________________ principal amount
of Notes held in /ballot box/ book-entry or *o definitive form by ______________
(the "Transferor").
The Transferor, by written order, has requested the Trustee:
/ballot box/ to deliver in exchange for its beneficial interest in the
Global Note held by the depositary, a Note or Notes in definitive,
registered form of authorized denominations and an aggregate
principal amount equal to its beneficial interest in such Global
Note (or the portion thereof indicated above); or
/ballot box/ to exchange or register the transfer of a Note or Notes. In
connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above captioned Notes and, the
transfer of this Note does not require registration under the
Securities Act of 1933, as amended (the "Securities Act") because
such Note:
/ballot box/ is being acquired for the Transferor's own
account, without transfer;
/ballot box/ is being transferred pursuant to an effective
registration statement;
/ballot box/ is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under
the Securities Act), in reliance on such Rule 144A;
/ballot box/ is being transferred pursuant to an exemption
from registration in accordance with Rule 904 under
the Securities Act;**
/ballot box/ is being transferred pursuant to Rule 144 under
the Securities Act;** or
/ballot box/ is being transferred pursuant to another
exemption from the registration requirements of the
Securities Act (explain:____________________________
_________________________________________).**
____________________________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________________________
Date:______________________
* Check applicable box.
** If this box is checked, this certificate must be accompanied
by an opinion of counsel to the effect that such transfer is
in compliance with the Securities Act.
B-1
<PAGE>
EXHIBIT C
[Form of Subsidiary Guaranty]
GUARANTY
For good and valuable consideration received from the Company by the
undersigned (hereinafter referred to as the "Subsidiary Guarantors," which term
includes any successor or additional Subsidiary Guarantors), the receipt and
sufficiency of which is hereby acknowledged, subject to Section 10.9 of the
Indenture, each Subsidiary Guarantor, jointly and severally, hereby
unconditionally guarantees, irrespective of the validity or enforceability of
the Indenture, the Notes, the Registration Rights Agreement or the Obligations
of any party under the Notes, the Indenture or the Registration Rights
Agreement, (a) the due and punctual payment of the principal and premium, if
any, of and interest on the Notes (including, without limitation, interest after
the filing of a petition initiating any proceedings referred to in Sections
6.1(j) or (k) of the Indenture), whether at maturity or on an interest payment
date, by acceleration, call for redemption or otherwise, (b) the due and
punctual payment of interest on the overdue principal and premium, if any, of
and interest, if any, on the Notes, if lawful, (c) the due and punctual payment
and performance of all other Obligations of the Company under the Indenture, the
Notes and the Registration Rights Agreement, all in accordance with the terms
set forth in the Indenture and (d) in case of any extension of time of payment
or renewal of any Notes or any of such other Obligations under the Indenture,
the Notes or the Registration Rights Agreement, the due and punctual payment or
performance thereof in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
No director, officer, employee, incorporator, stockholder or
controlling person of the Subsidiary Guarantor, as such, shall have any
liability under this Subsidiary Guaranty for any obligations of the Subsidiary
Guarantor under the Notes, the Indenture or the Registration Rights Agreement or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of the Notes by accepting a Note waives and releases
all such liability.
__________________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
C-1
EXHIBIT 4.5
LOUISIANA CASINO CRUISES, INC.
$55,000,000 11% Senior Secured Notes due 2005
REGISTRATION RIGHTS AGREEMENT
January 27, 1999
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
LOUISIANA CASINO CRUISES, INC., a Louisiana corporation (the
"Company"), is issuing and selling to Jefferies & Company, Inc. (the
"Purchaser"), upon the terms set forth in a purchase agreement, dated as of
January 22, 1999 (the "Purchase Agreement"), $55,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2005, Series A (the "Notes"). As an
inducement to the Purchaser to enter into the Purchase Agreement, the Company
agrees with the Purchaser, for the benefit of the holders of the Securities
(defined below) (including, without limitation, the Purchaser), as follows:
1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
ADVICE: See Section 6.
AGREEMENT: This Registration Rights Agreement.
APPLICABLE PERIOD: See Section 2(f).
BUSINESS DAYS: Any day other than (i) Saturday or Sunday, or (ii) a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to be closed.
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CLOSING DATE: January 27, 1999.
EFFECTIVENESS DATE: The 120th day following the Closing Date.
EFFECTIVENESS PERIOD: See Section 3(a).
EVENT DATE: See Section 4(a).
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
EXCHANGE OFFER: See Section 2(a).
EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a).
EXCHANGE SECURITIES: 11% Senior Secured Notes due 2005, Series B, of
the Company, identical in all respects to the Notes, except for references to
series and restrictive legends.
FILING DATE: The 60th day following the Closing Date.
HOLDER: Each holder of Registrable Securities.
INDENTURE: The Indenture, dated the date hereof, among the Company, any
future subsidiary guarantors and First Trust National Association, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time, in accordance with the terms thereof.
INITIAL SHELF REGISTRATION: See Section 3(a).
LOSSES: See Section 8(a).
NASD: The National Association of Securities Dealers, Inc.
PARTICIPATING BROKER-DEALER: See Section 2(f).
PERSON: An individual, trustee, corporation, partnership, joint stock
company, joint venture, trust, unincorporated organization or government or any
agency or political subdivision thereof, union, business association, firm or
other entity.
PRIVATE EXCHANGE: See Section 2(g).
PRIVATE EXCHANGE SECURITIES: See Section 2(g).
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PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
REGISTRABLE SECURITIES: (i) Notes, (ii) Private Exchange Securities and
(iii) Exchange Securities received in the Exchange Offer that may not be sold by
Persons who are not Affiliates (within the meaning of the Securities Act) of the
Company without restriction under federal or state securities law.
REGISTRATION STATEMENT: Any registration statement of the Company that
covers any of the Securities pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
RULE 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
RULE 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES: The Notes, the Private Exchange Securities and the Exchange
Securities, collectively.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2(i).
SHELF REGISTRATION: The Initial Shelf Registration and any Subsequent
Shelf Registration.
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SPECIAL COUNSEL: Counsel chosen by the holders of a majority in
aggregate principal amount of Securities.
SUBSEQUENT SHELF REGISTRATION: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture and, if any, the trustee under
any indenture governing the Exchange Securities or the Private Exchange
Securities.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
WEEKLY LIQUIDATED DAMAGES AMOUNT: means, with respect to any Event, an
amount per week per $1,000 principal amount of Registrable Securities equal to
$.05 for the first 90-day period immediately following the applicable Event
Date, increasing by an additional $.05 per week per $1,000 principal amount of
Registrable Securities with respect to each subsequent 90-day period, up to a
maximum amount of $.40 per week per $1,000 principal amount of Registrable
Securities.
2. EXCHANGE OFFER
(a) The Company shall:
(i) prepare and file with the SEC promptly after the date
hereof, but in no event later than the Filing Date, a registration statement
(the "Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer (the "Exchange Offer") to the
Holders to issue and deliver to such Holders, in exchange for the Notes, a like
aggregate principal amount of Exchange Securities;
(ii) use its best efforts to cause the Exchange Offer
Registration Statement to become effective as promptly as practicable after the
filing thereof, but in no event later than the Effectiveness Date;
(iii) keep the Exchange Offer Registration Statement effective
until the consummation of the Exchange Offer pursuant to its terms; and
(iv) unless the Exchange Offer would not be permitted by a
policy of the SEC, commence the Exchange Offer and use its best efforts to
issue, on or prior to 30 Business Days after the date on which the Exchange
Offer Registration Statement is declared effective, Exchange Securities in
exchange for all Notes tendered prior thereto in the Exchange Offer.
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<PAGE>
The Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate applicable law or any applicable
interpretation of the staff of the SEC and, with respect to any particular
Holder, the conditions contemplated in Section 2(h) below.
(b) The Exchange Securities shall be issued under, and entitled to the
benefits of, the Indenture or a trust indenture that is identical to the
Indenture (other than such changes as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification thereof under
the TIA).
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal that is an exhibit to the Exchange Offer Registration
Statement, and any related documents;
(ii) keep the Exchange Offer open for not less than 30 days
after the date notice thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last Business Day on which
the Exchange Offer shall remain open; and
(v) otherwise comply with all laws applicable to the Exchange
Offer.
(d) As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange all Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Notes, Exchange Securities equal in aggregate principal amount
to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange Security
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the date of original issue of the Notes. Each Exchange Security
and Private Exchange Security shall bear interest at the rate
5
<PAGE>
set forth thereon; PROVIDED, that interest with respect to the period prior to
the issuance thereof shall accrue at the rate or rates borne by the Notes
surrendered in exchange therefor from time to time during such period.
(f) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
containing a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including (without
limitation) all Participating Brokers-Dealers, and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Securities. The Company shall use its best efforts to keep the Exchange
Offer Registration Statement effective and to amend and supplement the
Prospectus to be lawfully delivered by all Persons subject to the prospectus
delivery requirement of the Securities Act for such period of time as such
Persons must comply with such requirements in order to resell the Exchange
Securities (the "Applicable Period"); PROVIDED, that such period shall not
exceed 180 days.
(g) If, prior to consummation of the Exchange Offer, the Purchaser
holds any Notes acquired by it and having the status as an unsold allotment in
the initial distribution, the Company shall, upon the request of the Purchaser,
simultaneously with the delivery of the Exchange Securities in the Exchange
Offer, issue (pursuant to the same indenture as the Exchange Securities) and
deliver to the Purchaser, in exchange for the Notes held by the Purchaser (the
"Private Exchange"), a like principal amount of debt securities of the Company
that are identical to the Exchange Securities (the "Private Exchange
Securities"), except for the placement of a restrictive legend on the Private
Exchange Securities. If possible, the Private Exchange Securities shall bear the
same CUSIP number as the Exchange Securities.
(h) The Company may require each Holder participating in the Exchange
Offer to represent to the Company that, at the time of the consummation of the
Exchange Offer, (i) any Exchange Securities received by such Holder in the
Exchange Offer will be acquired in the ordinary course of its business, (ii)
such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Securities within the meaning of
the Securities Act or resale of the Exchange Securities in violation of the
Securities Act, (iii) if such Holder is not a broker-dealer, that it is not
engaged in and does not intend to engage in, the distribution of the Exchange
Securities, (iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities, that it will deliver a
prospectus, as required by law, in connection with any resale of such Exchange
Securities, (v) if such Holder is an affiliate of the Company, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it and (vi) such Holder is not acting on behalf of
any Person who could not make the foregoing representation.
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(i) If (i) prior to the consummation of the Exchange Offer, either the
Company or the Holders of a majority in aggregate principal amount of
Registrable Securities determines in its or their reasonable judgment that (A)
the Exchange Securities would not, upon receipt, be tradeable by the Holders
thereof (which are not Affiliates (within the meaning of the Securities Act) of
the Company) without restriction under the Securities Act and the Exchange Act
and without material restrictions under applicable Blue Sky or state securities
laws, or (B) the interests of the Holders under this Agreement, taken as a
whole, would be materially adversely affected by the consummation of the
Exchange Offer, (ii) applicable interpretations of the staff of the SEC would
not permit the consummation of the Exchange Offer prior to the Effectiveness
Date, (iii) subsequent to the consummation of the Private Exchange, the
Purchaser so requests, (iv) the Exchange Offer is not consummated within 150
days of the Closing Date for any reason or (v) in the case of any Holder not
permitted to participate in the Exchange Offer or of any Holder participating in
the Exchange Offer that receives Exchange Securities that may not be sold
without restriction under state and federal securities laws (other than due
solely to the status of such Holder as an affiliate of the Company within the
meaning of the Securities Act) and, in either case contemplated by this clause
(v), such Holder notifies the Company within 90 days of consummation of the
Exchange Offer, then the Company shall promptly deliver to the Holders (or in
the case of any occurrence of the event described in clause (v) hereof, to any
such Holder) and the Trustee notice thereof (the "Shelf Notice") and shall as
promptly as possible thereafter file an Initial Shelf Registration pursuant to
Section 3.
3. SHELF REGISTRATION
If a Shelf Notice is required to be delivered pursuant to Section
2(i)(i), (ii), (iii) or (iv), then this Section 3 shall apply to all Registrable
Securities. Otherwise, upon consummation of the Exchange Offer in accordance
with Section 2, the provisions of this Section 3 shall apply solely with respect
to (i) Notes held by any Holder thereof not permitted to participate in the
Exchange Offer and (ii) Exchange Securities that are not freely tradeable as
contemplated by Section 2(i)(v) hereof.
(a) INITIAL SHELF REGISTRATION. The Company shall prepare and file with
the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Securities (the
"Initial Shelf Registration"). The Company shall use its best efforts to file
the Initial Shelf Registration within 30 days of the delivery of the Shelf
Notice or as promptly as possible following the request of the Purchaser. The
Initial Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Securities for resale by such
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company shall (i) not
permit any securities other than the Registrable Securities to be included in
any Shelf Registration, and (ii) use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable after the filing thereof, but in no event later than 60 days after
the filing of the Initial Shelf Registration and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date that
is 18 months
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<PAGE>
from the Effectiveness Date (subject to extension pursuant to the penultimate
paragraph of Section 6 hereof) (the "Effectiveness Period"), or such shorter
period ending when (i) all Registrable Securities covered by the Initial Shelf
Registration have been sold, (ii) a Subsequent Shelf Registration covering all
of the Registrable Securities has been declared effective under the Securities
Act or (iii) such Registrable Securities are eligible for resale pursuant to
Rule 144(k) under the Securities Act.
(b) SUBSEQUENT SHELF REGISTRATIONS. If any Shelf Registration ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the Registrable Securities registered
thereunder), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any event
shall within 30 days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration,
and any Subsequent Shelf Registration, was previously effective.
(c) SUSPENSION PERIOD. The Company shall not be deemed to have breached
its obligations pursuant to this Section if it shall be required to amend the
Shelf Registration or the effectiveness of the Shelf Registration shall be
suspended, or the Prospectus contained in the Shelf Registration shall not be
usable, as a result of a corporate transaction involving the Company that is not
adequately reflected in the Shelf Registration; PROVIDED that (i) the failure to
keep the Shelf Registration effective and usable for such reasons shall last no
longer than 45 days in any 12-month period and (ii) notwithstanding the
foregoing, the Company will be obligated to pay liquidated damages pursuant to
Section 4(a)(iv). Any such period during which the Company fails to keep the
Shelf Registration effective and usable is referred to as a "Suspension Period."
A Suspension Period shall commence on and include the date that the Company
gives notice that the Shelf Registration is no longer effective or the
Prospectus included therein is no longer usable and shall end on the earlier to
occur of (i) the date when each seller of Registrable Securities covered by such
Shelf Registration either receives copies of the supplemented or
amended prospectus or is advised in writing by the Company that the use of the
prospectus may
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<PAGE>
be resumed and (ii) the expiration the 45 days in any 12-month period during
which one or more Suspension Periods has been in effect.
(d) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION. No Holder of Registrable Securities may include any of its
Registrable Securities in any Shelf Registration pursuant to this Agreement
unless and until such Holder furnishes to the Company in writing, within 20 days
after receipt of a request therefor, the information specified in Item 507 or
508 of Regulation S-K, as applicable, of the Securities Act for use in
connection with any Shelf Registration or Prospectus or preliminary Prospectus
included therein. No Holder of Registrable Securities shall be entitled to
liquidated damages pursuant to Section 4 hereof unless and until such Holder
shall have provided all such information and made the representations contained
in Section 2(h). Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
4. LIQUIDATED DAMAGES
(a) The Company acknowledges and agrees that the Holders will suffer
damages, and that it would not be feasible to ascertain the extent of such
damages with precision, if the Company fails to fulfill its obligations
hereunder. Accordingly, in the event of such failure, the Company agrees to pay
liquidated damages to each Holder under the circumstances and to the extent set
forth below:
(i) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed with the SEC on or prior to the
Filing Date; or
(ii) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the SEC on or prior to
the Effectiveness Date; or
(iii) if the Company has not exchanged Exchange Securities for
all Notes validly tendered in accordance with the terms of the Exchange Offer
within 30 days after the date on which an Exchange Offer Registration Statement
is declared effective by the SEC; or
(iv) if a Shelf Registration is filed and declared effective
by the SEC but thereafter ceases to be effective without being succeeded within
30 days by a Subsequent Shelf Registration filed and declared effective;
(each of the foregoing an "Event," and the date on which the Event occurs being
referred to herein as an "Event Date").
Upon the occurrence of any Event, the Company shall pay, or cause to be
paid, in addition to amounts otherwise due under the Indenture and the
Registrable Securities, as liquidated damages, and not as a penalty, to each
Holder for each weekly period beginning on the
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Event Date an amount equal to the Weekly Liquidated Damages Amount per $1,000
principal amount of Registrable Securities held by such Holder; PROVIDED, that
such liquidated damages will, in each case, cease to accrue (subject to the
occurrence of another Event) on the date on which all Events have been cured
and; PROVIDED, further, that the Company shall in no event be required to pay
liquidated damages for more than one Event at any given time . An Event under
clause (i) above shall be cured on the date that either the Exchange Offer
Registration Statement or the Initial Shelf Registration is filed with the SEC;
an Event under clause (ii) above shall be cured on the date that either the
Exchange Offer Registration Statement or the Initial Shelf Registration is
declared effective by the SEC; an Event under clause (iii) above shall be cured
on the earlier of the date (A) the Exchange Offer is consummated with respect to
all Notes validly tendered or (B) the Company delivers a Shelf Notice to the
Holders; and an Event under clause (iv) above shall be cured on the earlier of
(A) the date on which the applicable Shelf Registration is no longer subject to
an order suspending the effectiveness thereof or proceedings relating thereto or
(B) a new Subsequent Shelf Registration is declared effective.
(b) The Company shall notify the Trustee within five Business Days
after each Event Date. The Company shall pay the liquidated damages due on the
Registrable Securities by depositing with the Trustee, in trust, for the benefit
of the Holders thereof, by 12:00 noon, New York City time, on or before the
applicable semi-annual interest payment date for the Registrable Securities,
immediately available funds in sums sufficient to pay the liquidated damages
then due. The liquidated damages amount due shall be payable on each interest
payment date to the record Holder entitled to receive the interest payment to be
made on such date as set forth in the Indenture.
5. GAMING CONSENTS
Prior to consummating the Exchange Offer or filing the Initial Shelf
Registration, as the case may be, the Company shall make or obtain all Permits
necessary or desirable for the consummation of the transactions contemplated
hereby.
6. REGISTRATION PROCEDURES
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, as soon as practicable after the
date hereof but in any event on or prior to the Filing Date, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and use
its best efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; PROVIDED, that, if (i) such filing is
pursuant to Section 3 or (ii) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any
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Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall, if requested, furnish to
and afford the Holders of the Registrable Securities covered by such
Registration Statement, their Special Counsel, each Participating Broker-Dealer,
the managing underwriters, if any, and their counsel a reasonable opportunity to
review and make available for inspection by such Persons copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed, such financial and other
information and books and records of the Company, and cause the officers,
directors and employees of the Company, Company counsel and independent
certified public accountants of the Company, to respond to such inquiries, as
shall be necessary, in the opinion of respective counsel to such Holders,
Participating Broker-Dealer and underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company may require
each Holder to agree to keep confidential any non-public information relating to
the Company received by such Holder and not disclose such information (other
than to an Affiliate or prospective purchaser who agrees to respect the
confidentiality provisions of this Section 6(a)) until such information has been
made generally available to the public unless the release of such information is
required by law or necessary to respond to inquiries of regulatory authorities
(including the National Association of Insurance Commissioners, or similar
organizations or their successors). The Company shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto in respect of
which the Holders must be afforded an opportunity to review prior to the filing
of such document, if the Holders of a majority in aggregate principal amount of
the Registrable Securities covered by such Registration Statement, their Special
Counsel, any Participating Broker-Dealer or the managing underwriters, if any,
or their counsel shall reasonably object within five days after the receipt
thereof.
(b) Provide an indenture trustee for the Registrable Securities or the
Exchange Securities, as the case may be, and cause the Indenture (or other
indenture relating to the Registrable Securities) to be qualified under the TIA
not later than the effective date of the first Registration Statement; and in
connection therewith, to effect such changes to such indenture as may be
required for such indenture to be so qualified in accordance with the terms of
the TIA; and execute, and use its best efforts to cause such trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods required
hereby; cause the related Prospectus to be supplemented by any Prospectus
supplement required by Applicable Law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such Prospectus, as so supplemented, in
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accordance with the intended methods of distribution set forth in such
Registration Statement or Prospectus as so amended.
(d) Furnish to such selling Holders and Participating Broker-Dealers
who so request (i) upon the Company's receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number of
copies of the final Prospectus as filed by the Company pursuant to Rule 424(b)
under the Securities Act, in conformity with the requirements of the Securities
Act, and (iv) such other documents (including any amendments required to be
filed pursuant to clause (c) of this Section), as any such Person may reasonably
request. The Company hereby consents to the use of the Prospectus by each of the
selling Holders of Registrable Securities or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and sale of the Registrable
Securities covered by, or the sale by Participating Broker-Dealers of the
Exchange Securities pursuant to, such Prospectus and any amendment thereto.
(e) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, their
Special Counsel, each Participating Broker-Dealer and the managing underwriters,
if any, promptly (but in any event within two Business Days), and confirm such
notice in writing, (i) when a Prospectus has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective under the Securities Act, (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any Prospectus or the initiation of any
proceedings for that purpose, (iii) if, at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities, the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 6(l) below cease to be true and correct in any material respect, (iv)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of a Registration Statement
or any of the Registrable Securities or the Exchange Securities to be sold by
any Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
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they were made, not misleading, and (vi) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(f) Use its best efforts to register or qualify, and, if applicable, to
cooperate with the selling Holders of Registrable Securities, the underwriters,
if any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of,
Securities to be included in a Registration Statement for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder, Participating Broker-Dealer or the managing underwriters
reasonably request in writing; and, if Securities are offered other than through
an Underwritten Offering, the Company shall cause its counsel to perform Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 6(f) at the expense of the Company; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Securities covered by the applicable
Registration Statement; PROVIDED, HOWEVER, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then so qualified, (ii) to take action that would subject it to general
service of process in any jurisdiction where it is not so subject or (iii)
subject it to taxation in respect of doing business in any such jurisdiction
where it is not then subject.
(g) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Securities for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible time.
(h) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be included therein required to comply with any Applicable
Law and (ii) make all required filings of such Prospectus or such post-effective
amendment as soon as practicable after the Company has received notification of
such matters required by Applicable Law to be incorporated in such Prospectus or
post-effective amendment.
(i) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders and the
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managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold, which
certificates shall not, upon sale in accordance with the Shelf Registration or
Prospectus, bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company ("DTC"); and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may request.
(j) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
6(e)(v) or 6(e)(vi) above, as promptly as practicable, subject to the provisions
of Section 3(c), prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder or to the purchasers of the
Exchange Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(k) Prior to the effective date of the first Registration Statement
relating to the Securities, (i) provide the applicable trustee with printed
certificates for the Securities in a form eligible for deposit with DTC and (ii)
provide a CUSIP number for each of the Securities, it being understood that all
Registrable Securities, for so long as such Securities are Registrable
Securities, will continue to bear any appropriate restrictive legends.
(l) If a Shelf Registration is filed pursuant to Section 3, upon the
request of the Holders of at least a majority in aggregate principal amount of
Registrable Securities, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith (including
those reasonably requested by the managing underwriters, if any, or the Holders
of a majority in aggregate principal amount of Registrable Securities being
sold) in order to expedite or facilitate the registration or the disposition of
such Registrable Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
Underwritten Registration, (i) make such reasonable representations and
warranties to the Holders and the underwriters, if any, with respect to the
business of the Company and its subsidiaries, if any, and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and scope as
are customarily made by issuers to underwriters in Underwritten Offerings, and
confirm the same if and when reasonably requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Holders
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of a majority in aggregate principal amount of the Registrable Securities being
sold), addressed to each selling Holder and each of the underwriters, if any,
covering the matters customarily covered in opinions requested in Underwritten
Offerings; (iii) obtain "cold comfort" letters and updates thereof (which
letters and updates (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters) from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters and each selling Holder, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with Underwritten Offerings and such other matters as reasonably
requested by underwriters; and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority in principal amount of
the Registrable Securities being sold and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties of the
Company and its subsidiaries made pursuant to clause (i) above and to evidence
compliance with any conditions contained in the underwriting agreement or other
similar agreement entered into by the Company. Notwithstanding the foregoing,
the Company shall not be obligated to enter into an underwriting agreement or to
facilitate such disposition in an Underwritten Offering pursuant to any Shelf
Registration unless Holders of a majority in aggregate principal amount of such
Registrable Securities elect to dispose of such Registrable Securities in such
an Underwritten Offering.
(m) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period (or
90 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing on the first day of the fiscal quarter following each fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(n) Upon consummation of an Exchange Offer or Private Exchange, obtain
an opinion of counsel to the Company (in form, scope and substance reasonable
and customary for underwritten offerings of debt securities similar to the
Notes), addressed to the Trustee for the benefit of all Holders participating in
the Exchange Offer or Private Exchange, as the case may be, to the effect that
(i) the Company has duly authorized, executed and delivered the Exchange
Securities or the Private Exchange Securities, as the case may be, and the
Indenture and (ii) the Exchange Securities or the Private Exchange Securities,
as the case may be, the Indenture and the Security Documents constitute legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforcement may be
subject to (A) applicable bankruptcy, insolvency, reorganization,
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moratorium and similar laws affecting creditors' rights and remedies generally
and (B) general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
(o) If an Exchange Offer or Private Exchange is to be consummated, upon
delivery of the Registrable Securities by such Holders to the Company (or to
such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, and in no
event shall such Registrable Securities be marked as paid or otherwise
satisfied.
(p) Cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
(q) Use its best efforts to take all other reasonable steps necessary
to effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request in writing.
The Company may exclude from such registration the Registrable Securities of any
seller or Exchange Securities of any Participating Broker-Dealer who fails to
furnish such information.
Each Holder and each Participating Broker-Dealer agrees by acquisition
of such Registrable Securities or Exchange Securities of any Participating
Broker-Dealer that, upon receipt of written notice (a "Suspension Notice") from
the Company of the happening of any event of the kind described in Section
6(e)(ii), 6(e)(iv), 6(e)(v) or 6(e)(vi), such Holder will forthwith discontinue
disposition (in the jurisdictions specified in a notice of a 6(e)(iv) event, and
elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi) event) of such
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(j), or until it is advised in writing (the "Advice")
by the Company that offers or sales in a particular jurisdiction may be resumed
or that the use of the applicable Prospectus may be resumed, as the case may be,
and has received copies of any amendments or supplements thereto. If the Company
shall give such notice, each of the Effectiveness Period and the Applicable
Period shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date when
each seller of such Securities covered by such Registration
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Statement shall have received (i) the copies of the supplemented or amended
Prospectus contemplated by Section 6(j) or (ii) the Advice.
Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Registrable Securities that was
current at the time of receipt of the Suspension Notice.
7. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Securities or
Exchange Securities and determination of the eligibility of the Registrable
Securities or Exchange Securities for investment under the laws of such
jurisdictions (x) where the Holders are located, in the case of the Exchange
Securities, or (y) as provided in Section 6(f), in the case of Registrable
Securities or Exchange Securities to be sold by a Participating Broker-Dealer
during the Applicable Period);
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with DTC and of printing prospectuses
if the printing of prospectuses is requested by the managing underwriters, if
any, or, in respect of Registrable Securities or Exchange Securities to be sold
by a Participating Broker-Dealer during the Applicable Period, by the Holders of
a majority in aggregate principal amount of the Registrable Securities included
in any Registration Statement or of such Exchange Securities, as the case may
be);
(iii) messenger, telephone, duplication, word processing and
delivery expenses incurred by the Company in the performance of its obligations
hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified public
accountants referred to in Section 6(l)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance);
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(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only where
the need for such a "qualified independent underwriter" arises due to a
relationship with the Company;
(vii) Securities Act liability insurance, if the Company so
desires such insurance; and
(viii) fees and expenses of all other Persons retained by the
Company; internal expenses of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company performing legal
or accounting duties); and the expense of any annual audit.
(b) The Company shall reimburse the Holders for the reasonable fees and
disbursements of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Securities to be included in any Registration Statement. The
Company shall not have any obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of any Securities pursuant to this
Agreement.
8. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder and each
Participating Broker-Dealer, each Person who controls each such Holder (within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) and the officers, directors, partners, employees, representatives and
agents of each such Holder, Participating Broker-Dealer and controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (including, without limitation, costs and expenses
reasonably incurred in connection with investigating or defending against any of
the foregoing) (collectively, "Losses"), as incurred, directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto,
or in any preliminary prospectus, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such Losses are based upon and in
conformity with information relating to such Holder or Participating
Broker-Dealer and furnished in writing to the Company by such Holder or
Participating Broker-Dealer or an authorized representative thereof expressly
for use therein; PROVIDED, however, that the indemnification contained in this
paragraph (a) with respect to any preliminary Prospectus provided by the Company
shall not inure to the benefit of any Participating Broker-Dealer (or to the
benefit of any Person controlling such Participating Broker-Dealer) on account
of any such Losses arising from the sale of the Securities
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by such Participating Broker-Dealer to any Person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in such preliminary Prospectus was corrected in the Prospectus and the
Participating Broker-Dealer sold Securities to that Person without sending or
giving at or prior to the written confirmation of such sale, a copy of the
Prospectus (as then amended or supplemented).
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In connection
with any Registration Statement, Prospectus or form of prospectus, any amendment
or supplement thereto, or any preliminary prospectus in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without limitation
as to time, indemnify and hold harmless the Company, its directors, officers,
agents, representatives and employees, each Person, if any, who controls the
Company (within the meaning of Section 15 of the Securities Act and Section
20(a) of the Exchange Act), and the directors, officers, agents, representatives
or employees of such controlling persons, to the fullest extent lawful, from and
against all Losses arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading to the extent, but only to the extent, that such untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact is contained in or omitted from any information so furnished in
writing by such Holder to the Company expressly for use therein. In no event
shall the liability of any selling Holder be greater in amount than the dollar
amount of the proceeds (net of payment of all expenses) received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party or
parties from which such indemnity is sought (the "indemnifying parties") in
writing; PROVIDED, that the failure to so notify the indemnifying parties shall
not relieve the indemnifying parties from any obligation or liability except to
the extent (but only to the extent) that it shall be finally determined by a
court of competent jurisdiction (which determination is not subject to appeal)
that the indemnifying parties have been prejudiced materially by such failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt of
written notice from such indemnified party of such Proceeding, to assume, at its
expense, the defense of any such Proceeding, PROVIDED, that an indemnified party
shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless: (i) the
indemnifying party has
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specifically agreed in writing to pay such fees and expenses; or (ii) the
indemnifying party shall have failed to assume the defense of such Proceeding or
shall have failed to employ counsel reasonably satisfactory to such indemnified
party; or (iii) the named parties to any such Proceeding (including any
impleaded parties) include both such indemnified party and the indemnifying
party or any of its affiliates or controlling persons, and such indemnified
party shall have been advised by counsel that there may be one or more defenses
reasonably available to such indemnified party that are in addition to, or in
conflict with, those defenses available to the indemnifying party or such
affiliate or controlling person (in which case, if such indemnified party
notifies the indemnifying parties in writing that it elects to employ separate
counsel at the expense of the indemnifying parties, the indemnifying parties
shall not have the right to assume the defense thereof and the reasonable fees
and expenses of such counsel shall be at the expense of the indemnifying party;
it being understood, however, that, the indemnifying party shall not, in
connection with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all indemnified parties).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any such
Proceeding, each indemnifying party jointly and severally agrees, subject to the
exceptions and limitations set forth above, to indemnify and hold harmless each
indemnified party from and against any and all Losses by reason of such
settlement or judgment. The indemnifying party shall not consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).
(d) CONTRIBUTION. If the indemnification provided for in this Section 8
is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the one hand, and such
indemnified party, on the other hand, from the offering of the Securities, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party, on the one hand, and such indemnified party, on the
other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to,
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among other things, whether any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such statement or omission. The amount paid or payable by
an indemnified party as a result of any Losses shall be deemed to include any
legal or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in Section 8(a) or 8(b) was
available to such party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), an indemnifying party that
is a selling Holder shall not be required to contribute, in the aggregate, any
amount in excess of such Holder's Maximum Contribution Amount. A selling
Holder's "Maximum Contribution Amount" shall equal the excess of (i) the
aggregate proceeds received by such Holder pursuant to the sale of such
Registrable Securities over (ii) the aggregate amount of damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 8
are in addition to any liability that the indemnifying parties may have to the
indemnified parties.
9. RULE 144 AND RULE 144A
The Company covenants that it shall (a) file the reports required to be
filed by it (if so required) under the Securities Act and the Exchange Act in a
timely manner and, if at any time any such Person is not required to file such
reports, it will, upon the request of any Holder, make publicly available other
information necessary to permit sales pursuant to Rule 144 and Rule 144A and (b)
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act pursuant to the exemptions
provided by Rule 144 and Rule 144A. Upon the request of any Holder, the Company
shall deliver to such Holder a written statement as to whether they have
complied with such information and requirements.
10. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Securities covered by any Shelf Registration
are to be sold in an Underwritten Offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Securities included in such offering.
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No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company or any Holder of
any of its obligations under this Agreement, the Company and each Holder, in
addition to being entitled to exercise all rights provided herein, in the
Indenture or, in the case of the Purchaser, in the Purchase Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and each Holder
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, each of them shall waive the
defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company has not entered into, as of
the date hereof, and shall not enter into, after the date of this Agreement, any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of Holders of at
least a majority of the then outstanding aggregate principal amount of
Registrable Securities; PROVIDED, that Sections 6(a) and 8 shall not be amended,
modified or supplemented, and waivers or consents to departures from this
proviso may not be given, unless the Company has obtained the written consent of
each Holder. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Securities being sold by such Holders pursuant to such
Registration Statement, PROVIDED that the provisions of this sentence may not be
amended, modified or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) NOTICES. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail, return receipt requested, next-day air courier or facsimile:
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(i) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 11(d),
which address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture, with a copy to Skadden,
Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles, California
90071, telecopy number (213) 687-5600, Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company, initially at 1717 North River Road,
Baton Rouge, Louisiana 70802, Attention: General Manager, telecopy number (225)
709-7770, and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11(d) with a copy to Carnival
Resorts & Casinos, 3250 Mary Street, 5th Floor, Miami, Florida 33133, Attention:
W. Peter Temling, telecopy number (305) 445-4261 and Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., 150 West Flagler St., Suite 2200, Miami,
Florida 33130, Attention: Richard E. Schatz, Esq., telecopy number (305)
789-3395.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders; PROVIDED, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Registrable Securities in violation
of the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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<PAGE>
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN
ANY OTHER JURISDICTION.
(i) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
24
<PAGE>
(k) ATTORNEYS' FEES. In any Proceeding brought to enforce any provision
of this Agreement, or where any provision hereof is validly asserted as a
defense, the prevailing party, as determined by the courts, shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and any
other available remedy.
(l) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than Holders deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
25
<PAGE>
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
LOUISIANA CASINO CRUISES, INC.
By:___________________________
Name:
Title:
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By:___________________________
Name:
Title:
EXHIBIT 10.5
(Baton Rouge)
MORTGAGE, LEASEHOLD MORTGAGE, ASSIGNMENT OF RENTS,
FIXTURE FILING, SECURITY AGREEMENT AND
FINANCING STATEMENT
Dated as of January 27, 1999
LOUISIANA CASINO CRUISES, INC.
("Grantor")
to
U. S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
("Mortgagee")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH PAGE
- --------- ----
<S> <C>
GRANTING CLAUSES.................................................................2
HABENDUM ........................................................................6
REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS AND
CONDITIONS.......................................................................6
1. Payment of Secured Obligations.................................6
2. Warranty of Title..............................................6
3. Subordinate Mortgages and Liens................................7
4. Representations and Warranties.................................7
5. Covenants of Grantor as to Performance and Other Matters.......8
6. Performance by Mortgagee......................................11
7. Conflicts with Security Agreement.............................11
8. Insurance.....................................................11
9. Payment of Taxes, etc.........................................14
10. Escrow Fund...................................................14
11. Space Leases, Rents and Cash Collateral.......................15
12. Maintenance of the Property; Alterations......................17
13. Damage to and Destruction of the Mortgaged Property...........17
14. Condemnation..................................................17
15. Compliance with Agreements, Laws, etc.........................18
16. Contest of Taxes, Assessments and Liens.......................18
17. Cure of Defaults by Mortgagee.................................19
18. Indemnity.....................................................20
19. Event of Default..............................................20
20. Additional Remedies...........................................21
21. Confession of Judgment. .....................................22
22. Authorization to Execute Deeds, Appointment of Keeper, etc....22
23. Proceeds of Foreclosure Sale..................................23
24. Purchase of the Property by Mortgagee.........................24
25. Waiver of Right to Bring Counterclaim in Foreclosure Action...24
26. Uniform Commercial Code.......................................24
27. Intentionally Omitted.........................................25
28. Terms Subject to Applicable Law; Severability.................25
29. Modifications by Mortgagee....................................25
30. Change in Laws Regarding Taxation.............................25
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<PAGE>
31. Documentary Stamps............................................26
32. Cumulative Remedies of Mortgagee; No Waiver...................26
33. Filing of Shore Mortgage, etc.................................26
34. Marshaling....................................................27
35. Waiver of Notice..............................................27
36. Recovery of Sums Required to Be Paid..........................27
37. Further Assurances............................................27
38. Notices.......................................................28
39. Liability.....................................................28
40. Headings, etc.................................................28
41. Successors and Assigns........................................28
42. Discharge of Lien.............................................28
43. Survival of Assignment........................................28
44. Miscellaneous.................................................28
45. Governing Law; Interpretation.................................29
46. True Copy.....................................................29
47. Expenses of Enforcement.......................................29
48. Waiver........................................................29
49. Construction Mortgage.........................................30
50. The Mortgagee's Duties........................................30
51. Shore Mortgage Absolute.......................................30
52. Authentic Evidence............................................31
53. Interaction with Indenture....................................31
54. Excluded Assets...............................................31
</TABLE>
Schedule A - Leasehold Interest
Schedule B - Permitted Encumbrances
Schedule C - Certified Copy of Resolutions
ii
<PAGE>
MORTGAGE, LEASEHOLD MORTGAGE, * UNITED STATES OF AMERICA
ASSIGNMENT OF LEASES AND RENTS, *
FIXTURE FILING, SECURITY *
AGREEMENT AND FINANCING *
STATEMENT * STATE OF NEW YORK
*
BY *
*
LOUISIANA CASINO CRUISES, INC. * COUNTY OF NEW YORK
*
TO *
*
U.S. BANK TRUST NATIONAL *
ASSOCIATION, AS TRUSTEE *
* * * * * * * * * * * * * * * * * * * * *
BE IT KNOWN, that as of this 26th day of January, 1999, but for all
purposes herein effective as of January 27, 1999, before me the undersigned
Notary Public duly commissioned and qualified, personally came and appeared:
LOUISIANA CASINO CRUISES, INC., a Louisiana corporation (Federal
Taxpayer Identification No. 72-1196619), appearing through its
undersigned representative duly authorized hereunto by virtue of a
resolution of the Board of Directors thereof, a certified copy of which
is attached hereto as Schedule C, which has a mailing address of 1717
River Road North, Baton Rouge, Louisiana 70802.
("GRANTOR"), who declared that Grantor does by these presents declare and
acknowledge an indebtedness unto:
U. S. BANK TRUST NATIONAL ASSOCIATION, a national banking association
(Federal Taxpayer Identification No. 41-0257700), as trustee for the
Holders under an Indenture, dated as of January 27, 1999 (such
Indenture, as amended or otherwise modified from time to time, the
"Indenture"), between Grantor, the Subsidiary Guarantors referred to
therein and Trustee, appearing herein through its undersigned officer
duly authorized hereunto, which has a mailing address of 180 East 5th
Street, St. Paul, Minnesota 55101, Attention: Corporate Trust
Department.
("MORTGAGEE"), here present who accepts this Mortgage, Leasehold Mortgage,
Assignment of Leases and Rents, Fixture Filing, Security Agreement and Financing
Statement (this "SHORE MORTGAGE"; capitalized terms not otherwise defined in
this Shore Mortgage shall have the meanings set forth for such terms in the
Indenture).
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<PAGE>
W I T N E S S E T H
WHEREAS, Grantor is the owner of a (i) leasehold interest (the
"LEASEHOLD INTEREST") created under that certain Ground Lease Agreement, dated
June 16, 1993, between Capitol Lake Properties, Inc., as landlord, and Grantor,
as tenant, as amended by that certain Supplemental Agreement to Ground Lease,
dated June 16, 1993, between Capitol Lake Properties, Inc. and Grantor and that
certain Amendment to Ground Lease Agreement, dated September 30, 1993, between
Capitol Lake Properties, Inc. and Grantor (as so amended, the "LEASE"), and (ii)
a fee simple interest (the "FEE SIMPLE INTEREST") pursuant to that certain Cash
Sale by Luhr Bros., Inc. in favor of Grantor dated September 15, 1998, for
certain premises located in East Baton Rouge Parish, Louisiana, and more
particularly described on Schedule A attached hereto (such Leasehold Interest
and Fee Simple Interest being hereinafter defined as the "REAL PROPERTY"); and
WHEREAS, Grantor has entered into the Indenture, pursuant to which
Grantor has issued or will issue up to $55,000,000 of its 11% Senior Secured
Notes due 2005 (the "NOTES"); and
WHEREAS, Grantor has entered into a Purchase Agreement, dated as of
January 22, 1999 (the "PURCHASE AGREEMENT") with the Initial Purchaser (as
defined therein) pursuant to which the Initial Purchaser has agreed to purchase
the Notes specified in such Purchase Agreement; and
WHEREAS, the proceeds of the purchase of the Notes will be available to
Grantor to enable Grantor to repay the existing $50 million of Senior Secured
Increasing Rate Notes due 2001 and for working capital purposes, and therefore,
Grantor will derive substantial direct benefit from the transactions
contemplated herein, in the Indenture, the Security Documents (as defined in the
Indenture; such documents being collectively hereinafter referred to as the
"TRANSACTION DOCUMENTS") and the Purchase Agreement; and
WHEREAS, it is a condition precedent to the purchase of the Notes by
the Initial Purchaser and to the Purchase Agreement that Grantor shall have
executed and delivered this Shore Mortgage.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of ten dollars and other good and
valuable consideration, the receipt of and sufficiency of which are hereby
acknowledged, and to secure (i) the payment when due of indebtedness evidenced
by the Notes in the principal sum of FIFTY-FIVE MILLION DOLLARS ($55,000,000),
payable to the order of the Holders, bearing interest as set forth in the
Indenture and maturing on December 1, 2005, such date being the "Maturity Date",
and any notes exchanged for the Notes or issued in replacement of the Notes (in
each case pursuant to the terms of the Indenture), including, without
limitation, all accrued and unpaid interest thereon, and premiums and penalties,
if any, thereon, including late payment charges and Additional Interest (as
defined in Paragraph 17 hereof), (ii) the payment by Grantor if and when
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<PAGE>
due of (a) the Change of Control Payment (as defined in Section 4.14 of the
Indenture), in an amount not to exceed such amount calculated in accordance with
Section 4.14 of the Indenture, and (b) amounts due in connection with an Excess
Proceeds Offer (as defined in Section 4.10 of the Indenture) in an amount not to
exceed such amount calculated in accordance with Section 4.10 of the Indenture,
in either case together with interest thereon as set forth in the Indenture, and
premiums and penalties, if any, thereon, including Additional Interest, (iii)
all other sums that may or shall become due hereunder, in connection with the
Notes or under the other Transaction Documents, including the costs and expenses
of enforcing any provision of any of the foregoing documents or any extensions
or modifications of the Notes or any substitutions therefor, (iv) the
reimbursement to Mortgagee of all monies which may be advanced as herein
provided and of any and all costs and expenses (including reasonable attorneys'
fees and expenses) incurred or paid on account of any litigation at law or in
equity that may arise in respect of this Shore Mortgage or the obligations
secured hereby or the lands and premises and other property herein mentioned or
in obtaining possession of said lands and premises and other property after any
sale that may be made as hereinafter provided, (v) the payment by Grantor to
Mortgagee of all sums, if any, as may be duly expended or advanced by Mortgagee
in the performance of any obligation of Grantor as provided hereunder, (vi) the
payment of any and all other indebtedness that this Shore Mortgage by its terms
secures and (vii) the performance and observance of the covenants, agreements
and obligations of Grantor contained herein and in the other Transaction
Documents (all obligations and sums included in the foregoing clauses (i), (ii),
(iii), (iv), (v), (vi) and (vii) being hereinafter collectively referred to as
the "SECURED OBLIGATIONS"), and in order to charge with such performance and
with such payments said lands and premises and other property hereinafter
described and the rents, revenues, issues, income and profits thereof, Grantor
does hereby mortgage, affect, hypothecate, to inure to the use and benefit of
Mortgagee (as trustee under the Indenture), and its successors and assigns, all
right, title and interest of Grantor now owned or leased, or hereafter acquired,
in, to or under, or derived from each and all of the following properties,
estates, rights, titles and interests (collectively, the "MORTGAGED PROPERTY"):
(a) the Real Property and all tenements, hereditaments,
appurtenances, estates and rights in and to any of the Real Property
and all component parts of the Real Property;
(b) all buildings, improvements and other structures now or
hereafter located on any of the Real Property (the "IMPROVEMENTS");
(c) all of Grantor's right, title and interest in and to all
servitudes, easements, rights-of-way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water rights and
powers, and all estates, rights, title, interests, privileges,
liberties, prescriptions, advantages and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining to any of the
Real Property or the Improvements;
3
<PAGE>
(d) all of Grantor's right, title and interest in and to any
right to purchase, or to use and occupy, any land adjacent to any of
the Real Property and any land lying in the bed of any street, road or
avenue, opened or proposed, in front of or adjoining any of the Real
Property;
(e) all of Grantor's right, title and interest to all
machinery, apparatus, equipment, fittings, fixtures and other property
of every kind and nature whatsoever now or hereafter located upon any
of the Real Property or the Improvements, and all component parts of
any building or other construction located on any of the Real Property
or appurtenances thereto, and used in connection with the operation and
occupancy of any of the Real Property or the Improvements, and all
building equipment, materials and supplies of any nature whatsoever now
or hereafter located in or upon any of the Real Property or the
Improvements, including, without limitation, ships, boats, barges and
vessels together with all of the boilers, engines, machinery, masts,
spars, sails, anchors, cables, chains, rigging, tackle, fittings and
all other appurtenances thereunto appertaining or belonging, and all
structural steel and other metals, lumber and lumber products, bricks,
stones, building blocks, sand, cement, roofing materials, paint, doors,
windows, hardware, wires, wiring and other building materials and any
building equipment, materials and supplies obtained for use in
connection with any of the Real Property or the Improvements and all
additions, replacements, modifications and alterations of any of the
foregoing, including, but without limiting the generality of the
foregoing, all heating, lighting, incinerating and power equipment,
engines, pipes, tanks, motors, conduits, switchboards, plumbing,
lifting, cleaning, fire prevention, fire extinguishing, refrigerating,
ventilating and communications apparatus, air cooling and air
conditioning apparatus, elevators, ducts and compressors and all other
equipment and fixtures (collectively, the "EQUIPMENT"). Grantor
acknowledges that all Equipment is part and parcel of the real estate
and appropriated to the use of the real estate and, whether or not
affixed or annexed to the Improvements, shall for the purpose of this
Shore Mortgage be deemed conclusively to be real estate and mortgaged
hereby;
(f) all of Grantor's right, title and interest to all plans
and specifications for the Real Property and the Improvements, all
contracts with architects and engineers responsible for the design of
the Improvements, the preparation or evaluation of any of such plans
and specifications or the supervision of the construction of any of the
Improvements, all contracts to which Grantor is now or hereafter a
party providing for the construction of any of the Improvements, or the
furnishing of labor or materials in connection therewith or the
furnishing or installation of any Equipment or other personal property
in connection therewith, all contracts to which Grantor is now or
hereafter a party providing for the management of the construction of
any of the Improvements, all rights of Grantor as a third party
beneficiary under all contracts and subcontracts pertaining to the Real
Property or the Improvements as to which Grantor is not a party, all
payment and performance bonds relating to the Real Property or the
Improvements and all other contracts and agreements related to the
design, management, construction,
4
<PAGE>
equipping and development of the Real Property or the Improvements
(collectively, the "CONSTRUCTION DOCUMENTS");
(g) all of Grantor's right, title and interest to all awards
or payments, and any interest paid or payable with respect thereto,
that may be made with respect to all or any portion of the Real
Property, the Improvements or the Equipment, whether from the exercise
of right of condemnation, eminent domain or similar proceedings
(including any transfer made in lieu of the exercise of said right), or
from any taking for public use, or for any other injury to or decrease
in the value of all or any portion of the Real Property, the
Improvements or the Equipment, or as a result of the exercise by any
governmental authority of any right or option to purchase any of the
Real Property, all of the foregoing to be held, applied and paid in
accordance with the provisions of this Shore Mortgage (collectively,
the "EMINENT DOMAIN AWARDS");
(h) all of Grantor's right, title and interest to all proceeds
of, and any unearned premiums on, any insurance policies covering all
or any portion of the Real Property, the Improvements or the Equipment
or the Rents (as hereinafter defined), including, without limitation,
the right to receive and apply the proceeds of any insurance,
judgments, or settlements made in lieu thereof, for damage to all or
any portion of the Real Property, the Improvements or the Equipment and
any interest actually paid with respect thereto, all of the foregoing
to be held, applied and paid in accordance with the provisions of this
Shore Mortgage (collectively, the "INSURANCE PROCEEDS");
(i) all of Grantor's right, title and interest as lessor or
landlord to all leases and other agreements affecting the use or
occupancy of any of the Real Property or the Improvements now in effect
or hereafter entered into (including, without limitation, subleases
(including subleases of the Lease, licenses, concessions, tenancies and
other occupancy agreements covering or encumbering all or any portion
of the Real Property or the Improvements), but excluding any licenses
and permits to the extent not assignable under applicable law,
including without limitation, liquor and gaming licenses, together with
any modifications, extensions or renewals of the same (collectively,
excluding the Lease, the "SPACE LEASES") and the rents, revenues,
issues, income, products and profits of the Real Property and the
Improvements, including, without limitation, any security deposits or
other funds deposited with Grantor pursuant to the Space Leases
(collectively, the "Rents"), together with any guarantees of the Space
Leases or Rents delivered to the Grantor from time to time, and any
modifications, extensions and renewals of any such guarantees, together
with the right, but not the obligation, to exercise options, to give
consents and to collect, receive and receipt for the Rents and apply
the Rents to the payment of the Secured Obligations and to demand, sue
for and recover the Rents (when due and payable), subject to a license
in favor of Grantor in respect thereof prior to the occurrence of an
Event of Default (as defined in Paragraph 19 hereof); and
5
<PAGE>
(j) any and all other, further or additional rights, title,
estates and interests of Grantor in and to any of the Real Property or
the Improvements or the Equipment, and all renewals, substitutions and
replacements of and all additions and appurtenances to any of the Real
Property or the Improvements or the Equipment or constructed, assembled
or placed on any of the Real Property or the Improvements, and all
conversions of the security constituted thereby that, immediately upon
such acquisition, construction, assemblage, placement or conversion, as
the case may be, and in each such case without any further mortgage,
conveyance, assignment or other act by Grantor, shall become subject to
the lien of this Shore Mortgage as fully and completely, and with the
same effect, as though now owned by Grantor, Grantor expressly agreeing
that if Grantor shall at any time acquire any other right, title,
estate or interest in and to any of the Real Property, the Improvements
or the Equipment, the lien of this Shore Mortgage shall automatically
attach to and encumber such other right, title, estate or interest as a
first lien thereon.
AND, as additional security, Grantor hereby grants to Mortgagee a
continuing security interest in (a) the Equipment, (b) the Construction
Documents, (c) the Insurance Proceeds, (d) the Eminent Domain Awards, (e) the
Space Leases, (f) the Rents, (g) all proceeds of the foregoing and (h) all
proceeds of any of the Real Property and the Improvements (collectively, the
"SECURITY INTEREST PROPERTY") and this Shore Mortgage shall be effective as a
security agreement pursuant to the Uniform Commercial Code as enacted and in
effect in the state in which any of the Real Property is located (the "CODE").
HABENDUM
TO HAVE AND TO HOLD the Mortgaged Property, the rights and privileges
hereby conveyed or assigned, or intended so to be, unto Mortgagee (as trustee
under the Indenture), its successors and assigns, forever for the uses and
purposes and subject to the terms and conditions herein set forth.
REPRESENTATIONS, WARRANTIES, COVENANTS,
AGREEMENTS AND CONDITIONS
THIS SHORE MORTGAGE FURTHER WITNESSETH the following representations,
warranties, covenants, agreements and conditions:
1. PAYMENT OF SECURED OBLIGATIONS. The Grantor will duly and punctually
pay the principal (and premium, if any) and interest on the Notes in accordance
with the terms of the Notes and the Indenture.
2. WARRANTY OF TITLE. Grantor warrants that it has good and marketable
title to all of the Real Property and the Improvements, subject only to the
encumbrances set forth on Schedule B hereto ("PERMITTED ENCUMBRANCES"); Grantor
has and will continue to have full power and
6
<PAGE>
lawful authority to encumber and convey the Mortgaged Property as provided
herein. Grantor owns all other Mortgaged Property free and clear of all liens,
charges and encumbrances of every kind and character, subject only to the
Permitted Encumbrances and Permitted Liens. Grantor further covenants that it
will preserve such title and will forever warrant and defend the title to the
Mortgaged Property unto Mortgagee against all claims whatsoever, subject to
Permitted Encumbrances and Permitted Liens and will forever warrant and defend
the validity, enforceability and priority of the lien of this Shore Mortgage
against the claims of all persons and parties whomsoever.
3. SUBORDINATE MORTGAGES AND LIENS. This Shore Mortgage is and shall be
maintained by Grantor as a valid first mortgage lien on and first security
interest in the Mortgaged Property, subject only to the Permitted Encumbrances
and Permitted Liens and such other matters as may be expressly permitted under
the Transaction Documents. Except as otherwise provided in the Transaction
Documents, Grantor shall not, directly or indirectly, create or suffer, or
permit to be created or suffered, against the Mortgaged Property or any part
thereof, including, without limitation, the Equipment or the Rents, and Grantor
will promptly discharge, any mortgage, lien (including the liens of mechanics
and materialmen), pledge, title retention agreement, attachment, security
interest, encumbrance or charge that may affect the Mortgaged Property, or any
part thereof, or interest therein, EXCEPT (i) the Permitted Encumbrances and
Permitted Liens and (ii) matters being contested in good faith and by
appropriate proceedings in the manner permitted by Paragraph 16 of this Shore
Mortgage. If any mortgage or other lien not permitted hereunder is filed,
Grantor will cause the same to be discharged promptly by payment or bonding or
otherwise to the satisfaction of Mortgagee and will exhibit to Mortgagee
evidence of payment, discharge, bonding or other disposition satisfactory to
Mortgagee.
4. REPRESENTATIONS AND WARRANTIES. In order to induce (i) Initial
Purchaser to purchase the Notes, and (ii) Mortgagee to accept this Shore
Mortgage, Grantor represents and warrants to Mortgagee that:
(a) The representations and warranties contained in the
Transaction Documents are true and correct as of the date hereof.
(b) This Shore Mortgage constitutes a valid mortgage and, upon
proper recording hereof, will constitute a valid and perfected mortgage
lien on, and security interest in, the Mortgaged Property (subject only
to the Permitted Encumbrances and Permitted Liens), and there are no
defenses or offsets to Grantor's obligations pursuant to this Shore
Mortgage or the other Transaction Documents, including, without
limitation, Grantor's applicable obligations to pay and perform the
Secured Obligations.
(c) Grantor's possession of the Mortgaged Property has been
peaceable and undisturbed and, to the best of Grantor's knowledge, the
title thereto has never been disputed or questioned, and Grantor does
not know of any facts by reason of which any
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<PAGE>
adverse claim to any part of the Mortgaged Property or to any undivided
interest therein might be set up or made.
(d) There are no federal, state or local tax claims or liens
assessed or filed against Grantor or the Mortgaged Property for taxes
which are due and payable, unsatisfied of record or docketed in any
court of the state in which the Real Property is located or in any
other court located in the United States, and no petition in bankruptcy
has ever been filed by Grantor, or, to the best of Grantor's knowledge,
against Grantor, and Grantor has never made any assignment for the
benefit of creditors or taken advantage of any insolvency act or any
act for the benefit of debtors.
(e) The Mortgaged Property has not been damaged or destroyed
by fire or other casualty, and no condemnation or eminent domain
proceedings have been commenced and are pending with respect to the
Mortgaged Property, and, to the best of Grantor's knowledge, no such
condemnation or eminent domain proceedings are about to be commenced.
(f) The Lease is now a valid and subsisting lease and is in
full force and effect in accordance with the terms thereof and has not
been modified, and all of the rental, additional rental and other
charges payable under the Lease prior to the execution hereof have been
paid, and all of the material terms, conditions and agreements
contained in the Lease have been performed by Grantor, and no material
default exists under the Lease. This Shore Mortgage is lawfully
executed and delivered in conformity with the Lease and is and will be
kept a valid first priority lien on the interest of the Grantor
therein.
5. COVENANTS OF GRANTOR AS TO PERFORMANCE AND OTHER MATTERS. (a)
Grantor shall perform, observe and comply in all material respects with all
agreements, covenants and obligations imposed by the provisions of this Shore
Mortgage and each other Transaction Document or imposed upon or assumed by
Grantor by virtue of the provisions of any deed, conveyance, lease, agreement,
statute or ordinance pursuant to which Grantor or any predecessor in title of
the Mortgaged Property acquired the Mortgaged Property or any rights or
privileges appurtenant thereto or for the benefit thereof.
(b) Except as otherwise expressly permitted under the
Transaction Documents or as otherwise expressly permitted hereunder,
Grantor, without the prior written consent of Mortgagee, shall not
effect, and shall not permit, any sale, lease, transfer or other
disposition of any of its assets, including, without limitation, any of
the Mortgaged Property.
(c) Subject to Section 4.13 of the Indenture, Grantor will do
or cause to be done all things necessary to preserve and keep in full
force and effect the corporate existence, rights (charter and
statutory) and franchises of Grantor.
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(d) Except as otherwise expressly permitted under the
Transaction Documents or as otherwise expressly permitted hereunder,
Grantor shall not, without Mortgagee's prior consent, which consent
will not be unreasonably withheld, enter into any agreement with or
conveyance to any other person or entity permitting the use of any
excess development rights that might otherwise be used by Grantor in
expanding, altering, reconstructing, replacing or otherwise improving
the Improvements or making any other improvements on the Mortgaged
Property, or otherwise permit or suffer any change of the zoning of the
Mortgaged Property or the use that may be made thereof.
(e) Grantor shall indemnify Mortgagee and each Holder from and
against any claims for brokerage fees or commissions payable to any
broker or finder with whom Grantor has dealt (or Grantor is alleged to
have dealt) in connection with this Shore Mortgage and shall pay all
reasonable expenses incurred by Mortgagee or any Holder in connection
with the defense of any action brought to collect any such brokerage
fee or commission by any such person or entity.
(f) Intentionally Omitted.
(g) Without limiting the foregoing, with respect to the Lease,
Grantor hereby covenants and agrees that:
(i) Grantor will promptly pay when due and payable
the rentals, additional rentals and other charges mentioned in
and payable under the Lease within the grace and cure periods
provided in the Lease.
(ii) Grantor will promptly perform and observe all of
the terms, covenants and conditions required to be performed
and observed by Grantor, as lessee under the Lease, within the
grace and cure periods provided in the Lease, and will do all
things reasonably necessary to preserve and to keep unimpaired
its rights under the Lease. Grantor will enforce or cause to
be enforced the obligations of the lessor under the Lease, to
the end that Grantor may enjoy all of the material rights
granted to it as lessee under the Lease.
(iii) Grantor will promptly notify Mortgagee of any
material default by Grantor in the performance or observance
of any of the terms, covenants or conditions on the part of
Grantor to be performed or observed under the Lease.
(iv) Grantor will (1) promptly notify Mortgagee of
the receipt by Grantor of any notice from the lessor under the
Lease of a default by Grantor in the performance or observance
of any of the terms, covenants or conditions on the part of
Grantor to be performed or observed under the Lease, (2)
promptly notify Mortgagee of the receipt by Grantor of any
notice from the lessor under the Lease to Grantor of
termination of the Lease pursuant to the provisions thereof
and (3)
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promptly cause a copy of each such notice received by Grantor
from the lessor under the Lease to be delivered to Mortgagee.
(v) Except as otherwise expressly permitted under the
Transaction Documents or as otherwise expressly permitted
hereunder, Grantor will not, without the prior consent of
Mortgagee (1) terminate, cancel, modify, supplement or
surrender or suffer or permit any termination, modification or
surrender of the Lease, (2) fail or refuse to take timely and
appropriate action to renew the Lease pursuant to the
applicable provisions thereof, (3) consent or refuse to
consent to any action taken or to be taken by the lessor or
anyone else under the Lease, the result of which would
materially diminish or impair the security of this Shore
Mortgage (as determined by Mortgagee), (4) further encumber
the Leasehold Interest, notwithstanding any such right given
to Grantor under the Lease, or (5) subordinate or consent to
the subordination of the Lease to any mortgage on the lessor's
interest in the premises demised by the Lease.
(vi) Supplementing the provisions of subparagraph (v)
above, if the Lease is rejected or disaffirmed by the lessor
thereunder (or by any receiver, trustee, custodian or other
party who succeeds to the rights of such lessor, such
receiver, trustee, custodian or other party being
collectively, the "ACTING LESSOR") pursuant to any bankruptcy,
insolvency, reorganization, moratorium or similar law (any
such law hereinafter collectively referred to as a "BANKRUPTCY
LAW"), Grantor covenants that it will not elect to treat the
Lease as terminated under 11 U.S.C. ss. 365(h) or any similar
or successor law or right, and hereby assigns to Mortgagee the
sole and exclusive right to make or refrain from making any
such election, and Grantor agrees that any such election, if
made by Grantor, shall be void and of no force or effect.
(vii) If the lessor or acting lessor under the Lease
rejects or disaffirms the Lease pursuant to any Bankruptcy Law
and Mortgagee elects to have Grantor remain in possession
under any legal right Grantor may have to occupy the premises
leased pursuant to the Lease, then (1) Grantor shall remain in
such possession and shall perform all acts necessary for
Grantor to retain its right to remain in such possession for
the unexpired term of the Lease (including all renewals
thereof) whether such acts are required under the then
existing terms and provisions of the Lease or otherwise, and
(2) all of the terms and provisions of this Shore Mortgage and
the lien created hereby shall remain in full force and effect
and shall be extended automatically to such possession,
occupancy and interest of Grantor.
(viii) Grantor will from time to time, after demand
of Mortgagee, use reasonable efforts to obtain and deliver to
Mortgagee a written statement from lessor under the Lease,
duly acknowledged, and certifying to Mortgagee and the
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Holders (i) that the Lease is then in full force and effect
and has not been modified (or, if modified, setting forth all
modifications), (ii) the date to which the rent, additional
rent and other charges thereunder have been paid, (iii)
whether or not, to the best knowledge of lessor under the
Lease, Grantor is in default under the Lease, and, if Grantor
is in default, the specific nature of all such defaults and
(iv) as to any other matters reasonably requested by Mortgagee
and reasonably related to the Lease.
(ix) Grantor shall deliver to Mortgagee an original
Non Disturbance and Attornment Agreement from the holder of
any mortgage encumbering the real property affected by the
Leasehold Interest, in a form previously agreed to by
Mortgagee.
(h) Each provision of this Shore Mortgage is subject to, and
shall be enforced in compliance with, the Gaming Laws.
6. PERFORMANCE BY MORTGAGEE. All sums duly paid by Mortgagee or any
Holder in connection with the payment or performance of any act performed by
Mortgagee in connection with the Mortgaged Property shall be paid by Grantor to
Mortgagee in accordance with the Transaction Documents, as applicable, and, if
such payment by Mortgagee or any Holder occurs after the applicable grace or
cure period, then such payment shall be with interest, payable from and
including the date of disbursement or advance, to and including the date of
payment calculated at the Additional Interest Rate (as hereinafter defined), and
the same shall be deemed to be secured by this Shore Mortgage and shall be a
lien on the Mortgaged Property prior to any right, title to, interest in or
claim upon the Mortgaged Property attaching subsequent to the attachment of the
lien of this Shore Mortgage. For the purpose of so curing any such default,
Mortgagee may after any applicable cure period (but shall be under no obligation
to) do any act or execute any document necessary or desirable for such purpose
in the name of Grantor, and Grantor irrevocably appoints Mortgagee as its true
and lawful attorney-in-fact, which appointment is coupled with an interest and
is unconditional and irrevocable, for such purposes.
7. CONFLICTS WITH SECURITY AGREEMENT. In the event of a conflict
between the provisions of the Security Agreement and the provisions of this
Shore Mortgage, the Shore Mortgage shall govern in all matters relating to the
validity and enforceability of the lien created hereby on the Real Property and
the Improvements and (except as expressly set forth to the contrary herein or in
the Security Agreement), the Security Agreement shall govern in all other
respects.
8. INSURANCE. (a) Unless such types of insurance are no longer
reasonably commercially available, Grantor shall maintain all insurance required
by the Lease and in addition, with respect to the Real Property and the
Improvements, as follows: (i) special causes of loss insurance (formerly known
as all-risk insurance), flood and sprinkler leakage, if applicable, in an amount
sufficient to prevent Grantor from being or becoming a co-insurer
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within the terms of the policy or policies providing such insurance, and in any
event for not less than the full replacement value of the Improvements and the
Equipment, as reasonably determined by Mortgagee; (ii) business interruption
insurance for loss occasioned by the perils commonly insured in a special causes
of loss policy for a period ending no earlier than the Maturity Date and in an
aggregate amount not less than the real estate taxes, additional interest and
other assessments for the Real Property and the Improvements and all other
continuing expenses of the Mortgaged Property, including, without limitation,
all payments required to be made by Grantor under the Lease; (iii) commercial
general liability insurance, including blanket contractual liability, completed
operations and personal injury coverage, with a combined single limit for any
one occurrence of at least FIVE MILLION DOLLARS ($5,000,000); (iv) worker's
compensation and employer's liability insurance, subject to statutory limits or
better, in respect of any work or other operations on, about or in connection
with the Real Property and the Improvements; and (v) such other insurance with
respect to the Real Property and the Improvements in such amounts as Mortgagee,
from time to time, may reasonably request against such other insurable hazards
which are commonly insured against in respect of property similar to the Real
Property and the Improvements (and, with respect to clause (v) only, PROVIDED
that such insurance is available at commercially reasonable rates).
(b) The insurance maintained by Grantor under clauses (i),
(ii) and, if appropriate, (v) of subparagraph (a) of this Paragraph
shall bear a standard noncontributory first mortgagee endorsement in
favor of Mortgagee. The insurance maintained by Grantor under clause
(iii) and, if appropriate, (v) above shall name Mortgagee as an
additional insured. All insurance maintained by Grantor shall provide
that no cancellation, material change or reduction in the coverage or
amounts thereof shall be effective until at least thirty (30) days or,
in the case of non-payment of premiums, ten (10) days, after written
notice to Mortgagee thereof.
(c) Grantor shall furnish Mortgagee with certificates
evidencing all such policies, endorsements and renewals and evidence of
payment of premiums therefor and, certified copies of all such
policies, endorsements and renewals certified by the insurance carrier.
In this regard, Grantor further covenants and agrees that, in any suit
or action for damages arising from the alleged negligence of Grantor in
which action Mortgagee or any Holder is included or made a defendant,
Grantor agrees to assume all of the burden, cost and expense of the
defense or settlement of such action or claim and will pay any judgment
which may be obtained against Mortgagee or any Holder.
(d) Grantor shall not carry separate or additional insurance
concurrent in form or contributing, in the event of loss, with that
required hereunder unless endorsed in favor of Mortgagee as loss payee
or additional insured, as applicable, and designating that such
insurance shall contain endorsements providing coverage secondary to
the insurance required to be carried hereunder. Nothing contained
herein shall prohibit Grantor from holding or obtaining an owner's
policy of title insurance covering the Real Property.
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(e) Each policy of insurance required by this Shore Mortgage
(hereinafter collectively referred to as the "POLICIES") shall be
carried with a company which is licensed to do business in the state in
which the Real Property is located and is rated A-minus-12 or higher by
Best's Rating Guide, or an equivalent rating, with such other
publication of a similar nature as shall be in current use, except that
Grantor may obtain such insurance from Lloyds of London or from a
protection and indemnity club which is comparable in financial strength
to insurance companies rated A-minus-12. All policies of insurance
placed with a mutual company shall be nonassessable. All policies of
insurance at any time carried by Grantor on the Mortgaged Property
(whether carried pursuant to the requirements of this Shore Mortgage or
otherwise) shall name Mortgagee as joint payee for all payments made by
such insurance company. Grantor shall pay the premiums for the Policies
as the same become due and payable. Not later than thirty (30) days
prior to the expiration date of each of the Policies, Grantor will
deliver to Mortgagee a renewal policy or policies (or binder(s)
evidencing-same) marked "premium paid" or accompanied by other evidence
of payment of premium satisfactory to Mortgagee.
(f) In the event of any insured loss, Grantor hereby
authorizes and directs any insurance company concerned to make payment
of such loss (only with respect to the insurance policies described in
subparagraphs 8(a)(i), 8(a)(ii) (PROVIDED, HOWEVER, in the case of
8(a)(ii) only, any such payments shall be made to Mortgagee only after
an Event of Default has occurred, as defined in Paragraph 19 hereof,
which has not been waived in writing by the Holders under the
Indenture) and, as applicable, 8(a)(v)) directly and solely to
Mortgagee to be applied as hereinafter provided. Grantor, acting in its
reasonable judgment, shall make any necessary proof of loss and shall
adjust and compromise all claims under all policies and shall cause the
applicable insurance company to make payment thereof as herein
provided; and Grantor shall sign all receipts, vouchers, releases and
other instruments which may be reasonably necessary or desirable in aid
of such payment. Any Insurance Proceeds paid to Mortgagee shall be held
as trust funds, and Mortgagee shall dispose of such proceeds, as
provided in Paragraph 13 hereof. In the event that any Insurance
Proceeds are paid by check to Grantor or to Grantor and Mortgagee as
joint payees, Grantor agrees that it shall endorse such check over to
Mortgagee.
(g) In the event that Grantor fails to keep the Real Property
and the Improvements insured in compliance with this Paragraph,
Mortgagee may, but shall not be obligated to, obtain insurance and pay
the premiums therefor, and Grantor shall, on demand, reimburse
Mortgagee for all sums advanced and expenses incurred in connection
therewith. Such sums and expenses, together with interest thereon at
the Additional Interest Rate, shall be deemed part of the Secured
Obligations and secured by the lien of this Shore Mortgage.
(h) Subject to the provisions of Paragraph 13 hereof, nothing
contained in this Paragraph or elsewhere in this Shore Mortgage shall
relieve Grantor of its duty to
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maintain, repair, replace or restore the Improvements or the Equipment
or rebuild the Improvements, from time to time, in accordance with the
applicable provisions of the Transaction Documents, and nothing in this
Paragraph or elsewhere in this Shore Mortgage shall relieve Grantor of
its duty to pay the Secured Obligations, which shall be absolute,
regardless of the occurrence of damage to or destruction of or
condemnation of all or any portion of the Mortgaged Property.
9. PAYMENT OF TAXES, ETC. Except as otherwise provided in Paragraph 16
hereof, Grantor shall pay, prior to the date upon which any fine, penalty,
interest or cost may be added thereto or imposed by law for the nonpayment
thereof, all taxes, assessments, water rates, sewer rents and other charges,
including vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Real Property or the Improvements, of any kind or
nature whatsoever, ordinary or extraordinary, now or hereafter levied, assessed
or imposed upon or which constitute a lien upon or against the Real Property or
the Improvements or any portion thereof (collectively, the "TAXES"). Grantor
shall deliver to Mortgagee promptly after request therefor by Mortgagee,
receipted bills or canceled checks evidencing the payment of prior taxes to the
date upon which any fine, penalty, interest or cost may be added thereto or
imposed by law for the nonpayment thereof. In the case of any assessment payable
in installments, each installment thereof shall be paid prior to or on the date
on which such installment becomes due and payable without imposition of any
fine, penalty, interest or cost. Grantor shall not be entitled to any credit on
the Notes or any other sums which may become payable under the terms thereof or
hereof, or otherwise, by reason of the payment of Taxes.
10. ESCROW FUND. (a) Grantor shall, following an Event of Default which
has not been waived in writing by the Holders in accordance with the Indenture,
pay to Mortgagee on the first day of each calendar month one-twelfth of an
amount (hereinafter referred to as the "ESCROW FUND") which would be sufficient
to pay the Taxes, all insurance premiums and all of Grantor's monetary
obligations under the Lease payable, or estimated by Mortgagee to be payable,
during the ensuing twelve (12) months, which shall be invested as provided in
Section 10(b) hereof, with income earned thereon becoming a part of the Escrow
Fund, PROVIDED that Mortgagee shall bear no liability for any loss occasioned by
investment of the Escrow Fund as herein provided, by any delays in investing or
reinvesting the Escrow Fund or by any failure to achieve the maximum possible
yield from the Escrow Fund. Mortgagee will apply the Escrow Fund to the payment
of Taxes and insurance premiums which are required to be paid by Grantor
pursuant to the provisions of this Shore Mortgage. If the amount of the Escrow
Fund shall exceed such amounts payable by Grantor pursuant to the provisions of
this Shore Mortgage, Mortgagee shall at its election, (a) return any excess to
Grantor, (b) credit such excess against future payments to be made to the Escrow
Fund or (c) reimburse Mortgagee for any amount owed to it under this Shore
Mortgage or under any of the Transaction Documents. If the Escrow Fund is not
sufficient to pay such amounts as the same become payable, Grantor shall on
demand pay, to Mortgagee an amount which shall be sufficient to make up the
deficiency. Any amounts in the Escrow Fund shall be kept separate and segregated
from the general funds of Mortgagee. If this Shore mortgage is sold or assigned
by Mortgagee in whole, Mortgagee shall deduct any amount owing
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to it under this Shore Mortgage or any Transaction Document and transfer to the
assignee the balance, if any, then held by Mortgagee under this Paragraph and,
upon such assignment and transfer, Mortgagee shall have no further obligation to
Grantor with respect to such amount. If at any time Grantor tenders to Mortgagee
full payment of the entire Secured Obligations, including any applicable premium
or penalty, and the lien of the Indenture or this Shore Mortgage shall have been
discharged, Mortgagee shall refund to Grantor any balance remaining in the
Escrow Fund.
(b) In the event that the Escrow Fund is created, Mortgagee
shall create an account denominated "Louisiana Casino Cruises, Inc. --
Shore Mortgage Escrow Fund" (or some similar name) in which to hold all
amounts in the Escrow Fund. All amounts from time to time in the Escrow
Fund shall be invested in the First American Fund (or, if the First
American Fund should become unavailable for any reason, a comparable
cash management fund). Mortgagee is specifically authorized to
implement its automated cash investment system to assure that funds in
the Escrow Fund are invested and to charge its normal cash management
fees, which may be deducted from income earned on investments.
11. SPACE LEASES, RENTS AND CASH COLLATERAL. (a) As additional and
collateral security for payment of the Secured Obligations, and as cumulative of
any and all rights and remedies herein provided, Grantor hereby bargains, sells,
transfers, assigns and sets over to Mortgagee for the benefit of the Holders,
any and all Space Leases and Rents and any and all cash collateral to be derived
from the Mortgaged Property, or the use and occupation thereof, or under any
contract or bond relating to the construction or reconstruction of the Mortgaged
Property, including all Rents, royalties, revenues rights, deposits (including
security deposits) and benefits accruing to Grantor under all Space Leases, and
the right to receive the same and apply them against the Secured Obligations or
against Grantor's other obligations hereunder or the Company's obligations under
the Transaction Documents, together with all Space Leases, contracts, bonds,
leases and other documents evidencing the same now or hereafter in effect and
all right of Grantor thereunder. Nothing contained in the preceding sentence
shall be construed to bind Mortgagee to the performance of any of the provisions
of any such Space Lease, contract, bond, lease or other documents or otherwise
impose any obligation upon Mortgagee, except that Mortgagee shall be accountable
for any money actually received pursuant to such assignment to the extent of its
disposition thereof in a manner inconsistent with this Shore Mortgage or the
Transaction Documents. Grantor shall deliver to Mortgagee upon Mortgagee's
request an executed counterpart of each such Space Lease, contract, bond or
other documents. The assignment of said Space Leases, Rents, income profits,
proceeds and cash collateral, and any of the aforesaid rights with respect
thereto and to the contracts, bonds, leases and other documents evidencing the
same, is intended to be and is an absolute present assignment from Grantor to
Mortgagee and not merely the passing of a security interest.
(b) So long as there shall exist no Event of Default hereunder
which has not been waived in writing by the Holders in accordance with
the Indenture, Grantor shall
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have the right and license to exercise all rights, options and
privileges extended to the lessor under the terms of the Space Leases,
including, without limitation, the right to collect all Rents. Grantor
agrees to hold the same in trust and to use the same, FIRST, in payment
of the Secured Obligations, SECOND, the Taxes and insurance premiums
payable hereunder and all other charges on or against the Mortgaged
Property and, THIRD, to the expenses of Grantor's business in or on the
Mortgaged Property.
(c) In the event of any such Event of Default which has not
been so waived, the right and license set forth in subparagraph (c) of
this Paragraph shall be automatically revoked, and, thereafter,
Mortgagee shall have the right and authority to exercise any of the
rights or remedies referred to or set forth herein. In addition, upon
such an Event of Default, Grantor shall promptly pay to Mortgagee (i)
all rent prepayments and security or other deposits paid to Grantor
pursuant to any Space Leases and (ii) all charges for services or
facilities or for escalations which were paid pursuant to any Space
Leases to the extent allocable to any period from and after such Event
of Default and any such sums received by Mortgagee shall be applied by
Mortgagee in accordance with Section 6.10 of the Indenture.
(d) If Grantor is not required to surrender possession of the
Mortgaged Property hereunder in the event of any such Event of Default
which has not been so waived, Grantor will pay monthly in advance to
Mortgagee, or to any receiver appointed to collect same, the income,
profits or proceeds received by Grantor under any of the Space Leases.
(e) Grantor will upon Mortgagee's request execute, acknowledge
and deliver to Mortgagee, in form approved by Mortgagee, one or more
general or specific assignments of the lessor's interest under any
Space Lease (which are consistent with the foregoing provisions).
Grantor will, on demand, pay to Mortgagee, or reimburse Mortgagee for
the payment of, any reasonable costs or expenses incurred in connection
with the preparation or recording of any such assignment.
(f) Grantor will (i) perform or cause to be performed the
lessor's material obligations under any Space Lease, (ii) enforce the
performance by the lessee under its respective Space Lease of all of
said lessee's material obligations thereunder and (iii) give Mortgagee
prompt notice and a copy of any notice of default, event of default,
termination or cancellation sent or received by Grantor.
(g) Except to the extent expressly permitted herein or under
the other Transaction Documents, Grantor will not, without Mortgagee's
consent, (i) assign, mortgage, pledge or otherwise transfer, dispose of
or encumber, whether by operation of law or otherwise, any Space Lease
or the Rents or other income thereunder or therefrom, (ii) accept or
permit the acceptance of a prepayment of any Rents for more than one
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month in advance of the due dates therefor, (iii) amend, modify or
otherwise alter any Space Lease or (iv) cancel, terminate or accept a
surrender of any Space Lease.
(h) Grantor will from time to time, promptly upon Mortgagee's
request, prepare and deliver to Mortgagee such information concerning
the Space Leases as Mortgagee shall request.
12. MAINTENANCE OF THE PROPERTY; ALTERATIONS. Notwithstanding Section
4.15 of the Indenture, Grantor will cause the Mortgaged Property to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and supplied with all necessary Equipment and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of Grantor may be necessary so that
the business carried on in connection therewith may be conducted at all times,
except, in every case, as and to the extent that Grantor may be prevented by
fire, strikes, lockouts, acts of God, inability to obtain labor or materials,
governmental restrictions, enemy action, civil commotion or unavoidable casualty
or similar causes beyond the control of Grantor. Grantor further agrees to
permit Mortgagee (and its agents, employees and contractors) to enter upon and
inspect the Mortgaged Property at any time during normal business hours upon
reasonable notice and, at Mortgagee's option, after the giving of a notice of
default hereunder and the expiration of any applicable grace period, to make
such repairs, replacements, renewals or additions, or to otherwise protect and
maintain the same in good, safe, insurable condition, but nothing contained in
this Paragraph shall be deemed to impose any duty upon Mortgagee or affect in
any manner the obligations of Grantor hereunder or of the Company under the
Transaction Documents.
13. DAMAGE TO AND DESTRUCTION OF THE MORTGAGED PROPERTY. (a) In the
event that, at any time during the term of the Notes, the Real Property, the
Improvements or the Equipment shall be damaged or destroyed, in whole or in
part, by fire or other casualty covered by insurance, Grantor shall give prompt
written notice thereof to Mortgagee. At such time as such damage, destruction or
casualty shall occur, the Insurance Proceeds payable in connection therewith
shall be payable to Mortgagee in accordance with Paragraph 8 hereof and shall be
deposited in the Collateral Account and shall be released, applied and/or
distributed in accordance with Sections 4.10 and 11.4 of the Indenture.
(b) Upon the occurrence of an Event of Default which has not
been waived in writing by the Holders in accordance with Section 6.4 of
the Indenture, Mortgagee shall have the right to apply such Insurance
Proceeds in accordance with Section 6.10 of the Indenture.
14. CONDEMNATION. (a) In the event that the Mortgaged Property, or any
part thereof, shall be taken in condemnation proceedings or by exercise of the
right of eminent domain, or by conveyance in lieu of condemnation, or as a
result of the exercise by any governmental authority of any right or option to
purchase (hereinafter collectively called "PROCEEDINGS"), Mortgagee shall have
the right to participate in any such Proceedings at Grantor's expense, including
reasonable
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attorneys' fees and disbursements, and any Eminent Domain Awards that may be
made or any proceeds thereof shall be deposited with Mortgagee and held in trust
by Mortgagee and distributed in the manner herein set forth. The parties agree
to execute any and all further documents that may be required in order to
facilitate collection of any Eminent Domain Award and the making of any such
deposit.
(b) If, at any time during the term of the Notes, there occurs
a Proceeding, any Eminent Domain Awards payable in connection therewith
shall be deposited in the Collateral Account and shall be released,
applied and/or distributed in accordance with Sections 4.10 and 11.4 of
the Indenture.
(c) Upon the occurrence of an Event of Default which has not
been waived in writing by the Holders in accordance with Section 6.4 of
the Indenture, Mortgagee shall have the right to apply such Eminent
Domain Awards in accordance with Section 6.10 of the Indenture.
15. COMPLIANCE WITH AGREEMENTS, LAWS, ETC. Subject to Section 16,
Grantor agrees to perform and comply in all material respects with all
covenants, agreements and restrictions affecting the Mortgaged Property and with
all laws, ordinances, acts, rules, regulations and orders of any legislative,
executive, administrative or judicial body, commission or officer (whether
federal, state or local) exercising any power of regulation or supervision over
Grantor or any part of the Mortgaged Property, whether now or hereafter enacted
and in force, whether the same be directed to the erection, repair, manner of
use or structural alteration of the Improvements or otherwise. Grantor further
agrees (i) to comply with the terms of all insurance policies covering or
applicable to the Mortgaged Property, all requirements of the issuer of any such
policy, and all orders, rules, regulations and other requirements of or
standards recommended by the National and Regional Fire Protection Associations
(or any other body exercising similar functions) applicable to or affecting the
Mortgaged Property or any use or condition of the Mortgaged Property, and (ii)
to procure, maintain and comply with all permits, licenses, approvals or other
authorizations required for any use of the Mortgaged Property then being made,
and for the proper erection, installation, operation and maintenance of the
Improvements and the Equipment or any portion of any of the foregoing, subject
to the right to contest the applicability or validity of any license, permit,
approval or authorization in accordance with the provisions of Paragraph 16
hereof. With respect to the compliance obligations of Grantor in this Paragraph
15 other than Grantor's obligation to comply with all environmental or hazardous
materials laws, ordinances, rules, regulations or orders, Grantor shall have no
compliance obligation under this Paragraph 15 where failure to comply would not
have a material adverse effect on (a) the use made by Grantor of, the value or
condition of, or the business conducted on the Mortgaged Property or (b) the
rights or interests of Mortgagee or any Holder.
16. CONTEST OF TAXES, ASSESSMENTS AND LIENS. Notwithstanding anything
to the contrary contained in this Shore Mortgage, Grantor shall have the right
to contest, at its own expense, by appropriate legal proceedings conducted in
good faith and with due diligence, the
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amount or validity of any Taxes or encumbrance referred to herein (other than
this Shore Mortgage or any other document or instrument securing all or any
portion of the Secured Obligations), or any of the laws, ordinances, acts,
rules, regulations orders, licenses and authorizations referred to herein;
PROVIDED that (a) Grantor gives Mortgagee timely notice of its intention to
contest the same, (b) the commencement of such proceedings shall suspend the
collection or enforcement of the matter under contest, or, if the commencement
of such proceedings does not suspend such collection or enforcement, Grantor
shall have made payment of any item sought to be collected with or without
protest, (c) there shall be no impairment of the lien of this Shore Mortgage or
undue interference with the normal conduct of Grantor's riverboat gaming
operation at the Mortgaged Property, (d) neither the Mortgaged Property, nor any
part thereof or interest therein, would be in any immediate danger of being
sold, forfeited or lost, (e) neither Mortgagee nor any Holder would be
potentially subjected to criminal, or in imminent danger of civil, liability for
failure to comply therewith pending the outcome of such proceedings, (f) in the
case of Taxes, assessments, charges or other impositions, Grantor shall have
either (i) paid the amount in dispute prior to instituting such contest, in
which event the notice requirement of subparagraph (a) of this Paragraph shall
be satisfied by giving notice prior to initiating such contest rather than prior
to making payment, or (ii) furnished such security, if any, as may be required
by Mortgagee during the pendency of such proceedings, and (g) if such contest be
finally resolved against Grantor, Grantor shall promptly pay the amount required
to be paid, together with all interest and penalties accrued thereon, or comply
with the applicable requirement. Grantor shall indemnify and save Mortgagee and
each Holder harmless from and against any liability, loss, damage, cost or
expense of any kind that may be imposed upon Mortgagee or such Holder in
connection with any such contest and any determination resulting therefrom.
17. CURE OF DEFAULTS BY MORTGAGEE. If Grantor shall default in the
payment of any Taxes or other assessments, charges or impositions as herein
required; shall fail or refuse to keep the Improvements and Equipment in good
repair; shall fail or refuse to insure the Mortgaged Property as herein
required; shall fail to pay and satisfy liens or encumbrances against the
Mortgaged Property as herein required in respect of which security shall not
have been given as herein permitted; shall fail to pay any other sum or make any
other deposit elsewhere in this Shore Mortgage required to be paid or deposited;
or shall otherwise fail to make any payment or perform any act required to be
made or performed hereunder within any applicable grace or cure period, if any,
then Mortgagee, without further demand upon Grantor, and without waiving or
releasing any obligation or default, may (provided, that one or more Holders
shall have deposited with Mortgagee sufficient funds in order to pay the same),
but shall not be obligated to: pay such Taxes or other assessments, charges or
impositions; redeem the Mortgaged Property from any tax sale or forfeiture;
purchase any tax title obtained, or which shall be obtained thereon, without
inquiring into the validity or invalidity of any such Taxes, tax deed, or
assessments; make reasonable repairs to the Mortgaged Property; procure such
insurance and pay such insurance premium charges; pay or settle any and all
suits or claims for such liens; satisfy any such encumbrances or any other
claims that may be made against the Mortgaged Property or any part thereof; pay
any other sum or make any other deposit herein required to be paid or made by
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Grantor or perform any such act for the account and at the expense of Grantor,
and enter upon the Mortgaged Property for any such purpose and take all such
action thereon as Mortgagee or any of its duly appointed agents, may deem
necessary or appropriate therefor; and all monies paid for any of the purposes
authorized in this Paragraph or for similar purposes set forth elsewhere in this
Shore Mortgage and all expenses paid or incurred in connection therewith,
including reasonable attorneys' fees and disbursements and any other monies
disbursed or advanced by Mortgagee under any Transaction Document to protect the
lien of this Shore Mortgage, shall be due and payable upon demand, with interest
("ADDITIONAL INTEREST"), from and including the date of disbursement or advance
to and including the date of payment, at a per annum rate equal to the rate
borne by the Notes (the "ADDITIONAL INTEREST RATE"). Any sum payable pursuant to
this Shore mortgage as Additional Interest (A) shall be deemed a part of the
Secured Obligations, (B) shall be a lien on the Mortgaged Property equal in
priority to the original indebtedness secured by this Shore Mortgage, and (C)
may be included in any decree foreclosing this Shore Mortgage to be paid out of
the proceeds of the sale of the Mortgaged Property if not otherwise paid by
Grantor. The maximum amount of all Secured Obligations secured by this Shore
Mortgage is SEVENTY-FIVE MILLION DOLLARS ($75,000,000.00).
18. INDEMNITY. Grantor hereby agrees to indemnify, defend and hold
Mortgagee (and its directors, officers, agents and employees) and each Holder
harmless from and against any and all loss, liability, damage, claim, judgment
or expense (including reasonable attorneys' fees and expenses, bond expenses,
printing and automated document preparation and retention expenses and other
ordinary litigation expenses) incurred by it (or such director, officer, agent
or employee) in connection with the acceptance or administration of Mortgagee's
duties under this Shore Mortgage, any action or proceeding to foreclose this
Shore Mortgage or in or to which Mortgagee or any Holder may be made a party due
to the existence of this Shore Mortgage or the other Transaction Documents or to
which action or proceeding Mortgagee or any Holder may become a party for the
purpose of protecting the lien of this Shore Mortgage. All sums paid by
Mortgagee or any Holder to prosecute or defend the rights herein set forth shall
be deemed a part of the Secured Obligations and shall be paid by Grantor to
Mortgagee or such Holder within ten (10) days after written demand, and if not
paid within that period, shall accrue interest from and including the date of
disbursement or advance by Mortgagee or such Holder to and including the date of
payment by Grantor at the Additional Interest Rate.
19. EVENT OF DEFAULT. The term "EVENT OF DEFAULT," wherever used in
this Shore Mortgage, shall mean any one or more of the events of default listed
in Section 6.1 of the Indenture, subject to such cure rights as may be expressly
set forth in the Indenture. If any Event of Default shall occur then, in any
such event, Mortgagee may, in accordance with Article VI of the Indenture and by
written notice to Grantor, declare the entire unpaid balance of the Secured
Obligations or any portion thereof to be forthwith due and payable, and
thereupon such entire balance or portion thereof shall become so due and payable
without presentment, protest or further demand or notice of any kind, all of
which are hereby expressly waived, and Grantor will forthwith pay to Mortgagee
the entire Secured Obligations or portion thereof, as applicable, and, to the
extent permitted by law, the premiums and penalties, if any, provided in this
Shore
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Mortgage and each other Transaction Document, as applicable, and such payment
shall be applied in accordance with Section 6.10 of the Indenture.
20. ADDITIONAL REMEDIES. If any one or more Events of Default which has
not been waived in writing by the Holders in accordance with the Indenture shall
occur, then, and in any such event, Mortgagee shall have the following rights,
in addition to the right of acceleration provided in this Shore Mortgage or
otherwise provided in any Transaction Document, by law or in equity, all of
which rights and remedies shall be, to the fullest extent permitted by law,
cumulative:
(a) POSSESSION. Mortgagee and its agents may enter upon the
Mortgaged Property, and exclude Grantor and its agents and servants
wholly therefrom, without liability for trespass, damages or otherwise,
and take possession of all books, records and accounts relating thereto
and all other Mortgaged Property, and Grantor agrees to surrender
possession of the Mortgaged Property and of such books, records and
accounts to Mortgagee or its agents on demand after the happening of
any Event of Default; and having and holding the same, may use,
operate, manage, preserve, control and otherwise deal therewith and
conduct the business thereof, either personally or by its
superintendents, managers, agents, servants, attorneys or receivers,
without interference from Grantor; and upon each such entry and from
time to time thereafter may, at the expense of Grantor and the
Mortgaged Property, without interference by Grantor and as Mortgagee
may deem advisable, (i) insure or reinsure the Mortgaged Property, (ii)
make all necessary or proper repairs, renewals, replacements,
alterations, additions, betterments and improvements thereto and
thereon and (iii) in every such case in connection with the foregoing,
have the right to exercise all rights and powers of Grantor with
respect to the Mortgaged Property, either in Grantor's name or
otherwise;
(b) FORECLOSURE. Mortgagee may, at its option, foreclose this
Shore Mortgage for any portion of the Secured Obligations which is then
due and payable, whether by acceleration or otherwise;
(c) SUITS. Mortgagee may, either with or without first taking
possession, proceed by suit or suits in equity or at law, or by any
other appropriate remedy or proceeding, to protect and enforce its
rights hereunder whether for the specific performance of any covenant
or agreement contained herein or in any other Transaction Document or
for an injunction against the violation of any of the terms hereof or
thereof or in aid of the exercise of any right, power or remedy granted
to Mortgagee herein or therein, or to enforce the payment of all or any
part of the Secured Obligations, or to foreclose the lien and security
interest of this Shore Mortgage against the Mortgaged Property or any
part thereof, and to have all of the Mortgaged Property or any part
thereof sold in one or more sales (as an entirety or in parcels) under
the judgment or decree of a court of competent jurisdiction or
otherwise. All rights of action under this Shore
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Mortgage may be enforced by Mortgagee without the possession of the
Notes and without the production thereof at any trial or other
proceeding relative thereto;
(d) RECEIVER. Mortgagee, in any action to foreclose the lien
of this Shore Mortgage, to the extent permitted by law, shall be
entitled as a matter of right, and without notice, to the appointment
of a receiver of the Mortgaged Property or any part thereof, pending
such proceedings, with such powers as the court, making such
appointment, shall confer, and Grantor hereby consents to the
appointment of such receiver and will not oppose any such appointment;
or
(e) SECURITY INTEREST. In addition to the rights and remedies
of Mortgagee hereinabove set forth and not in lieu thereof, upon the
occurrence of an Event of Default, Mortgagee shall have all of the
rights and remedies of a holder of a security interest under the Code
with respect to the Security Interest Property (provided that Mortgagee
shall give Grantor fifteen (15) days' notice of any public or private
sale of all or any portion of the Security Interest Property) and under
any other applicable law, and all rights provided or referred to herein
and in each other Transaction Document, all of which rights and
remedies shall, to the fullest extent permitted by law, be cumulative.
21. CONFESSION OF JUDGMENT. For purposes of executory process under the
laws of the State of Louisiana, or in the event Mortgagee elects, at its option,
to enter suit via ordinaria on the Secured Obligations, Mortgagor (i) hereby
waives citation, other legal process, and legal delays, (ii) hereby acknowledges
the Secured Obligations and confesses judgment in favor of Mortgagee for the
full amount of the Secured Obligations, including, without limitation,
principal, interest, expenses, attorneys' fees, and all other fees provided for
hereunder, and (iii) consents that judgment be rendered and signed whether
during term of court or in vacation for the full amount of the Secured
Obligations.
22. AUTHORIZATION TO EXECUTE DEEDS, APPOINTMENT OF KEEPER, ETC. (a)
Upon the occurrence of an Event of Default which has not been waived in writing
by the Holders in accordance with the Indenture, Grantor irrevocably appoints
Mortgagee as its true and lawful attorney-in-fact, which appointment is coupled
with an interest and is unconditional and irrevocable, in Grantor's name and
stead and on its behalf, for the purpose of effectuating any sale, assignment,
transfer or delivery of the Mortgaged Property or any part thereof or any
interest therein for the enforcement of this Shore Mortgage as Mortgagee may
reasonably consider necessary or appropriate, with full power of substitution,
Grantor hereby ratifying and confirming all that such attorney shall lawfully do
by virtue hereof. If so requested by Mortgagee or any other purchaser, Grantor
shall ratify and confirm any such sale, assignment, transfer or delivery by
executing and delivering to Mortgagee, or such other purchaser, all proper
deeds, bills of sale, assignments, releases and other instruments as may be
designated in any such request. Mortgagee shall use reasonable efforts to
deliver to Grantor, promptly after the execution or filing thereof, copies of
any document executed by Mortgagee on behalf of Grantor pursuant to this
Paragraph or Paragraph 28 hereof; PROVIDED that the failure of Mortgagee to so
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deliver any such document to Grantor shall not affect the validity or
enforceability of such document.
(b) In the event the Mortgaged Property, or any part thereof,
is seized as an incident to an action for the recognition or
enforcement of this Shore Mortgage by executory process, ordinary
process, sequestration, writ of fieri facias or otherwise, Grantor and
Mortgagee agree that the court issuing any such order shall, if
petitioned for by Mortgagee, direct the applicable sheriff to appoint
as a keeper of the Mortgaged Property, the Mortgagee or any agent
designated by Mortgagee or any person named by the Mortgagee at the
time such seizure is effected. This designation is pursuant to
Louisiana Revised Statutes 9:5136 through 5140.2, inclusive, as the
same may be amended, and Mortgagee shall be entitled to all the rights
and benefits afforded thereunder. It is hereby agreed that the keeper
shall be entitled to receive as compensation, in excess of its
reasonable costs and expenses incurred in the administration or
preservation of the Mortgaged Property, an amount equal to $500 per
day. The designation of keeper made herein shall not be deemed to
require Mortgagee to provoke the appointment of such a keeper.
23. PROCEEDS OF FORECLOSURE SALE. In any foreclosure of this Shore
Mortgage there shall be allowed and included in the decree of sale to be paid,
in the following order, out of the proceeds of such sale:
First: All reasonable fees and costs owed to or incurred by
Mortgagee and its agents and consultants hereunder or under the Transaction
Documents;
Second: All court costs, allowances authorized or permitted by
statute or a court, fees of receivers, attorneys' fees and disbursements,
reasonable appraisers' fees, expenditures for documentary and expert evidence,
stenographers' charges, publication costs and reasonable costs (which may be
estimated as to items to be expended after the entry of the decree) of procuring
all abstracts of title, title searches and examinations, title policies and
similar data with respect to title which Mortgagee may deem reasonably necessary
and any other expenses of the foreclosure proceeding. All such expenses shall
become additional indebtedness secured hereby and immediately due and payable,
with interest computed at the Additional Interest Rate, from and including the
date of payment to and including the date of repayment to Mortgagee;
Third: Any lien prior to the lien and security interest of
this Shore Mortgage which Mortgagee may consider necessary or desirable to
discharge;
Fourth: All other items advanced or paid by Mortgagee pursuant
to this Shore Mortgage from any other Transaction Document, with interest (to
the extent permitted by law), from and including the date of any such advance to
and including the date of payment computed at the Additional Interest Rate; and
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Fifth: In accordance with Section 6.10 of the Indenture.
24. PURCHASE OF THE PROPERTY BY MORTGAGEE. Mortgagee may for its own
account be a purchaser of the Mortgaged Property or any part thereof or any
interest therein at any sale thereof, whether pursuant to foreclosure or
otherwise, and may apply the amount of the Secured Obligations outstanding
toward the purchase price thereof.
25. WAIVER OF RIGHT TO BRING COUNTERCLAIM IN FORECLOSURE ACTION. In any
action to foreclose the lien or liens of this Shore Mortgage, including a
partial foreclosure, no defense, counterclaim or setoff shall be available to
Grantor other than one which denies the existence or sufficiency of the facts
upon which the action is grounded or which raises an issue concerning the
priority of liens or the statute of limitations or other bar to an action based
on the passage of time. If any defense, counterclaim or setoff, other than one
permitted by the preceding sentence, is timely raised in such foreclosure
action, such defense, counterclaim or setoff shall be dismissed; PROVIDED,
HOWEVER, that, if such defense, counterclaim or setoff is based on a claim that
could be tried in an action for money damages, such claim may be brought in a
separate action which shall not thereafter be consolidated with such foreclosure
action. Nothing contained herein, however, shall limit Grantor's right to bring
a separate action, at law or in equity, to adjudicate the issues that are the
basis for any purported defense, claim or setoff. The bringing of such separate
action for money damages shall not be deemed to afford any grounds for staying
the foreclosure action.
26. UNIFORM COMMERCIAL CODE. This Shore Mortgage constitutes a security
agreement under the Code and a fixture filing for the purposes of Article 9 of
the Code and a security interest shall attach to the Security Interest Property
for the benefit of Mortgagee as additional security for the Secured Obligations.
Pursuant to Section 32 hereof, Grantor is obligated to make certain filings and
re-filings. Grantor also hereby authorizes Mortgagee to file financing and
continuation statements with respect to the Security Interest Property without
the signature of Grantor and, upon request, Grantor shall promptly execute
financing and continuation statements in form satisfactory to Mortgagee to
further evidence and secure Mortgagee's interest in the Security Interest
Property. Mortgagee shall deliver to Grantor a copy of each such filing promptly
after making the same. Upon the occurrence of any Event of Default, Mortgagee
shall have all of the rights and remedies of a secured party under the Code,
with respect to the Security Interest Property, or other applicable law, and all
rights and remedies provided for herein and in each other Transaction Document,
all of which rights and remedies are cumulative to those provided elsewhere in
this Shore Mortgage or otherwise available to Mortgagee. Following the
occurrence of any Event of Default, Mortgagee, pursuant to Section 9-501(4) of
the Code, shall have the option of proceeding as to both real and personal
property in accordance with its rights and remedies in respect of the real
property, in which event the default provisions of the Code shall not apply. The
parties agree that, in the event Mortgagee elects to proceed with respect to the
Equipment separately from the Real Property, Grantor will assemble the Equipment
(other than those items of Equipment which are affixed to the Improvements and
not removable without material damage to such items or the Improvements) and
make the Equipment available to Mortgagee at a place or places reasonably
convenient to Mortgagee. Any
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notice of sale, disposition or other intended action by Mortgagee, sent to
Grantor at the address of Grantor specified for notices herein at least fifteen
(15) days prior to such action, shall constitute reasonable notice to Grantor.
All replacements, renewals and additions to the Equipment shall become and be
immediately subject to the security interest herein of Mortgagee and be covered
by this Shore Mortgage as part of the Mortgaged Property. Grantor shall, from
time to time, on request of Mortgagee, deliver to Mortgagee an inventory of the
Equipment in reasonable detail. Grantor warrants and represents that all
Equipment now is, and that all replacements thereof, substitutions therefor and
additions thereto, will be, owned by Grantor free and clear of liens,
encumbrances or security interests of others prior to or on a parity with the
interest herein of Mortgagee other than security interests or leases given to
providers of Equipment to finance the purchase of the same and Permitted
Encumbrances and Permitted Liens. Neither the provisions of this Paragraph nor
the filing of any separate security agreement or financing statement with
respect to Mortgagee's security interest in the Security Interest Property shall
be construed as in any way derogating or impairing the intention of Grantor and
Mortgagee hereto that the Security Interest Property shall, at all times and for
all purposes and in all proceedings, both legal and equitable, be regarded as a
part of the Mortgaged Property.
27. Intentionally Omitted.
28. TERMS SUBJECT TO APPLICABLE LAW; SEVERABILITY. All rights, powers
and remedies provided herein are intended to be limited to the extent necessary
so that they will not render this Shore Mortgage invalid, unenforceable or not
entitled to be recorded, registered or filed under any applicable law. If any
term of this Shore Mortgage shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the other terms
hereof shall in no way be affected thereby.
29. MODIFICATIONS BY MORTGAGEE. Grantor agrees that, without affecting
the liability of Grantor or any other person or entity (except any person or
entity expressly released in writing) liable for payment of the Secured
Obligations or for performance of any obligation contained herein or affecting
the lien and security interest of this Shore Mortgage upon the Mortgaged
Property or any part thereof, Mortgagee may, at any time and from time to time,
without notice to or the consent of any person or entity, release any person or
entity liable for payment of any debt or for performance of any obligation,
extend the time or agree to alter the terms of payment of any such indebtedness
or performance of any such obligation, modify or waive any obligation,
subordinate, modify or otherwise deal with the lien and security interest
hereof, accept additional security of any kind, consent to the making of any map
or plat of the Mortgaged Property, the creating of any easements thereon on or
any covenants restricting use or occupancy thereof, or exercise or refrain from
exercising or waive any right Mortgagee may have.
30. CHANGE IN LAWS REGARDING TAXATION. In the event of the passage
after the date of this Shore Mortgage of any Federal law or law of the state in
which the Real Property is located deducting from the value of real property for
the purposes of taxation any lien or encumbrance thereon or changing in any way
the laws for the taxation of mortgages or debts secured by
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mortgages for state or local purposes or the manner of the collection of any
such taxes, and imposing a tax, either directly or indirectly, on this Shore
Mortgage or all or any part of the Secured Obligations, or upon Mortgagee or any
Holder or any by reason of or as holder of any of the foregoing (excepting
therefrom any income tax on interest payments made to Mortgagee or any Holder
with respect to the Secured Obligations), Grantor shall, if permitted by law,
pay any tax imposed as a result of any such law within the statutory period or
within thirty (30) days after demand by Mortgagee, whichever is less.
31. DOCUMENTARY STAMPS. If at any time the United States of America,
any state thereof or any governmental subdivision of any such state shall
require revenue or other stamps to be affixed to this Shore Mortgage, Grantor
will pay for the same, with interest and penalties thereon, if any.
32. CUMULATIVE REMEDIES OF MORTGAGEE; NO WAIVER. No legal, equitable or
contractual right, power or remedy of Mortgagee or any Holder hereunder or under
any other Transaction Document shall be exclusive of any other but, rather, each
right, power or remedy shall be separate, cumulative and concurrent and shall be
in addition to every right, power or remedy now or hereafter existing at law or
in equity. No delay in the exercise of, or omission to exercise, any right,
power or remedy accruing on any default shall impair any such right, power or
remedy or be construed to be a waiver of any such default or acquiescence
therein, nor shall it affect any subsequent default of the same or a different
nature. Every such right, power or remedy may be exercised concurrently or
independently, and when and as often as may be deemed expedient, by Mortgagee or
any Holder, as applicable. Mortgagee may resort for the payment of the Secured
Obligations to the Mortgaged Property and to any other security held by
Mortgagee in such order and manner as Mortgagee, in its discretion, may elect.
Mortgagee or any Holder may take action to recover the Secured Obligations or
any portion thereof or to enforce any covenant herein or in any other
Transaction Document without prejudice to the right of Mortgagee thereafter to
foreclose this Shore Mortgage. No act of Mortgagee or any Holder shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
33. FILING OF SHORE MORTGAGE, ETC. Grantor, forthwith upon the
execution and delivery of this Shore Mortgage and thereafter, from time to time,
as required, will cause this Shore Mortgage and any security instrument or
Transaction Document creating a lien or evidencing the lien hereof upon the
Mortgaged Property and each instrument of further assurance, and each supplement
to any of the foregoing and each modification to any of the foregoing, to be
filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect the lien hereof upon, and the interest of Mortgagee in, the Mortgaged
Property. Grantor will pay all filing, registration or recording fees and all
reasonable expenses incident to the preparation, execution and acknowledgment of
this Shore Mortgage, any mortgage supplemental hereto, any security instrument
with respect to the Mortgaged Property and any instrument of further assurance,
and all federal, state, county and municipal taxes, duties, imposts, assessments
and charges arising out of or in connection with the
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execution and delivery of this Shore Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property or any instrument
of further assurance and shall furnish to Mortgagee evidence satisfactory to it
that all recordings and re-recordings, registrations and re-registrations,
filings and re-filings have been effectively made. Grantor shall hold harmless
and indemnify Mortgagee and each Holder and its successors and assigns against
any liability incurred by reason of the imposition of any tax on the making and
recording of this Shore Mortgage.
34. MARSHALING. Grantor waives and releases any right to have the
Mortgaged Property marshaled.
35. WAIVER OF NOTICE. Grantor shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Shore Mortgage specifically and expressly provides for the giving of
notices by Mortgagee to Grantor, and Grantor hereby expressly waives the right
to receive any notice from Mortgagee with respect to any matter for which this
Shore Mortgage does not specifically and expressly provide for the giving of
notice by Mortgagee to Grantor.
36. RECOVERY OF SUMS REQUIRED TO BE PAID. Mortgagee shall have the
right, from time to time, to take action to recover any sum or sums which
constitute a part of the Secured Obligations as the same become due, without
regard to whether or not the balance of the Secured Obligations shall be due and
without prejudice to the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Grantor existing
at the time such earlier action was commenced.
37. FURTHER ASSURANCES. Grantor covenants that it will, at Grantor's
sole cost and expense and at the request of Mortgagee, (i) promptly correct any
defect or error which may be discovered in the Transaction Documents, (ii)
promptly do, execute, acknowledge and deliver, and record and re-record, file
and re-file and register and re-register, any and all such acts and instruments
as Mortgagee may require from time to time in order to carry out more
effectively the purposes of this Mortgage and the other Transaction Documents
and to effectuate, complete or perfect, or to continue and preserve, the liens
and security interests created by this Mortgage and the other Transaction
Documents as first and prior liens and security interests, subject only to the
Permitted Encumbrances and Permitted Liens and such other matters as may be
expressly permitted under the Transaction Documents, upon all of the Mortgaged
Property, whether now owned or hereafter acquired by Grantor, (iii) promptly
furnish Mortgagee with evidence satisfactory to Mortgagee of every such
recording, filing or registration and (iv) promptly execute and deliver to
Mortgagee such other documents and instruments and take such other actions as
Mortgagee may from time to time require in order to evidence, preserve, protect
and effectuate Mortgagee's rights hereunder.
38. NOTICES. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied,
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telegraphed, telexed, cabled or delivered, if to Mortgagee at its address at 180
East 5th Street, St. Paul, Minnesota 55101, Attention: Corporate Trust
Administration; if to Grantor at its address at 1717 River Road North, Baton
Rouge, Louisiana 70802; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and communications shall be effective when received (with respect to
notices given by Grantor to Mortgagee) and when given (with respect to notices
given by Mortgagee to Grantor).
39. LIABILITY. If Grantor consists of more than one person or entity,
the obligations and liabilities of each such person or entity hereunder shall be
joint and several and solidary.
40. HEADINGS, ETC. The headings and captions of the paragraphs of this
Shore Mortgage are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
41. SUCCESSORS AND ASSIGNS. The provisions of this Shore Mortgage shall
be binding upon Grantor, its successors and assigns, and all persons and
entities claiming under or through Grantor or any such successor or assign, and,
subject to the terms of the Transaction Documents, shall inure to the benefit of
Mortgagee and each Holder and their respective successors and assigns.
42. DISCHARGE OF LIEN. Subject to Article VIII of the Indenture, upon
the observance and performance of each and every covenant and condition set
forth herein and in the Transaction Documents and payment in full of the Secured
Obligations or Legal Defeasance or Covenant Defeasance, Mortgagee shall promptly
deliver to Grantor a confirmatory certification evidencing the same and a
satisfaction or other instruments, in recordable form, as may be reasonably
necessary to evidence such discharge and to satisfy the same of record.
43. SURVIVAL OF ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Shore Mortgage, the assignment, pledge and mortgaging of the
Space Leases, Construction Documents, Rents, Eminent Domain Awards and the
Insurance Proceeds, and any cash collateral derived from the Mortgaged Property
and the right to apply any of the foregoing in accordance with the terms of this
Shore Mortgage, shall survive any foreclosure of the lien of this Shore
Mortgage.
44. MISCELLANEOUS. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Shore Mortgage shall be used interchangeably in singular or plural form and the
word "Grantor" shall mean each Grantor and any subsequent owners of the
Mortgaged Property or any part thereof or interest therein, the word "Mortgagee"
shall mean Mortgagee or any successor thereto, and the word "Mortgagee" shall
include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority or other entity. References to
"this paragraph" shall mean the paragraph commencing with an Arabic numeral in
which the affected phrase or sentence is contained. Whenever the context may
require, any pronouns used herein shall include the corresponding
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masculine, feminine or neuter forms and the singular form of nouns and pronouns
shall include the plural and vice versa. The terms "herein," "hereof" or
"hereunder" or similar terms used in this Shore Mortgage refer to this entire
Shore Mortgage and not to the particular provision in which the term is used.
This Shore Mortgage may be executed in any number of duplicate originals and
each such duplicate original shall be deemed to constitute but one and the same
instrument. The terms of this Shore Mortgage supersede the terms of any and all
prior instruments consolidated herein.
45. GOVERNING LAW; INTERPRETATION. This Shore Mortgage is to be
construed in accordance with and governed by the internal laws of the state in
which the Real Property is located, without regard to principles of conflicts of
law. It is acknowledged and agreed that, in the preparation of this Shore
Mortgage and each other Transaction Document, indistinguishable contributions
were made by representatives of both Grantor and Mortgagee and that Grantor and
Mortgagee each waives any and all rights, both in law or in equity, to have the
provisions of this Shore Mortgage or any part thereof or the provisions of any
other Transaction Document interpreted in favor of one over the other based on a
claim that representatives of one or the other were the principal draftsmen of
any such document.
46. TRUE COPY. Grantor acknowledges having received a true copy of this
Shore Mortgage without charge.
47. EXPENSES OF ENFORCEMENT. All costs and expenses paid by Mortgagee
in the performance and the enforcement of any right or remedy afforded Mortgagee
pursuant to this Shore Mortgage or any other Transaction Document (including
reasonable attorneys' fees, expenses and disbursements) shall be paid by Grantor
upon demand by Mortgagee, shall bear interest, to the extent permitted by law,
at the Additional Interest Rate from the date of demand until the date of
payment and shall be deemed a part of the Secured Obligations and secured by
this Shore Mortgage.
48. WAIVER. (a) Grantor hereby covenants and agrees that it will not at
any time: (i) insist upon or plead, or in any manner whatever claim or take any
advantage of, any stay, exemption or extension law or any so-called "moratorium
law" now or at any time hereafter in force; or (ii) claim, take or insist upon
any benefit or advantage of or from any law now or hereafter in force providing
for the valuation or appraisal of the Mortgaged Property, or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provisions herein
contained, or to decree, judgment or order of any court of competent
jurisdiction. Grantor hereby expressly waives any and all rights of redemption
from sale under any order or decree of foreclosure of this Shore Mortgage, on
its own behalf and on behalf of each and every person, it being the intent
hereof that any and all such rights of redemption of the Grantor and of all
other persons are and shall be deemed to be hereby waived to the full extent
permitted by the law of the state in which the Real Property is located.
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<PAGE>
(b) Grantor hereby expressly waives in favor of Mortgagee any
and all homestead exemptions and other exemptions of seizure or
otherwise to which Grantor is or may be entitled under the constitution
and statutes of the State of Louisiana insofar as the Mortgaged
Property is concerned. Grantor hereby expressly further waives: (i) the
benefit of appraisement as provided for in Louisiana Code of Civil
Procedure Articles 2332, 2336, 2723 and 2724, and all other laws
conferring such benefits; (ii) the demand and three (3) days delay
accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721;
(iii) the notice of seizure required by Louisiana Code of Civil
Procedure Articles 2293 and 2721; (iv) the three (3) days delay
provided by Louisiana Code of Civil Procedure Articles 2331 and 2722;
(v) the benefit of the other provisions of Louisiana Code of Civil
Procedure Articles 2331, 2722 and 2723; and (vi) the benefit of the
provisions of any other articles of the Louisiana Code of Civil
Procedure not specifically mentioned above.
49. CONSTRUCTION MORTGAGE. This Shore Mortgage secures in part an
obligation incurred for the construction of Improvements on the Real Property
and constitutes a "construction mortgage" within the meaning of Section 9-313 of
the Code.
50. THE MORTGAGEE'S DUTIES. The rights, authority to approve, or to
consent to, disapprove, withhold consent, exercise judgment or discretion and
such other powers (collectively the "POWERS") conferred on Mortgagee hereunder
are solely to protect its interest in the Mortgaged Property, and Mortgagee
shall be under no obligation to exercise any such Powers. Except for accounting
for moneys actually received by it hereunder, and the safe custody of any
collateral in its possession (subject to the standards of care governing the
Mortgagee hereunder), Mortgagee shall not have any duty as to any matters
relating to any Mortgaged Property or as to ascertaining or taking action with
respect to any Mortgaged Property whether or not Mortgagee or any Holder has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Mortgaged Property. Nothing herein shall affect any obligation
of Mortgagee or any Holder to the Holders under the Indenture or under
applicable law.
51. SHORE MORTGAGE ABSOLUTE. The obligations of Grantor under this
Shore Mortgage are independent of the obligations of Grantor under the other
Transaction Documents, and a separate action or actions may be brought and
prosecuted against Grantor to enforce this Shore Mortgage, irrespective of
whether any action is brought against Grantor under such other Transaction
Documents. All rights of Mortgagee and the mortgage, assignment and security
interest hereunder, and all obligations of Grantor hereunder, shall be absolute
and unconditional, irrespective of:
(a) any lack of validity or enforceability of any other
Transaction Document or any other agreement or instrument relating
thereto;
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(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of Grantor under
the other Transaction Documents or any other amendment or waiver of or
any consent to any departure from the other Transaction Documents,
including, without limitation, any increase in such obligations
resulting from the extension of additional credit to Grantor or
otherwise;
(c) any taking, exchange, release or non-perfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any other of the
obligations of Grantor under the other Transaction Documents;
(d) any manner of application of collateral, or proceeds
thereof, to all or any of the obligations of Grantor under the other
Transaction Documents, or any manner of sale or other disposition of
any collateral for all or any of such obligations or any other assets
of Grantor;
(e) any change, restructuring or termination of the corporate
restructure or existence of Grantor; or
(f) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Grantor or a third party
grantor of a security interest or mortgage.
52. AUTHENTIC EVIDENCE. Any and all declarations of facts made by
authentic act before a notary public in the presence of two witnesses by a
person declaring that such facts lie within his knowledge, shall constitute
authentic evidence of such facts for the purpose of executory process.
53. INTERACTION WITH INDENTURE. All terms, covenants, conditions,
provisions and requirements of the Indenture are incorporated by reference in
this Shore Mortgage. Notwithstanding any other provision of this Shore Mortgage,
the terms and provisions of this Shore Mortgage shall be subject and subordinate
to the terms of the Indenture. To the extent that the Indenture provides Grantor
with a particular cure or notice period, or establishes any limitations or
conditions on Mortgagee's actions with regard to a particular set of facts,
Grantor shall be entitled to the same cure periods and notice periods, and
Mortgagee shall be subject to the same limitations and conditions, under this
Shore Mortgage, as under the Indenture, in place of the cure periods, notice
periods, limitations and conditions provided for under this Shore Mortgage;
provided, however, that such cure periods, notice periods, limitations and
conditions shall not be cumulative as between the Indenture and this Shore
Mortgage. In the event of any conflict or inconsistency between the provisions
of this Shore Mortgage and those of the Indenture, including, without
limitation, any conflicts or inconsistencies in any definitions herein or
therein, the provisions or definitions of the Indenture shall govern.
54. EXCLUDED ASSETS. Notwithstanding anything to the contrary contained
herein, if a portion of the Collateral, Mortgaged Property or Security Interest
Property becomes an Excluded
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Asset after the Issue Date, the Mortgagee shall, simultaneous with the granting
of the applicable Permitted Lien, without the payment of any partial release
for, or any other prepayment with respect to, the Notes, release the Lien in
favor of the Mortgagee in such Excluded Asset in accordance with the provisions
of Section 11.4 of the Indenture. Once any Excluded Asset is released, such
Excluded Asset shall be expressly excluded from and shall no longer be deemed
Collateral, Mortgaged Property or Security Interest Property under this Shore
Mortgage and shall not be subject to any of the representations, covenants or
obligations under this Shore Mortgage.
THUS DONE AND PASSED on the day and in the month and year hereinabove
first written, in the presence of the undersigned witnesses who hereunto sign
their names with Grantor and me, Notary, after due reading of the whole.
WITNESSES:
__________________________________ LOUISIANA CASINO CRUISES, INC.
By: ____________________________
___________________________________ Name:
Title:
____________________________________
NOTARY PUBLIC
My commission expires: ____________
32
EXHIBIT 10.6
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE CASINO ROUGE
(Official Number 1027353)
$55,000,000
LOUISIANA CASINO CRUISES, INC.
1717 River Road North
Baton Rouge, Louisiana 70802
Owner and Mortgagor
In Favor of
U.S. BANK TRUST NATIONAL ASSOCIATION
in its capacity as Trustee under
that certain Indenture dated as of
January 27, 1999 between Trustee,
Louisiana Casino Cruises, Inc.
and the Subsidiary Guarantors referred to therein
180 East 5th Street
St. Paul Minnesota 55101
Attention: Corporate Trust Administration
Dated as of January 27, 1999
Discharge Amount: $55,000,000 Together
With Interest, Expenses, Fees
and Performance of Mortgage Covenants
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
FIRST PREFERRED SHIP MORTGAGE (the "Mortgage") made as of the 27th day
of January, 1999, by:
LOUISIANA CASINO CRUISES, INC.
1717 River Road North
Baton Rouge, Louisiana 70802
a corporation organized and existing under the laws of Louisiana (the
"Shipowner") in favor of
U.S. BANK TRUST NATIONAL ASSOCIATION AS TRUSTEE
180 East 5th Street
St. Paul Minnesota 55101
Attention: Corporate Trust Administration
a national banking association, as Trustee (the "Mortgagee") under that certain
Indenture (the "Indenture") dated as of January 27, 1999, between the Mortgagee,
the Shipowner and the Subsidiary Guarantors referred to therein. Capitalized
terms not otherwise defined herein shall have the meanings set forth for such
terms in the Indenture.
WHEREAS:
1. The Shipowner is the sole owner of the Vessel, Casino Rouge, having
its hailing port as the Port of Baton Rouge, Louisiana. The Vessel is documented
under the laws and flag of the United States, with Official Number 1027353.
2. The Shipowner has duly authorized the creation of an issue of 11%
Senior Secured Notes Due 2005 (the "Notes") more fully described in the
Indenture.
3. In order to induce Initial Purchaser to purchase the Notes, and in
order to secure (i) the due and punctual payment of the principal of, and
interest on, the Notes and the payment of any fees, expenses and all other
amounts at any time and from time to time payable by the Shipowner with respect
to the Notes, or under the Indenture, or any of the Security Documents
(collectively, the "Transaction Documents") and (ii) all the obligations of the
Shipowner under this Mortgage (all such obligations recited in subsections (i)
and (ii) of this Recital 3 being the "Secured Obligations", the Shipowner has
duly authorized the execution and delivery of this First Preferred Ship Mortgage
under and pursuant to 46 United States Code, Sections 31301 through 31343, as
amended from time to time (the "Ship Mortgage Act")
4. For purposes of this Mortgage and in order to comply with Section
31321(b)(3) of the Ship Mortgage Act, the parties to this Mortgage hereby
declare that the maximum amount of Indebtedness that is now or will in the
future be owed under the Secured Obligations at any one time
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<PAGE>
is $55,000,000, plus interest (including, without limitation, interest after the
filing of a petition initiating a proceeding referred to in Section 6.1(xi) and
(xii) of the Indenture, whether or not such interest constitutes an allowed
claim for purposes of such proceeding), expenses and fees incurred by the
Trustee and/or the Holders and performance of the covenants of this Mortgage and
the Transaction Documents.
5. The interest of the Shipowner in the Vessel (as defined below) and
the interest mortgaged by this Mortgage is that of one-hundred percent (100%)
absolute and sole ownership.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Notes and in order to secure the payment of the Secured Obligations and the
performance and observance of all of the agreements, covenants and provisions
contained in this Mortgage and in each other Transaction Document, THE SHIPOWNER
HAS GRANTED, CONVEYED, MORTGAGED, PLEDGED, CONFIRMED, ASSIGNED, TRANSFERRED AND
SET OVER, AND BY THESE PRESENTS DOES GRANT, CONVEY, MORTGAGE, PLEDGE, CONFIRM,
ASSIGN, TRANSFER AND SET OVER, UNTO THE MORTGAGEE in its capacity as the Trustee
for the benefit of the Holders the WHOLE of the vessel described in Recital 1
above, together with all of its boilers, engines, machinery, masts, spars,
sails, boats, anchors, cables, chains, rigging, tackle, apparel, furniture,
fittings, equipment and all other appurtenances thereunto appertaining or
belonging, and also any and all additions, improvements and replacements
hereafter made in or to such Vessel, or any part thereof, or in or to her
equipment and appurtenances aforesaid (each of the foregoing, individually, a
"Vessel" and, collectively, the "Vessel");
TO HAVE AND TO HOLD all and singular the above mortgaged and described
property unto the Mortgagee and its successors and assigns, to its and its
successors and assigns own use, benefit and behoof forever;
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the property above
described is to be held subject to the further covenants, conditions,
provisions, terms and uses set forth in the attached Annex I;
PROVIDED, HOWEVER, and these presents are upon the condition that, if
the Shipowner or any of its successors or assigns shall pay or cause to be paid
the Secured Obligations in accordance with the terms hereof and of the other
Transaction Documents, and shall perform and observe all of the agreements,
covenants and provisions contained herein and in the other Transaction
Documents, this Mortgage and the estate and rights hereby granted shall cease to
be binding and be void, otherwise to remain in full force and effect.
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<PAGE>
IN WITNESS WHEREOF, the Shipowner has executed this Mortgage on the day
and year first above written.
LOUISIANA CASINO CRUISES, INC.
By:________________________________________
Name:
Title:
[SEAL]
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<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY OF NEW YORK
On January __, 1999 before me personally came _______________________
to me known, who being by me duly sworn, did depose and say, that he resides at
___________________________________ that he is the _____________________ of
LOUISIANA CASINO CRUISES, INC. the corporation described in and which executed
the above instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation, that he signed his name
thereto by like order.
____________________________________
NOTARY PUBLIC
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<PAGE>
ANNEX I
TO
FIRST PREFERRED SHIP MORTGAGE
made as of the 27th day of January, 1999
by LOUISIANA CASINO CRUISES, INC.
regarding the WHOLE of the CASINO ROUGE
(Official Number 1027353)
ARTICLE I
COVENANTS OF THE SHIPOWNER
The Shipowner covenants and agrees with the Mortgagee as
follows:
SECTION 1.1 Subject to applicable grace or cure periods (if
any), the Shipowner will pay the Secured Obligations payable by it and will
observe, perform and comply with the covenants, terms and conditions herein and
in the other Transaction Documents, express or implied, on its part to be
observed, performed or complied with.
SECTION 1.2 The Shipowner was duly organized and is now duly
existing as a corporation under the laws of the State of Louisiana; it is duly
authorized to mortgage the Vessel; all corporate action necessary and required
by law for the execution and delivery of this Mortgage has been duly and
effectively taken; and the Shipowner shall at all times maintain its corporate
existence and right to carry on its business. The Shipowner is and will remain a
citizen of the United States of America within the meaning of Title 46, Section
802, of the United States Code, entitled to own and document the Vessel under
the laws of the United States of America.
SECTION 1.3 The Shipowner lawfully owns the whole of and is
lawfully possessed of the Vessel free from any Lien whatsoever (except for Liens
created by the Security Documents, other Liens expressly permitted under the
Transaction documents and Liens for current crew's wages, salvage and those
Liens which arise during normal operations which will be paid in the ordinary
course of business and maritime Liens which have not been recorded on the
General Index Or Abstract of Title (U.S.C.G. 1332) of the Vessel or judicially
asserted, if any (collectively, the "Permitted Encumbrances")) and will warrant
and defend the title and possession thereto and to every part thereof for the
benefit of the Mortgagee against the claims and demands of all Persons
whomsoever, except claims and demands relating to Permitted Encumbrances.
SECTION 1.4 The Vessel is duly documented in the name of the
Shipowner under the laws and flag of the United States of America, entitled to
engage in the operations conducted by the Shipowner, and the Shipowner will, at
its own expense, cause the Vessel to remain so documented. The Shipowner will
cause this Mortgage immediately after its execution and delivery to be filed for
recordation, in accordance with the Ship Mortgage Act, and will comply with and
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<PAGE>
satisfy all of the provisions of United States law and all other provisions and
requirements of law from time to time in force so as to establish and maintain
the Lien of this Mortgage, as at any time amended, supplemented or assigned as a
first "preferred mortgage" Lien under the Ship Mortgage Act upon the Vessel and
upon all additions, improvements and replacements hereafter made on or to the
Vessel or any part thereof for the amount of the Secured Obligations.
SECTION 1.5 (a) The Shipowner will not cause or permit the
Vessel to be operated in any manner contrary to law and the Shipowner will not
engage in any unlawful trade or violate any law or carry any cargo that will
expose the Vessel to penalty, forfeiture or capture, and will not do, or suffer
or permit to be done, anything which can or may injuriously affect the
documentation of the Vessel under the laws and regulations of the United States
and will at all times keep the Vessel duly documented thereunder.
(b) The Shipowner shall comply with and satisfy all applicable
laws and regulations of the United States and of the State of Louisiana or any
other jurisdiction in which the Vessel is or may be operating pursuant to the
terms of the Indenture, specifically including, but not limited to, the Gaming
Laws, which if not complied with, could reasonably be expected to materially and
adversely affect the Shipowner's financial condition or its ability to fulfill
its obligations under this Mortgage or any other Transaction Document.
(c) The Shipowner will not operate any Vessel outside of the
navigation limits of the insurance carried pursuant to Section 1.15.
SECTION 1.6 The Shipowner will pay and discharge when due and
payable, from time to time, all taxes, assessments, governmental charges, fines
and penalties lawfully imposed on the Vessel or any income therefrom, subject to
the proviso of Section 1.9.
SECTION 1.7 Neither the Shipowner, any charterer, the Master
of the Vessel nor any other Person has or shall have any right, power or
authority to create, incur or permit to be placed or imposed or continued upon
the Vessel any Lien whatsoever other than Permitted Encumbrances.
SECTION 1.8 The Shipowner will place, and at all times and
places will retain, a properly certified copy of this Mortgage on board the
Vessel with her papers and will cause such certified copy and the Vessel's
Certificate of Documentation to be exhibited to (i) any and all persons having
business therewith which might give rise to any Lien thereon other than
Permitted Encumbrances and (ii) to any representative of the Mortgagee; and will
place and keep prominently displayed a framed printed notice in plain type
reading as follows:
"NOTICE OF MORTGAGE
This Vessel is covered by a First Preferred Ship Mortgage under 46
U.S.C. Section 31301 et seq. to U. S. Bank Trust National Association,
as Trustee for the Holders under an Indenture dated as of January 27,
1999 with Louisiana Casino Cruises, Inc.
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<PAGE>
Under the terms of said Mortgage, neither the Shipowner, any charterer,
the Master of this Vessel nor any other person has any right, power or
authority to create, incur or permit to be imposed upon this Vessel any
Lien whatsoever other than Permitted Encumbrances (as defined in such
First Preferred Ship Mortgage)."
SECTION 1.9 Except for the Lien of this Mortgage, the
Shipowner will not suffer to be continued any Lien other than Permitted
Encumbrances and in due course and in any event within 30 days after the same
becomes due and payable will pay or cause to be discharged or make adequate
provision for the satisfaction or discharge of all claims or demands, or will
cause the Vessel encumbered by such Lien to be released or discharged from any
Lien therefor; provided, however, that the Shipowner shall have the right to
contest, at its own expense, by appropriate legal proceedings conducted in good
faith and with due diligence, the amount or validity (or the applicability to
the Shipowner, the Vessel or this Mortgage) of any tax, assessment, governmental
charge, fine, penalty or Lien (other than this Mortgage, any Transaction
Document or any other document or instrument securing any of the Secured
Obligations or creating a Lien in favor of the Trustee and/or the Holders);
provided further that (a) the Shipowner gives the Mortgagee timely notice of its
intention to contest the same, (b) the commencement of such proceedings shall
suspend the collection or enforcement of the matter under contest, or, if the
commencement of such proceedings does not suspend such collection or
enforcement, the Shipowner shall have made payment of any item sought to be
collected with or without protest, (c) there shall be no impairment of the Lien
of this Mortgage or any other Transaction Document or undue interference with
the normal conduct of the Shipowner's riverboat gaming operation on the Vessel
or at the Mortgaged Property (as defined in the Shore Mortgage) where such
Vessel is operating, (d) neither the Vessel nor the Mortgaged Property where the
Vessel is operating, nor any part thereof or interest therein, would be in any
immediate danger of being sold, forfeited or lost, (e) neither the Mortgagee nor
any Holder would be potentially subjected to criminal, or in imminent danger of
civil, liability for failure to comply therewith pending the outcome of such
proceedings, (f) in the case of taxes, assessments, charges, fines, penalties or
other impositions, the Shipowner shall have either (i) paid the amount in
dispute prior to instituting such contest, in which event the notice requirement
of clause (a) above shall be satisfied by giving notice prior to initiating such
contest rather than prior to making payment, or (ii) furnished reasonable
security during the pendency of such proceedings, and (g) if such contest be
finally resolved against the Shipowner, the Shipowner shall promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable requirement. The Shipowner shall
indemnify and save the Mortgagee and each Holder harmless from and against any
liability, loss, damage, cost or expense of any kind (including reasonable
attorneys, fees and expenses) that may be imposed upon the Mortgagee or such
Holder in connection with any such contest and any determination resulting
therefrom.
SECTION 1.10 (a) If a complaint be filed against the Vessel or
the Vessel be otherwise attached, arrested, levied upon or taken into custody
under process or color of legal authority for any cause whatsoever, the
Shipowner will promptly notify the Mortgagee by telecopier or by telephone that
is confirmed in writing, at the address specified in Section 3.5 of this
Mortgage, and within 15 days from the time of such complaint, attachment, arrest
or seizure will cause the
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<PAGE>
Vessel to be released and all Liens thereon other than Permitted Encumbrances to
be discharged (subject to the provisions of Section 1.9 hereof) and will
promptly notify the Mortgagee hereof in the manner aforesaid.
(b) If the Shipowner shall fail or neglect to furnish proper
security or otherwise to release the Vessel from complaint, arrest, levy,
seizure or attachment, the Mortgagee or any person acting on behalf of the
Mortgagee may furnish security to release the Vessel and by so doing shall not
be deemed to cure the default of the Shipowner.
SECTION 1.11 (a) The Shipowner will at all times and without
cost or expense to the Mortgagee maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair, so that
the Vessel shall be, insofar as due diligence can make her so, tight, staunch,
strong and well and sufficiently tackled, appareled, furnished, equipped and in
every respect seaworthy.
(b) The Mortgagee shall have the right at any time, on
reasonable notice, to inspect or survey the Vessel to ascertain its condition
and to satisfy itself that the Vessel is being properly repaired and maintained,
and the Shipowner shall cause to be made all such repairs, without expense to
the Mortgagee, as such inspection or survey may show to be required. The
Shipowner shall also permit the Mortgagee to inspect the Vessel's logs, whenever
requested, on reasonable notice, and shall furnish the Mortgagee with full
information regarding any material casualties or other accidents or damage to
the Vessel.
(c) The Vessel shall, and the Shipowner covenants that she
will, at all times comply with all applicable laws, treaties and conventions of
the United States, and rules and regulations issued thereunder, and shall have
on board as and when required thereby valid certificates showing compliance
therewith.
(d) The Shipowner will not make, or permit to be made, any
substantial change in the structure, type or speed of the Vessel or change in
her rig, without first receiving the written approval thereof of the Mortgagee.
SECTION 1.12 The Shipowner will permit the Mortgagee or any
agents or representatives thereof from time to time upon prior reasonable notice
full and complete access to the Vessel for the purpose of inspecting the Vessel
and her cargo and papers and, at the reasonable request of the Mortgagee, the
Shipowner will deliver for inspection copies of any and all contracts and
documents relating to the Vessel, whether on board or not.
SECTION 1.13 The Shipowner will not transfer or change the
flag of the Vessel unless and until, upon 30 days' prior written notice to the
Mortgagee, all filings, recordations or other actions necessary to perfect and
protect the Lien created by this Mortgage and to enable the Mortgagee to
exercise and enforce its rights and remedies hereunder with respect to the
Vessel after giving effect to such transfer or change of flag shall have been
completed (including, without
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<PAGE>
limitation, opinions of counsel as to the perfected status of the Mortgagee
after giving effect to such transfer or change of flag).
SECTION 1.14 Except to the extent expressly permitted by the
Indenture, the Shipowner will not sell, mortgage, charter or in any way transfer
the Vessel or any interest therein without the written consent of the Mortgagee
first had and obtained, and any such written consent to any one sale, mortgage,
demise charter or transfer shall not be construed to be a waiver of this
provision with respect to any subsequent proposed sale, mortgage, charter or
transfer. Any such sale, mortgage, charter or transfer of the Vessel or any
interest therein shall be subject to the provisions of this Mortgage and the
Lien hereof.
SECTION 1.15 (a) (i) Unless such types of insurance are no
longer commercially available, the Shipowner will at all times and at its own
cost and expense cause to be carried and maintained in respect of the Vessel
insurance payable in United States Dollars in such amounts against such risks
(including navigating risk and marine hull and machinery (including excess
value) insurance, marine protection and indemnity insurance and public liability
insurance), in such form (including, without limitation, the form of the loss
payable clause and the designation of named assureds) and with such insurance
companies, underwriters, funds, mutual insurance associations or clubs as shall
be selected by the Shipowner.
(ii) In the case of all marine hull and machinery
policies, the Shipowner will cause the Mortgagee to be named an
additional insured and will (and cause its insurance broker to) cause
the insurers under such policies to waive any liability of the
Mortgagee and the Holders for premiums payable under such policies. In
the case of all protection and indemnity insurance, if obtainable, the
Shipowner will cause the Mortgagee, to be named as an additional
insured unless it cannot be provided that the Mortgagee shall not be
liable under such policies for payment of any premium, club call,
assessment or advance. Notwithstanding the foregoing, at no time shall
there be recourse against the Mortgagee under such policies for payment
of any premium, club call, assessment, advance or commission.
(iii) The Shipowner will cause the firm of insurance
brokers referenced in Section 1.15(a)(iv) of this Mortgage to agree to
advise the Mortgagee forthwith by telecopier to its address specified
in Section 3.5 of this Mortgage, of any lapse of any such insurance by
expiration, termination, failure to renew or otherwise and of any
default in payment of any premium and of any other act or omission on
the part of the Shipowner of which such brokers have knowledge and
which might invalidate or render unenforceable, in whole or in part,
any insurance on the Vessel. Absent actual knowledge, the Mortgagee
shall not be deemed to have knowledge of any such lapse of insurance in
the absence of receipt of notice from such brokers. The Shipowner will
also cause such brokers to agree to mark their records and to advise
the Mortgagee, by telecopier, addressed as provided above in this
subsection, at least five business days prior to the expiration date of
any insurance carried pursuant to this Mortgage, that such insurance
has been renewed or replaced with new
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insurance which complies with the provisions of this Section 1.15. In
addition, the Shipowner will endeavor to or use its best efforts to
cause each insurance company, underwriter, club or fund (or an
authorized agent thereof) with respect to all insurance required hereby
to agree in writing for the benefit of the Mortgagee that each policy
or contract issued by such insurance company, underwriter, club or fund
shall not lapse, canceled for any reason whatsoever without at least
ten days, prior notice to the Mortgagee by telecopier or cable
addressed as provided above in this subsection (iii).
(iv) The Shipowner will deliver to the Mortgagee,
within 120 days after the end of each fiscal year, a certificate from a
firm of independent insurance brokers appointed by the Shipowner and
acceptable to the Mortgagee confirming that the insurance carried and
maintained in respect of the Vessel complies with the requirements of
this Mortgage.
(b) For the purposes of insurance against total loss, the
Vessel, its equipment, appurtenances, etc., shall be insured for and valued at
an amount at least equal to the fair market value thereof. Protection and
indemnity insurance in respect of the Vessel shall be in the highest amount from
time to time commercially reasonable for vessels of the same type, size, age and
flag as the Vessel, but in any event shall be in an amount for each occurrence
of not less than the declared value of the Vessel under its hull and machinery
insurance.
(c) Unless otherwise required by the Mortgagee by notice to
the Mortgagee, which notice shall be given only upon receipt of instructions
from the Holders of a majority in principal amount of the Notes as set forth in
Section 6.5 of the Indenture, although the following insurance is payable to the
Mortgagee, (i) any loss under any insurance on the Vessel with respect to
protection and indemnity risks and public liability may be paid directly to the
Shipowner to reimburse it for any loss, damage or expense incurred by it and
covered by such insurance or directly to the person to whom any liability
covered by such insurance has been incurred and (ii) in the case of any loss
(other than (A) a loss covered by clause (i) of this subsection or by Section
1.15(d) or (B) a loss in excess of $1,000,000 per occurrence) under any
insurance with respect to the Vessel involving any damage to the Vessel, the
Mortgagee may pay directly for the repair, salvage or other charges involved or,
if the Shipowner shall have first fully repaired the damage or paid all of the
salvage or other charges, may pay the Shipowner as reimbursement therefor.
(d) In the event of an actual, constructive or compromised
total loss of the Vessel, all insurance or other payments for such loss shall be
paid to the Mortgagee and deposited by the Mortgagee in the Collateral Account
to be distributed or disbursed in accordance with the agreements between the
parties, and to the extent of the respective interests of the Shipowner and
Mortgagee, as they may appear.
(e) The Shipowner will cause all policies and certificates of
entry with respect to insurance required hereby to contain a loss payable clause
which shall (i) in the case of protection and indemnity insurance and public
liability insurance, provide for payment to the Shipowner or its
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order unless and until the underwriters or associations receive notice from the
Mortgagee that there has occurred and is continuing an Event of Default
hereunder, in which event all payments shall be made to the Mortgagee for
deposit in the Collateral Account, and (ii) in the case of all other insurance,
provide for payment in accordance with the terms of subsections (c) and (d) of
this Section 1.15. In addition (unless all or substantially all of the insurance
required by this Section 1.15 is placed in the United States market), the
Shipowner will, at its own cost and expense, assign to the Mortgagee all of the
Shipowner's right, title and interest in and to each policy and contract of
insurance (including all entries in protection and indemnity associations) with
respect to the insurance required hereby and furnish, or cause its brokers to
furnish, written notice of such assignment to all insurers, underwriters, clubs
and associations with respect to such insurance.
(f) In the event that any claim or Lien is asserted against
the Vessel for loss, damage or expense which is covered by insurance required
hereunder, and it is necessary for the Shipowner to obtain a bond or supply
other security to prevent arrest of the Vessel or to release the Vessel from
arrest on account of such claim or Lien, the Mortgagee, on request of the
Shipowner or its agent, may assign to any person, firm or corporation executing
a surety or guarantee bond or other agreement to save or release the Vessel from
such arrest, all right, title and interest of the Mortgagee in and to said
insurance covering said loss, damage or expense, as collateral security to
indemnify against liability under said bond or other agreement.
(g) The Shipowner will deliver to the Mortgagee copies of all
cover notes, binders, policies and certificates of entry in protection and
indemnity associations, and all endorsements and riders amendatory thereof, in
respect of insurance maintained in connection with the Vessel.
(h) The Shipowner agrees that it will not do or permit or
willingly allow to be done any act by which any insurance required by the terms
of this Mortgage may be suspended, impaired or canceled, and that it will not
permit or allow the Vessel to undertake any voyage or run any risk or transport
any cargo which may not be permitted by the policies in force, without having
previously insured the Vessel by additional coverage to extend to such voyages,
risks or cargoes.
SECTION 1.16 The Shipowner will reimburse the Mortgagee
promptly, with interest at a rate equal to the rate applicable to the Notes, for
any and all expenditures which the Mortgagee may from time to time make, lay out
or expend in providing such protection in respect of insurance, discharge or
purchase of Liens, taxes, dues, assessments, governmental charges, fines and
penalties lawfully imposed, repairs, attorneys' fees and other matters as the
Shipowner is obligated herein to provide, but fails to provide. Such obligation
of the Shipowner to reimburse the Mortgagee shall be an additional Indebtedness
due from the Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Mortgagee, though privileged so to do, shall be under
no obligation to the Shipowner to make any such expenditures, nor shall the
making thereof relieve the Shipowner of any default in that respect.
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SECTION 1.17 The Shipowner will fully perform any and all
charter parties which are or may be entered into with respect to the Vessel.
SECTION 1.18 In the event that at any time and from time to
time this Mortgage, any other Transaction Document or any provisions hereof or
thereof shall be deemed invalidated in whole or in part by reason of any present
or future law or any decision of any court, or if the documents at any time held
by the Mortgagee shall be deemed by the Mortgagee for any reason insufficient to
carry out the true intent and spirit of this Mortgage and each other Transaction
Document, then the Shipowner, forthwith upon the reasonable request of the
Mortgagee, will execute and deliver, on its own behalf, such other and further
assurances and documents as may be reasonably necessary to more effectively
subject the Vessel to secure the payment of the Secured Obligations, as provided
in this Mortgage and each other Transaction Document and the performance of the
terms and provisions of this Mortgage and each other Transaction Document and do
such things as the Mortgagee in its sole discretion may reasonably deem to be
necessary to carry out the true intent of this Mortgage.
SECTION 1.19 In the event of the requisition (whether of title
or use), condemnation, sequestration, seizure or forfeiture of the Vessel by any
governmental or purported authority or by anyone else, any payments in respect
thereof shall be paid to the Mortgagee and applied in accordance with the terms
of Section 1.15(d).
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
SECTION 2.1 In case any one or more of the following events,
herein termed "Events of Default", shall have occurred and be continuing:
(a) if any "Event of Default", as said term is defined in the
Indenture, shall have occurred and be continuing; or
(b) if the Shipowner shall default in the use and punctual
performance or observance of any of the provisions of Sections 1.2, 1.4, 1.5,
1.9, 1.10, 1.13, 1.14 and 1.15; or
(c) if the Shipowner shall fail to perform or observe any
other term, covenant or agreement contained in this Mortgage on its part to be
performed or observed and if such failure shall remain unremedied for the lesser
of the cure period provided for herein and 60 days after written notice thereof
shall have been given to the Shipowner by the Mortgagee; or
(d) if any representation and warranty made in this Mortgage
is untrue in any material respect, as of the time when the same shall have been
made;
then, in each and every such case, the Mortgagee shall have
the right to:
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(1) declare immediately due and payable all of the
Secured Obligations (in which case all of the same
shall be immediately due), bring suit at law, in
equity or in admiralty, as it may be advised, to
recover judgment for the Secured Obligations and
collect the same out of any and all property of the
Shipowner, whether covered by this Mortgage or
otherwise;
(2) exercise all of the rights and remedies in
foreclosure and otherwise given to mortgagees by the
provisions of applicable law, including, but not
limited to, the provisions of the Ship Mortgage Act;
(3) take and enter into possession of the Vessel, at any
time, wherever the same may be, without legal process
(except to the extent required by applicable law),
and, except to the extent caused by the Mortgagee's
gross negligence or bad faith, without being
responsible for loss or damage, and the Shipowner or
other person in possession forthwith upon demand of
the Mortgagee, shall surrender to the Mortgagee
possession of the Vessel, and the Mortgagee may,
without being responsible for loss or damage, except
to the extent caused by the Mortgagee's gross
negligence or bad faith, hold, lay up, lease,
charter, operate or otherwise use the Vessel for such
time and upon such terms as it may deem to be for its
best advantage, and demand, collect and retain all
hire, freights, earnings, issues, revenues, income,
profits, return premiums, salvage awards or
recoveries, recoveries in general average, and all
other sums due or to become due in respect of the
Vessel or in respect of any insurance thereon from
any person whomsoever, accounting only for the net
profits, if any, arising from such use of the Vessel
and charging upon all receipts from the use of the
Vessel or from the sale thereof by court proceedings
or pursuant to subsection (4) next following, all
costs, expenses, charges, damages or losses by reason
of such use; and if at any time the Mortgagee shall
avail itself of the right herein given it to take the
Vessel, the Mortgagee shall have the right to dock
the Vessel at any dock, pier or other premises of the
Shipowner without charge, or to dock her at any other
place at the cost and expense of the Shipowner;
and/or
(4) take and enter into possession of the Vessel, upon
reasonable notice, wherever the same may be, without
legal process (except to the extent required by
applicable law), and if it seems desirable to the
Mortgagee and without being responsible for loss or
damage, except to the extent caused by the
Mortgagee's gross negligence or bad faith, sell the
Vessel, at any place and at such time as the
Mortgagee may specify and in such manner and such
place (whether by public or private sale) as the
Mortgagee may deem advisable (without necessity of
bringing the Vessel to the place designated for such
sale), free from any claim by the Shipowner in
admiralty, in equity, at
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law or by statute, after first giving notice of the
time and place of any public sale with a general
description of the property in the following manner:
(i) by publishing such notice for 10 consecutive days
in a daily newspaper of general circulation published in Baton
Rouge, Louisiana;
(ii) if the place of sale should not be Baton Rouge,
Louisiana, then also by publication of a similar notice in a
daily newspaper, if any, published at the place of sale; and
(iii) by mailing a similar notice to the Shipowner at
its last known address on the day of first publication and
notice of the time and place of any private sale by mailing
such notice to the Shipowner at its last known address.
The notice provisions contained in this Section are not
exclusive, and to the extent that Mortgagee elects to foreclose or
enforce its interests in a court of admiralty, Mortgagee will comply
with the notice provisions required by any applicable federal statutes
and procedural rules.
SECTION 2.2 Any sale of the Vessel made in pursuance of the
Mortgage shall operate to divest all right, title and interest of any nature
whatsoever of the Shipowner therein and thereto and shall bar any claim from the
Shipowner, its successors and assigns, and all persons claiming by, through or
under them. No purchaser shall be bound to inquire whether notice has been
given, or whether any default has occurred, or as to the property of the sale,
or as to the application of the proceeds thereof. In the case of any such sale,
the Mortgagee shall be entitled to bid for the purchase of the Vessel and, for
the purpose of making settlement or payment for the property purchased, to use
and apply the Secured Obligations in order that there may be credited against
the amount remaining due and unpaid thereon the sums payable out of the net
proceeds of such sale with respect to the Secured Obligations after allowing for
the costs and expense of sale and other charges; and thereupon such purchaser
shall be credited, on account of such purchase price, with the net proceeds that
shall have been so credited with respect to the Secured Obligations. At any such
sale, the Mortgagee may bid for and purchase such property and upon compliance
with the terms of sale may hold, retain and dispose of such property without
further accountability therefor.
SECTION 2.3 The Mortgagee is hereby appointed attorney-in-fact
of the Shipowner to execute and deliver to any purchaser aforesaid, and is
hereby vested with full power and authority to make, in the name and on behalf
of the Shipowner, a good conveyance of the title to the Vessel so sold. In the
event of any sale of the Vessel under any power herein contained, the Shipowner
will, if and when required by the Mortgagee, execute such form of conveyance of
the Vessel and other related documents as the Mortgagee may direct or approve.
SECTION 2.4 The Shipowner hereby irrevocably appoints the
Mortgagee attorney-in-fact in the name of the Shipowner with full authority in
the place and stead of the
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Shipowner from time to time upon the occurrence and during the continuance of an
Event of Default, to demand, collect, receive, compromise and sue for, so far as
may be permitted by law, all freights, hire, earnings, issues, revenues, income
and profits of the Vessel and all amounts due from underwriters under any
insurance thereon as payments of losses or as return premiums or otherwise,
salvage awards and recoveries, recoveries in general, average or otherwise, and
all other sums due or to become due at the time of the occurrence of any Event
of Default, or in respect of any insurance thereon, from any person whomsoever,
and to make, give and execute in the name of the Shipowner acquittances,
receipts, releases or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Shipowner all checks,
notes, drafts, warrants, agreements and other instruments in writing with
respect to the foregoing, or in respect of any actions in law or in equity, in
contract or in negligence, against third parties, to file suit against said
third parties for damage sustained by the Vessel while under the care and
custody of said third parties and prosecute through judgment or settlement, the
Mortgagee to have by assignments, all rights and remedies that would be afforded
to the Shipowner under principles and theories of privity, standing and
jurisdiction.
SECTION 2.5 Whenever any right to enter and take possession of
the Vessel accrues to the Mortgagee, it may require the Shipowner to deliver,
and the Shipowner shall on demand, at its own cost and expense, deliver to the
Mortgagee the Vessel as demanded. If any legal proceedings shall be taken to
enforce any right under this Mortgage, the Mortgagee shall be entitled as a
matter of right to the appointment of a receiver of the Vessel and of the
freights, hire, earnings, issues, revenues, income and profits due or to become
due and arising from the operation thereof.
SECTION 2.6 Upon the occurrence and during the continuance of
an Event of Default, the Shipowner authorizes and empowers the Mortgagee or its
appointees or any of them to appear in the name of the Shipowner, its successors
and assigns, in any court of any country or nation of the world where a suit is
pending against the Vessel because of or on account of an alleged Lien against
the Vessel from which the Vessel has not been released and to take such
proceedings as to them or any of them may seem proper towards the defense of
such suit and the purchase or discharge of such Lien, and all expenditures made
or incurred by them or any of them for the purpose of such defense or purchase
or discharge shall be a debt due from the Shipowner, its successors and assigns,
to the Mortgagee, and shall be secured by the Lien of this Mortgage in like
manner and extent as if the amount and description thereof were written herein.
SECTION 2.7 The Shipowner covenants that, at any time that any
Secured Obligations shall be due and payable (whether by acceleration or
otherwise), the Mortgagee may demand the payment thereof; and in case the
Shipowner shall fail to pay the same forthwith upon such demand, the Mortgagee
shall be entitled to recover judgment for the whole amount so due and unpaid,
together with such further amounts as shall be sufficient to cover the
reasonable compensation to the Mortgagee's agents, attorneys and counsel and any
necessary advances, expenses and liabilities made or incurred by it hereunder.
All moneys collected by the Mortgagee under this Section 2.7 shall be applied by
the Mortgagee in accordance with the provisions of Section 2.11.
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SECTION 2.8 Each and every power and remedy herein given to
the Mortgagee shall be cumulative and shall be in addition to every other power
and remedy herein given or now or hereafter existing at law, in equity, in
admiralty or by statute, and each and every power and remedy whether herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Mortgagee, and the exercise or
the beginning of the exercise of any power or remedy shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other
power or remedy. No delay or omission by the Mortgagee in the exercise of any
right or power or in the pursuance of any remedy accruing upon any Event of
Default shall impair any such right, power or remedy or be construed to be a
waiver of any such Event of Default or to be an acquiescence therein; nor shall
the acceptance by the Mortgagee of any security or of any payment of or on
account of the Secured Obligations after any Event of Default or of any payment
on account of any past Event of Default be construed to be a waiver of any right
to take advantage of any future Event of Default or of any past Event of Default
not completely cured thereby.
SECTION 2.9 If at any time after an Event of Default and prior
to the actual sale of the Vessel by the Mortgagee or prior to any foreclosure
proceedings, the Shipowner offers completely to cure all Events of Default and
to pay all expenses, advances and damages to the Mortgagee consequent on such
Events of Default, with interest at the rate provided in Section 1.16 hereof,
then the Mortgagee may, but shall be under no obligation to, accept such offer,
cure and payment and restore the Shipowner to its former position, but such
action shall not affect any subsequent Event of Default or impair any rights
consequent thereon.
SECTION 2.10 In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Shipowner and the Mortgagee shall be restored to their
former positions and rights hereunder with respect to the property subject or
intended to be subject to this Mortgage and all rights, remedies and powers of
the Mortgagee shall continue as if no such proceedings had been taken.
SECTION 2.11 The proceeds of any sale of the Vessel and the
net earnings of any charter operation or other use of the Vessel by the
Mortgagee under any of the powers herein specified in this Article II, as well
as any and all other moneys received by the Mortgagee pursuant to or under any
of the provisions of Article I hereof or this Article II or in any proceedings
pursuant to this Article II, shall be held and applied by the Mortgagee from
time to time as set forth in the Indenture, any other provision in this Mortgage
to the contrary notwithstanding. In the event that the proceeds and amounts
referred to above received by the Mortgagee are insufficient to pay in full all
Secured Obligations, the Mortgagee shall be entitled to collect the balance from
the Shipowner or from any other person or entity liable therefor.
SECTION 2.12 Unless and until one or more Events of Default
shall occur and be continuing, the Shipowner (a) shall be suffered and permitted
to retain actual possession and use
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of the Vessel and (b) shall have the right, from time to time, in its
discretion, and without application to the Mortgagee, and without obtaining a
release therefrom by the Mortgagee, to dispose of, free from the Lien hereof,
any boilers, engines, machinery, masts, spars, sails, rigging, boats, anchors,
cables, chains, tackle, apparel, furniture, fittings, equipment or any other
appurtenances of the Vessel that are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, by first or simultaneously
replacing the same by new boilers, engines, machinery, masts, spars, sails,
rigging, boats, anchors, cables, chains, tackle, apparel, furniture, fittings,
equipment or other appurtenances of substantially equal value to the Shipowner,
which shall forthwith become subject to the Lien of this Mortgage as a first
preferred mortgage thereon unless otherwise permitted by the Indenture.
ARTICLE III
SUNDRY PROVISIONS
SECTION 3.1 All of the covenants, promises, stipulations and
agreements of the Shipowner in this Mortgage contained shall bind the Shipowner
and its successors and assigns and shall inure to the benefit of the Mortgagee
and its successors and assigns (including successor trustees under the
Indenture). In the event of any assignment of this Mortgage, the term
"Mortgagee" as used in this Mortgage shall be deemed to mean any such assignee.
SECTION 3.2 Wherever and whenever herein any right, power or
authority is granted or given to the Mortgagee, such right, power or authority
may be exercised in all cases by the Mortgagee or such agent or agents as it may
appoint, and the act or acts of such agent or agents when taken shall constitute
the act of the Mortgagee hereunder. Without limitation of the foregoing, in each
instance where the Mortgagee has engaged a consultant to advise the Mortgagee in
connection with the exercise of any such rights, powers and authority, the
Mortgagee shall be entitled to rely upon the advice of such consultant and when
so relying shall conclusively be deemed to have acted in a reasonable manner.
SECTION 3.3 In the event that any provision of this Mortgage
shall be deemed invalid or unenforceable by reason of any present or future law
or any decision of any court of competent jurisdiction, the validity and
enforceability of any other provision hereof shall not be affected thereby. Any
such invalidity or unenforceability of any provision of this Mortgage in any
jurisdiction or nation shall not render such provision invalid or unenforceable
under the laws of any other jurisdiction or nation.
SECTION 3.4 Anything herein to the contrary notwithstanding,
it is intended that nothing herein shall waive the preferred status of this
Mortgage and that, if any provision of this Mortgage or portion hereof shall be
construed to waive the preferred status of this Mortgage, then such provision to
such extent shall be void and of no effect and shall cease to be a part of this
Mortgage without affecting the remaining provisions, which shall remain in full
force and effect.
SECTION 3.5 The Shipowner irrevocably submits itself to the
non-exclusive jurisdiction of the State of Louisiana or federal court sitting in
Louisiana and any appellate court of
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any thereof, for the purposes of any suit, action or other proceeding arising
out of, or relating to, this Mortgage or any of the transactions contemplated
hereby, hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard in such Louisiana state or federal court and hereby, to
the fullest extent it may effectively do so, irrevocably waives, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such suit, action
or proceeding any claim that it is not personally subject to the jurisdiction of
the above-named courts for any reason whatsoever, that such suit, action or
proceeding is brought in an inconvenient forum, that the venue of such suit,
action or proceeding is improper or that this Mortgage or the subject matter
hereof may not be enforced in or by such courts. The Shipowner hereby
irrevocably consents to the service of any and all process in any suit, action
or proceeding by the mailing (certified mail, return receipt requested) or
delivery of copies of such process to the Shipowner at 1717 River Boat Road
North, Baton Rouge, Louisiana 70802, Attention: President. The Shipowner agrees
that all notices to the Mortgagee hereunder shall be validly given only if
delivered at or mailed (certified mail, return receipt requested) to the
Mortgagee at 180 East 5th Street, St. Paul, Minnesota 55101, Attention:
Corporate Trust Department. The Shipowner further agrees that a final judgment
in any such action, suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this Section 3.5 shall affect the right of the Mortgagee to
serve legal process in any other manner permitted by law or affect the right of
the Mortgagee to bring any action or proceeding against the Shipowner or its
property in the courts of any other jurisdiction.
SECTION 3.6 This Mortgage may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
SECTION 3.7 The term "Dollars" or the symbol as used herein
shall mean Dollars in any coin or currency of the United States of America which
at the time of payment shall be legal tender for public and private debts.
SECTION 3.8 If the Shipowner shall pay and discharge all
Secured Obligations secured hereby by well and truly paying or causing to be
paid all Secured Obligations, as and when the same become due and payable, and
if the Shipowner shall also pay or cause to be paid all other sums payable
hereunder by the Shipowner, then the Mortgage and the Lien, rights and interest
granted shall cease, determine and become null and void, and the Mortgagee
shall, at the request and cost and expense of the Shipowner, execute and deliver
such instrument or instruments of satisfaction as may be reasonably necessary to
satisfy and discharge the Lien hereof; and forthwith the estate, right, title
and interest of the Mortgagee in and to all property subject to this Mortgage
shall thereupon cease, determine and become null and void.
SECTION 3.9 The powers conferred on the Mortgagee by this
Mortgage, including without limitation the provisions of Sections 1.11(d), 1.13,
1.14, 1.15, 2.1, 2.2, 2.4, 2.5 and 2.6 hereof, are solely to protect its
interest and the interests of the Holders in the Vessel and shall not impose any
duty upon it to exercise such provisions. Except for the safe custody of any
part of the
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Vessel in its possession (subject to standards of care governing the Mortgagee
hereunder) and the accounting for moneys actually received by it hereunder, the
Mortgagee shall have no duty as to any part of the Vessel whether or not the
Mortgagee or any Holder has or is deemed to have knowledge of such matters, or
as to the taking of any necessary steps to preserve rights against any parties
or any other rights pertaining to the Vessel.
SECTION 3.10 The provisions of Article IX of the Indenture
regarding amendments are specifically incorporated in this Mortgage by
reference, with the same force and effect as if the same were set out in this
Mortgage in full. All references in such incorporated provisions to "Company"
shall without further reference mean and refer to the Shipowner; and all
references in such incorporated provisions to "this Indenture" shall without
further reference mean and refer to this Mortgage; and all references in such
incorporated provisions to "Trustee" shall without further reference mean and
refer to Mortgagee.
SECTION 3.11 The Shipowner hereby agrees to indemnify and
defend Mortgagee, and its directors, officers, agents and employees, and each
Holder and saves each of them harmless from and against any and all liability,
loss, damages, judgments, claims and expenses, including reasonable attorneys'
fees and expenses, disbursements, bond expenses, printing and automated document
preparation and retention expenses and other ordinary litigation expenses,
incurred in connection with any action or proceeding to foreclose this Mortgage
or in or to which the Mortgagee or any Holder may be made a party due to the
existence of this Mortgage or to which action or proceeding the Mortgagee or any
Holder may become a party for the purpose of protecting the Vessel or the Lien
of this Mortgage. All sums paid by the Mortgagee or any Holder to prosecute or
defend the rights herein set forth shall be deemed a part of the Secured
Obligations and shall be paid by the Shipowner to the Mortgagee or such Holder
within ten days after written demand, and if not paid within that period, shall
accrue interest from and including the date of disbursement or advance by the
Mortgagee or such Holder to and including the date of payment by the Shipowner
at the interest rate then applicable to the Notes.
END OF ANNEX I
TO
FIRST PREFERRED SHIP MORTGAGE
made as of the 27th day of January, 1999
by LOUISIANA CASINO CRUISES, INC.
regarding the WHOLE of the CASINO ROUGE
(Official Number 1027353 )
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EXHIBIT 10.7
SECURITY AGREEMENT
DATED AS OF JANUARY 27, 1999
BY AND BETWEEN
LOUISIANA CASINO CRUISES, INC.
AND
U. S. BANK TRUST NATIONAL ASSOCIATION
AS TRUSTEE
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SECTION 1. Grant of Security.................................................1
SECTION 2. Security for Obligations..........................................3
SECTION 3. Company Remains Liable............................................4
SECTION 4. Delivery of Security Collateral and Account Collateral............4
SECTION 5. Maintaining the Collateral Account................................4
SECTION 6. Intentionally Omitted.............................................4
SECTION 7. Investing of Amounts in the Collateral Account....................5
SECTION 8. Release of Amounts................................................5
SECTION 9. Representations and Warranties....................................5
SECTION 10. Certain Covenants.................................................7
SECTION 11. Insurance.........................................................9
SECTION 12. Place of Perfection; Records; Collection of Receivables..........10
SECTION 13. Voting Rights; Dividends; Etc....................................10
SECTION 14. As to the Assigned Agreements....................................12
SECTION 15. Payments Under the Assigned Agreements...........................13
SECTION 16. Transfers and Other Liens; Pledged Shares........................13
SECTION 17. Trustee Appointed Attorney-in-Fact...............................13
SECTION 18. Trustee May Perform..............................................14
SECTION 19. The Trustee's Duties.............................................14
SECTION 20. Remedies.........................................................14
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SECTION 21. Registration Rights..............................................16
SECTION 22. Regulatory Matters...............................................17
SECTION 23. Indemnity and Expenses...........................................18
SECTION 24. Security Interest Absolute.......................................19
SECTION 25. Amendments; Waivers; Etc.........................................20
SECTION 26. Addresses for Notices............................................20
SECTION 27. Continuing Security Interest; Assignment Under the Indenture.....20
SECTION 28. Release and Termination..........................................20
SECTION 29. Gaming Laws......................................................21
SECTION 30. The Mortgages....................................................21
SECTION 31. Governing Law; Terms.............................................21
SECTION 32. Execution in Counterparts........................................21
SECTION 33. Interaction with Indenture.......................................21
</TABLE>
Schedule I - Assigned Agreements
Schedule II - Locations of Equipment and Inventory
Schedule III - Trade Names
Schedule IV - Deposit Accounts
Exhibit A - Form of Deposit Account Letter
Exhibit B - Form of Consent and Agreement
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SECURITY AGREEMENT
SECURITY AGREEMENT dated as of January 27, 1999 made by and between
LOUISIANA CASINO CRUISES, INC., a Louisiana corporation, with an office at 1717
River Road North, Baton Rouge, Louisiana 70802 (the "COMPANY") and U.S. BANK
TRUST NATIONAL ASSOCIATION, as trustee (in such capacity, together with any
successor appointed pursuant to Section 7.8 of the Indenture, the "TRUSTEE") for
the holders (the "HOLDERS") under an Indenture dated as of January 27, 1999
(such Indenture, as it may be amended, supplemented or otherwise modified from
time to time in accordance with its terms, the "INDENTURE") . Capitalized terms
not otherwise defined in this Agreement shall have the meanings set forth in the
Indenture.
PRELIMINARY STATEMENTS:
(1) The Company has entered into the Indenture pursuant to
which the Company will issue up to $55,000,000 of 11% Senior Secured Notes Due
2005 (the "NOTES") .
(2) The Company has opened a collateral account (the
"COLLATERAL ACCOUNT") with U.S. Bank Trust National Association, Account No.
______________, in the name of Louisiana Casino Cruises, Inc. but under the sole
dominion and control of the Trustee and subject to the terms of this Agreement
(on the date hereof, the balance in the Collateral Account is $0).
(3) It is a condition precedent to the execution of the
Indenture by the Trustee and the purchase of the Notes by the Holders that the
Company shall have granted to the Trustee the assignment and security interest
and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises, the Company hereby
agrees with the Trustee for its benefit and the ratable benefit of the Holders
as follows:
SECTION 1. GRANT OF SECURITY. The Company hereby assigns and pledges to
the Trustee for its benefit and the ratable benefit of the Holders, and hereby
grants to the Trustee for its benefit and the ratable benefit of the Holders a
security interest in, the collateral described in paragraphs (a), (b), (c), (d),
(e), (f) and (g) of this Section 1 (collectively, the "COLLATERAL"):
(a) all of the Company's right, title and interest, whether
now owned or hereafter acquired, in and to (i) all equipment in all of
its forms, wherever located (other than any gaming equipment that was
acquired with the proceeds of Indebtedness provided by one or more
lenders that are not Affiliates of the Company and is or at the time of
its acquisition becomes subject to a perfected security interest in
such gaming equipment (the "EXCLUDED GAINING EQUIPMENT"), now or
hereafter existing (including, but not limited to, security and
surveillance equipment, cash registers, telephone, facsimile and other
communications equipment, chairs, desks, cabinets and other furniture),
all furniture, fixtures and all parts thereof and all accessions
thereto and (ii) the vessel
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Casino Rouge (Official Number 1027353), together with all boilers,
engines, machinery, masts, spars, sails, boats, anchors, cables,
chains, rigging, tackle, apparel and fittings relating thereto (any and
all such equipment, furniture, fixtures, parts and accessions being the
"EQUIPMENT");
(b) all of the Company's right, title and interest, whether
now owned or hereafter acquired, in and to all inventory in all of its
forms, wherever located, now or hereafter existing (including, but not
limited to, (i) all food, beverages, linens and other hotel supplies,
glasses, china and other restaurant supplies and all raw materials and
work in process therefor, finished goods thereof and materials used or
consumed in the manufacture or production thereof, (ii) goods in which
the Company has an interest in mass or a joint or other interest or
right of any kind (including, without limitation, goods in which the
Company has an interest or right as consignee) and (iii) goods that are
returned to or repossessed by the Company), and all accessions thereto
and products thereof and documents therefor (any and all such
inventory, accessions, products and documents being the "INVENTORY");
(c) all of the Company's right, title and interest, whether
now owned or hereafter acquired, in and to all accounts, contract
rights, chattel paper, instruments, deposit accounts (including the
deposit accounts listed on Schedule IV hereto), general intangibles and
other obligations of any kind, now or hereafter existing, whether or
not arising out of or in connection with the sale or lease of goods or
the rendering of services, and all rights now or hereafter existing in
and to all security agreements, leases and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles or
obligations, but excluding any gaming license issued by the State of
Louisiana or any subdivision or agency thereof to the extent granting
of a security interest in such gaming license would violate applicable
governing law (any and all such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and
obligations, to the extent not referred to in paragraph (e) or (f) of
this Section 1, being the "RECEIVABLES", and any and all such leases,
security agreements and other contracts being the "RELATED CONTRACTS");
(d) all of the Company's right, title and interest in and to
each of the agreements listed on Schedule I hereto, as such agreements
may be amended, supplemented or otherwise modified from time to time
(collectively, the "ASSIGNED AGREEMENTS"), including, without
limitation, (i) all rights of the Company to receive moneys due and to
become due under or pursuant to the Assigned Agreements, (ii) all
rights of the Company to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to the Assigned Agreements, (iii) any
claims of the Company for damages arising out of or for breach of or
default under one or more of the Assigned Agreements and (iv) all
rights of the Company to terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise all
remedies thereunder (all such Collateral being the "AGREEMENT
COLLATERAL");
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(e) all of the following (collectively, the "ACCOUNT
COLLATERAL"):
(i) the Collateral Account, all funds held therein
and all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Account;
(ii) Collateral Investments (as hereinafter defined)
from time to time and all certificates and instruments, if
any, from time to time representing or evidencing the
Collateral Investments;
(iii) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Trustee
for or on behalf of the Company, in substitution for or in
addition to any or all of the then existing Account
Collateral; and
(iv) all interest, dividends, cash, instruments and
other property and assets from time to time received,
receivable or otherwise-distributed in respect of or in
exchange for any or all of the then existing Account
Collateral;
(f) any and all shares of stock of, or other equity interests
in, any Restricted Subsidiary or any other Person owned, as of the date
hereof, or from time to time acquired by the Company in any manner
after the date hereof (the "PLEDGED SHARES"), the certificates
representing the Pledged Shares, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares (the "SECURITY COLLATERAL"); and
(g) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of
the types described in paragraphs (a) - (f) of this Section 1) and, to
the extent not otherwise included, all (i) payments under insurance
(whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral and (ii)
cash.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment
of all obligations of the Company now or hereafter existing under or with
respect to the Notes, the Indenture or any of the Security Documents, whether
for principal, premium, interest, fees, expenses or otherwise (all such
obligations being the "SECURED OBLIGATIONS"). Without limiting the generality of
the foregoing, this Agreement secures the payment of all amounts that constitute
part of the Secured Obligations and would be owed by the Company to the Trustee
or the Holders under or with respect to the Notes, the Indenture or the Security
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
the Company.
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SECTION 3. COMPANY REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Company shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Trustee of any of the
rights hereunder shall not release the Company from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) neither the Trustee nor any Holder shall have any obligation or liability
under the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Trustee or any Holder be obligated to perform any of
the obligations or duties of the Company thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. DELIVERY OF SECURITY COLLATERAL AND ACCOUNT COLLATERAL. All
certificates or instruments representing or evidencing Security Collateral or
Account Collateral shall be delivered to and held by or on behalf of the Trustee
pursuant hereto and shall be in suitable form for transfer by delivery or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
all in form and substance satisfactory to the Trustee. The Trustee shall have
the right, at any time and without notice to the Company, to transfer to or to
register in the name of the Trustee or any of its nominees any or all of the
Security Collateral and Account Collateral, subject only to the revocable rights
specified in Section 13(a) hereof. In addition, the Trustee shall have the right
at any time to exchange certificates or instruments representing or evidencing
Account Collateral for certificates or instruments of smaller or larger
denominations.
SECTION 5. MAINTAINING THE COLLATERAL ACCOUNT. So long as any Secured
Obligation shall remain unpaid and until such time as the Indenture shall have
been satisfied and discharged in accordance with Section 8.1 thereof:
(a) The Company will maintain the Collateral Account with the
Trustee.
(b) It shall be a term and condition of the Collateral
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Collateral Account and except as
otherwise provided in Sections 8 and 20 hereof, that no amount
(including interest on Collateral Investments, as hereinafter defined)
shall be paid or released to or for the account of, or withdrawn by or
for the account of, the Company or any other Person from the Collateral
Account.
The Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
SECTION 6. Intentionally Omitted.
SECTION 7. INVESTING OF AMOUNTS IN THE COLLATERAL ACCOUNT. The Trustee
will upon receipt of the written instructions of the Company from time to time,
subject to Sections 8 and 20
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hereof, (a) invest amounts on deposit in the Collateral Account in such
marketable securities in the name of the Trustee as the Company may select and
(b) invest interest paid on the marketable securities referred to in clause (a)
above, and reinvest other proceeds of any such marketable securities that may
mature or be sold in the name of the Trustee as the Company may select (the
marketable securities referred to in clauses (a) and (b) above being,
collectively, "COLLATERAL INVESTMENTS"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided in the immediately
preceding sentence shall be deposited and held in the Collateral Account.
SECTION 8. RELEASE OF AMOUNTS. Subject to Section 20 hereof, amounts
held in the Collateral Account shall be released only in accordance with the
terms and conditions of Section 11.4 of the Indenture.
SECTION 9. REPRESENTATIONS AND WARRANTIES. The Company represents,
warrants and agrees for itself and its Collateral as follows:
(a) LOCATION OF COMPANY AND COLLATERAL, ETC. All of the
Equipment and Inventory is located at one or more of the places
specified in Schedule II hereto. The principal place of business of the
Company or, if the Company has more than one place of business, the
chief executive office of the Company and the office where the Company
keeps its records concerning its Receivables, copies of each Assigned
Agreement to which it is a party and copies of all chattel paper that
evidence Receivables, are located, in each case, at the address listed
below the name of the Company on the signature page hereof. Copies of
each Assigned Agreement (certified by the Secretary of the Company to
be true and complete) and originals of all chattel paper that evidence
Receivables have been delivered to the Trustee. None of the Receivables
or the Agreement Collateral is evidenced by a promissory note, chattel
paper or other instrument, except for promissory notes, chattel paper
or other instruments that have been delivered to the Trustee pursuant
to the terms of this Agreement.
(b) OWNERSHIP OF COLLATERAL. The Company is the legal and
beneficial owner of the Collateral in which it is granting a security
interest free and clear of any Lien, except for (i) Liens created
hereunder in favor of the Trustee and (ii) Permitted Liens. No
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Trustee
relating to this Agreement. The Company has exclusive possession and
control of the Equipment and Inventory. All of the trade names of the
Company are listed below its name on Schedule III hereto.
(c) AGREEMENT COLLATERAL. The Assigned Agreements, copies of
which (certified by the Secretary of the Company to be true and
complete) have been furnished to the Trustee, have been duly
authorized, executed and delivered by (i) the Company and (ii) to the
knowledge of the officers and directors of the Company, each other
party
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<PAGE>
thereto, have not been amended, supplemented or otherwise modified
except as set forth on Schedule I hereto, are in full force and effect
and are binding upon and enforceable against all parties thereto in
accordance with their terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), moratorium or other laws
affecting enforcement of creditors' rights generally from time to time
in effect and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law). There exists no default under any
Assigned Agreement by (i) the Company and (ii) to the knowledge of the
officers and directors of the Company, each other party thereto. Each
party to each Assigned Agreement other than the Company has executed
and delivered to the Company a consent, in substantially the form of
Exhibit B hereto, to the assignment of the Agreement Collateral to the
Trustee pursuant to this Agreement.
(d) VALID AND PERFECTED PRIORITY SECURITY INTEREST. This
Agreement and the pledge and assignment of the Collateral pursuant
hereto create, a valid and perfected first priority security interest
in the Collateral, enforceable against all third parties and securing
the payment of the Secured Obligations, and all filings and other
actions necessary or desirable and requested by the Trustee prior to
the date hereof to create, perfect and protect such security interest
have been duly made or taken or will be duly made or taken on or
immediately after the Issue Date.
(e) THIRD PARTY AUTHORIZATIONS. No authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other third party is required for:
(i) the grant by the Company of the assignment and
security interest granted hereby, for the pledge by the
Company of the Security Collateral pursuant hereto or for the
execution, delivery or performance of this Agreement by the
Company, or
(ii) the perfection or maintenance of the pledge,
assignment and security interest created hereby (including the
first priority nature thereof), except for the filing of
financing and continuation statements under the Uniform
Commercial Code, which financing statements have been duly
filed, and
(iii) the exercise by the Trustee of its voting or
other rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except
as may be required in connection with the disposition of any
portion of the Security Collateral by laws affecting the
offering and sale of securities generally.
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(f) INVENTORY. All Inventory produced by the Company has been
produced by the Company in compliance with all requirements of the Fair
Labor Standards Act.
(g) ASSETS INCLUDED IN COLLATERAL. The Collateral (together
with the property and assets of the Company subject to other Security
Documents) consists of all of the property and assets owned by the
Company or any of its Subsidiaries other than Excluded Gaming
Equipment. The Collateral includes all property and assets other than
Excluded Gaming Equipment necessary to operate the business of the
Company and its Subsidiaries in the same manner as such business is
conducted on the date hereof and as such business is intended to be
conducted.
(h) FEDERAL IDENTIFICATION NUMBER. The Company's federal tax
identification number is 72-1196619 and the Company shall not change
such number, except upon at least 30 days' prior written notice to the
Trustee and upon the taking or causing to be taken at the Company's
expense such actions as may be reasonably requested by the Trustee.
SECTION 10. CERTAIN COVENANTS. So long as any Secured Obligation shall
remain unpaid and until such time as the Indenture shall have been satisfied and
discharged in accordance with Section 8.1 thereof, the Company will:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with the Employment Retirement Income
Security Act of 1974, as amended, and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of
1970.
(b) PAYMENT OF TAXES, ETC. To the extent required under,
Section 4.5 of the Indenture pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become
delinquent (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon the Collateral and (ii) all lawful
claims that, if unpaid, might by law become a Lien upon the Collateral.
(c) LOCATION OF EQUIPMENT AND INVENTORY. Keep all Equipment
and Inventory (other than Inventory sold in the ordinary course of
business) at the places therefor specified in Section 9(a) hereof or,
upon 30 days' prior written notice to the Trustee, at such other places
in a jurisdiction where all action required by Section 10(h) hereof
shall have been taken with respect to such Equipment and Inventory.
(d) MAINTENANCE OF EQUIPMENT. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all Equipment in
which the Company is granting a security interest in accordance with,
and to the extent required under, Section 4.15 of the Indenture.
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(e) PRODUCTION OF INVENTORY. Produce, and cause each of its
Subsidiaries to produce, all Inventory in compliance with all
requirements of the Fair Labor Standards Act.
(f) VISITATION RIGHTS. Permit the Trustee (at the Company's
expense) or any agents or representatives thereof at any reasonable
time and from time to time to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Company and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Company and any of its Subsidiaries with
any of their officers or directors and with their independent public
accountants.
(g) LIMITATION ON ACCOUNTS. Not maintain, or permit any of its
Subsidiaries to maintain, any deposit accounts other than the
Collateral Account, the deposit accounts set forth on Schedule IV
hereto or such other accounts to the extent that the bank maintaining
any such account shall have delivered to the Trustee a deposit account
letter substantially in the form of Exhibit A hereto.
(h) FURTHER ASSURANCES. From time to time at the sole expense
of the Company, (i) promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable, or that the Trustee may request, in order to
perfect and protect any pledge, assignment or security interest granted
or purported to be granted hereby or to enable the Trustee to exercise
and enforce its rights and remedies hereunder with respect to any
Collateral, including, without limitation:
(A) marking conspicuously each document included in
the Inventory, each chattel paper included in the Receivables,
each Related Contract, each Assigned Agreement and, at the
request of the Trustee, each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory
to the Trustee, indicating that such document, chattel paper,
Related Contract or Assigned Agreement is subject to the
security interest granted hereby;
(B) if any Collateral shall be evidenced by a
promissory note or other instrument (other than a draft or
check received in the ordinary course of business) or chattel
paper, delivering and pledging to the Trustee hereunder such
note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the
Trustee;
(C) executing and filing such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or
as the Trustee may request, in order to perfect and preserve
the pledge, assignment and security interest granted or
purported to be granted hereby; and
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(D) causing each Restricted Subsidiary (each a
"COLLATERAL GRANTOR" and, collectively, the "COLLATERAL
GRANTORS") to enter into a supplement to this Agreement or a
security agreement (either of which shall become a part of
this Agreement upon its execution), in either case
substantially in the form of this Agreement and providing the
Trustee with a security interest in the assets of such
Collateral Grantor substantially similar to the security
interest in the Collateral granted herein by the Company to
the Trustee; and
(ii) furnish to the Trustee statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Trustee may reasonably request,
all in reasonable detail.
The Company hereby authorizes the Trustee (at the Company's expense) to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Company where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
SECTION 11. INSURANCE. (a) The Company shall, at its own expense,
maintain insurance with respect to any Equipment and Inventory in which it is
granting a security interest with responsible and reputable insurance companies
or associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company operates. Each policy for liability
insurance shall provide for all losses to be paid on behalf of the Trustee and
the Company as their interests may appear, and each policy for property damage
insurance shall provide for all losses (except for losses of less than $100,000
per occurrence) to be paid directly to the Trustee; it is acknowledged that any
such payments received by the Trustee that are not related to an Event of Loss
will be promptly endorsed or otherwise paid by the Trustee to the Company. Each
such policy shall in addition (i) name the Company and the Trustee as insured
parties thereunder (without any representation or warranty by or obligation upon
the Trustee) as their interests may appear, (ii) provide that there shall be no
recourse against the Trustee for payment of premiums or other amounts with
respect thereto and (iii) provide that at least 30 days' prior written notice of
cancellation or of lapse shall be given to the Trustee by the insurer. The
Company shall, if so requested by the Trustee, deliver to the Trustee original
or duplicate policies of such insurance and, as often as the Trustee may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Furthermore, the Company shall, at the request of the Trustee,
duly exercise and deliver instruments of assignment of such insurance policies
to comply with the requirements of Section 10(h) hereof and cause the insurers
to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by
the Company pursuant to this Section 11 may be paid directly to the
Person who shall have incurred liability covered by such insurance. In
case of any loss involving damage to Equipment or
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Inventory, the Company shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory to the extent
required by Section 4.15 of the Indenture, and any proceeds of
insurance maintained by the Company pursuant to this Section 11 shall
be paid to the Company as reimbursement for the costs of such repairs
or replacements pursuant to Section 11.4 of the Indenture.
SECTION 12. PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES.
(a) The Company shall keep its principal place of business and chief executive
office and the office where it keeps its records concerning the Collateral, and
copies of any Assigned Agreements and copies of all chattel paper that evidence
Receivables, at the location therefor specified in Section 9(a) hereof, or upon
30 days' prior written notice to the Trustee, at such other locations in a
jurisdiction where all actions required by Section 10 (h) hereof shall have been
taken with respect to the Collateral. The Company will hold and preserve such
records, Assigned Agreements and chattel paper and will permit representatives
of the Trustee (at the Company' s expense) at any time during normal business
hours to inspect and make copies of and abstracts from such records and chattel
paper.
(b) Except as otherwise provided in this subsection (b), the
Company shall continue to collect, at its own expense, all amounts due
or to become due the Company under the Receivables. In connection with
such collections, the Company may take (and, at the Trustee's
direction, shall take) such action as the Company or the Trustee may
deem reasonable, necessary or advisable to enforce collection of the
Receivables; PROVIDED, HOWEVER, that the Trustee shall have the right
at any time, upon the occurrence and during the continuance of an Event
of Default and upon written notice to the Company of its intention to
do so, to notify the obligors under any Receivables of the assignment
of such Receivables to the Trustee and to direct such obligors to make
payment of all amounts due or to become due to the Company thereunder
directly to the Trustee and, upon such notification and at the expense
of the Company, to enforce collection of any such Receivables, and to
adjust, settle or compromise (on reasonable terms) the amount or
payment thereof, in the same manner and to the same extent as the
Company might have done. After receipt by the Company of the notice
from the Trustee referred to in the proviso to the immediately
preceding sentence, (i) all amounts and proceeds (including
instruments) received by the Company in respect of the Receivables
shall be received in trust for the benefit of the Trustee hereunder,
shall be segregated from other property and funds of the Company and
shall be forthwith paid over to the Trustee in the same form as so
received (with any necessary indorsement) and shall be deposited in the
Collateral Account and, thereafter, applied in accordance with Section
20 (b) hereof and (ii) the Company shall not adjust, settle or
compromise the amount or payment of any Receivable, release wholly or
partly any obligor thereof, or allow any credit or discount thereon.
SECTION 13. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Event of
Default shall have occurred and be continuing:
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(i) The Company shall be entitled to exercise or
refrain from exercising any and all voting and other
consensual rights pertaining to the Security Collateral or any
part thereof for any purpose not inconsistent with the terms
of this Agreement; PROVIDED, HOWEVER, that the Company shall
not exercise or refrain from exercising any such right if such
action would have a material adverse effect on the value of
the Security Collateral or any part thereof.
(ii) The Company shall be entitled to receive and
retain any and all dividends, distributions and interest paid
in respect of the Security Collateral; PROVIDED, HOWEVER, that
any and all
(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and
other property received, receivable or otherwise
distributed in respect of or in exchange for any
Security Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Security
Collateral in connection with a partial or total
liquidation or dissolution or in connection with a
reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in
redemption of or in exchange for, any Security
Collateral shall be, and shall be forthwith delivered
to the Trustee to hold as, Security Collateral and
shall, if received by the Company, be received in
trust for the benefit of the Trustee, be segregated
from the other property or funds of the Company and
be forthwith delivered to the Trustee as Security
Collateral in the same form as so received (with any
necessary endorsement). The Company shall, upon
request of the Trustee, promptly execute such
documents and do such acts as may be necessary or
advisable to give effect to this paragraph (ii).
(iii) Upon not less than ten Business Days' prior
notice, accompanied by an Officer's Certificate to the effect
that any and all conditions under this Agreement have been
met, the Trustee shall execute and deliver (or cause to be
executed and delivered) to the Company all such proxies and
other instruments as the Company may reasonably request for
the purpose of enabling the Company to exercise the voting and
other consensual rights that it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends,
distributions or interest payments that it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event
of Default:
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(i) All rights of the Company (A) to exercise or
refrain from exercising the voting and other consensual rights
that it would otherwise be entitled to exercise pursuant to
Section 13(a)(i) hereto shall, upon notice to the Company by
the Trustee, cease and (B) to receive the dividends,
distributions and interest payments that it would otherwise be
authorized to receive and retain pursuant to Section 13(a)(ii)
hereto shall automatically cease, and all such rights shall
thereupon become vested in the Trustee, which shall thereupon
have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and
hold as Security Collateral such dividends, distributions and
interest payments.
(ii) All dividends, distributions and interest
payments that are received by the Company contrary to the
provisions of Section 13(b)(i) shall be received in trust for
the benefit of the Trustee, shall be segregated from other
property and funds of the Company and shall be forthwith paid
over to the Trustee as Security Collateral in the same form as
so received (with any necessary endorsement).
SECTION 14. AS TO THE ASSIGNED AGREEMENTS. (a) The Company shall, at
its own expense:
(i) perform and observe all the terms and provisions
of each Assigned Agreement to be performed or observed by it,
maintain each such Assigned Agreement in full force and effect
on its part, enforce each such Assigned Agreement in
accordance with its terms and take all such action to such end
as may be from time to time reasonably requested by the
Trustee; and
(ii) furnish to the Trustee promptly upon the
Trustee's request therefor copies of all notices, requests and
other documents received by the Company under or pursuant to
the Assigned Agreements, and from time to time (A) furnish to
the Trustee such information and reports regarding the
Collateral as the Trustee may reasonably request and (B) upon
request of the Trustee make to each other party to any
Assigned Agreement such demands and requests for information
and reports or for action as the Company is entitled to make
thereunder.
(b) Except as otherwise expressly permitted pursuant to the
Indenture, the Company shall not cancel or terminate, or consent or
accept any cancellation or termination of, any Assigned Agreement, or
enter into any amendment to any Assigned Agreement to which it is a
party, or grant any consent or waiver from any of the terms thereof,
except amendments, waivers or consents for certain specified purposes,
including, among other things, (i) curing ambiguities, defects or
inconsistencies, (ii) making any change that does not adversely affect
the rights of any Holder or (iii) mortgaging, pledging or granting a
security interest in favor of the Company as additional security for
the payment and performance of the Secured Obligations in any property
or
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assets (including any additional collateral that is required to be
mortgaged, pledged or hypothecated, or in which a security interest is
required to be granted, pursuant to such Assigned Agreement or
otherwise).
SECTION 15. PAYMENTS UNDER THE ASSIGNED AGREEMENTS. Notwithstanding
that all payments under the Assigned Agreements shall be made in accordance with
their terms so long as no Event of Default has occurred and is continuing, the
Company agrees, and has effectively so instructed each other party to each
Assigned Agreement that, upon the occurrence and during the continuation of an
Event of Default, all payments due or to become due under or in connection with
such Assigned Agreement shall be received in trust for the benefit of the
Trustee hereunder, shall be segregated from other property and funds of the
Company and shall be forthwith paid over to the Trustee in the same form as so
received (with any necessary indorsement) to be deposited in the Collateral
Account and, thereafter, applied by the Trustee in accordance with Section 20(b)
hereof.
SECTION 16. TRANSFERS AND OTHER LIENS; PLEDGED SHARES. (a) Except as
otherwise expressly permitted pursuant to the Indenture, the Company shall not
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the pledge, assignment and security interest created by this Agreement and
Permitted Liens.
(b) The Company shall (i) cause each of its Restricted
Subsidiaries not to issue any stock or other equity securities, except
to the Company or as otherwise permitted under the Indenture, and (ii)
pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock or other equity
securities of each of its Subsidiaries or any other Person to the
Trustee, except as otherwise permitted under the Indenture.
SECTION 17. TRUSTEE APPOINTED ATTORNEY-IN-FACT. The Company hereby
irrevocably appoints the Trustee its attorney-in-fact, with full authority in
the place and stead of the Company and in the name of the Company or otherwise,
from time to time, to take any action and to execute any instrument necessary to
accomplish the purposes of this Agreement (subsequent to an Event of Default
subject to the rights of the Company under Section 12 hereof), including,
without limitation:
(a) to obtain and adjust insurance required to be paid to the
Trustee pursuant to Section 11 hereof,
(b) to ask for, demand, collect, sue for, recover, compromise
(on reasonable terms), receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of the
Collateral,
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<PAGE>
(c) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
or (b) above, and
(d) to file any claims or take any action or institute any
proceedings necessary for the collection of any of the Collateral or
otherwise to enforce compliance with the terms and conditions of any
Assigned Agreement or any other agreements that are part of the
Collateral, or the rights of the Trustee with respect to any of the
Collateral.
SECTION 18. TRUSTEE MAY PERFORM. If the Company fails to perform any
agreement contained herein, the Trustee may itself perform, or cause performance
of, such agreement, and the expenses of the Trustee incurred in connection
therewith shall be payable by the Company under Section 23(b) hereof.
SECTION 19. THE TRUSTEE'S DUTIES. The powers conferred on the Trustee
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Trustee shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Security
Collateral, whether or not the Trustee or any Holder has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral.
SECTION 20. REMEDIES. If any Event of Default under the Indenture shall
have occurred and be continuing:
(a) The Trustee may exercise in respect of the collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of
Louisiana at such time (the "LOUISIANA UNIFORM COMMERCIAL CODE")
(whether or not the Louisiana Uniform Commercial Code applies to the
affected collateral) and also may (i) require the Company to, and the
Company hereby agrees that it will at its expense and upon request of
the Trustee forthwith, assemble all or part of the Collateral as
directed by the Trustee and make it available to the Trustee at a place
to be designated by the Trustee that is reasonably convenient to both
parties and (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Trustee's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the
Trustee may deem commercially reasonable. The Company agrees that, to
the extent notice of sale shall be required by law, at least ten days'
notice to the Company of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Trustee shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Trustee may adjourn any public or private sale from time to time by
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announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(b) Any cash held by the Trustee as Collateral and all cash
proceeds received by the Trustee in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may
be held by the Trustee as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Trustee
pursuant to Section 23(b) hereof), in whole or in part, by the Trustee
for the ratable benefit of the Holders against, all or any part of the
Secured Obligations in such order as is set forth in Section 6.10 of
the Indenture. Any surplus of such cash or cash proceeds held by the
Trustee and remaining after payment in full of all the Secured
Obligations shall be paid over to the Company or to whomsoever may be
lawfully entitled to receive such surplus.
(c) The Trustee may exercise any and all rights and remedies
of the Company under or in connection with the Assigned Agreements or
otherwise in respect of the Collateral, including, without limitation,
any and all rights of the Company to demand or otherwise require
payment of any amount under, or performance of any provision of, any
Assigned Agreement.
(d) All payments received by the Company under or in
connection with any Assigned Agreement or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Trustee,
shall be segregated from other property and funds of the Company and
shall be forthwith paid over to the Trustee in the same form as so
received (with any necessary indorsement).
(e) The Trustee may, without notice to the Company except as
required by law and at any time or from time to time, charge, set off
and otherwise apply all or any part of the Secured Obligations against
the Collateral Account or any part thereof.
(f) The following provisions shall apply if the remedies
indicated are governed by the laws of Louisiana. The Trustee shall have
the right to cause the Collateral to be seized and sold under Louisiana
executory or ordinary process, at the Trustee's sole option, without
appraisement, appraisement being hereby expressly waived, as an
entirety or in portions as the Trustee may determine, to the highest
bidder for cash, and otherwise exercise the rights, powers and remedies
afforded herein and under applicable Louisiana law. For purposes of
Louisiana executory process procedures, the Company acknowledges the
Secured Obligations and does hereby confess judgment in favor of the
Trustee and the Holders for the full amount of the Secured Obligations.
Any and all declarations of fact made by authentic act before a notary
public in the presence of two witnesses by a person declaring that such
facts lie within his knowledge shall constitute authentic evidence of
such facts for the purpose of executory process. The Company hereby
expressly waives: (a) the benefit of appraisement as provided for in
Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and 2724,
and all other
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laws conferring such benefits; (b) the demand and three (3) days delay
accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721;
(c) the notice of seizure required by Louisiana Code of Civil Procedure
Articles 2293 and 2721; (d) the three (3) days delay provided by
Louisiana Code of Civil Procedure Articles 2331 and 2722; (e) the
benefit of the other provisions of Louisiana Code of Civil Procedure
Articles 2331, 2722 and 2723; and (f) the benefit of the provisions of
any other articles of the Louisiana Code of Civil Procedure not
specifically mentioned above. In the event the Collateral or any part
thereof is seized as an incident to an action for the recognition or
enforcement of this Agreement by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, the Company and the
Trustee agree that the court issuing any such order shall, if
petitioned for by the Trustee, direct the applicable sheriff to appoint
as a keeper of the Collateral, the Trustee or any agent designated by
the Trustee or any person named by the Trustee at the time such seizure
is effected. This designation is pursuant to Louisiana Revised Statutes
9:5136 through 9:5140.2, inclusive, and the Trustee shall be entitled
to all the rights and benefits afforded thereunder as the same may be
amended. It is hereby agreed that the keeper shall be entitled to
receive as compensation, in excess of its reasonable costs and expenses
incurred in the administration or preservation of the Mortgaged
Property, an amount equal to $500 per day. The designation of keeper
made herein shall not be deemed to require the Trustee to provoke the
appointment of such a keeper.
SECTION 21. REGISTRATION RIGHTS. If the Trustee shall determine to
exercise its right to sell all or any of the Security Collateral pursuant to
Section 20 hereof, the Company agrees that, upon request of the Trustee, it
will, at its own expense:
(a) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary to: (i) register such Security Collateral under the
provisions of the Securities Act of 1933, as from time to time amended
(the "SECURITIES ACT"), (ii) cause the registration statement relating
thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished and (iii) make all
amendments and supplements thereto and to the related prospectus that
are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Commission
applicable thereto;
(b) use its best efforts to qualify the Security Collateral
under the state securities or "blue sky" laws and to obtain all
necessary governmental approvals for the sale of the Security
Collateral, as requested by the Trustee;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act and the
rules and regulations thereunder;
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<PAGE>
(d) provide the Trustee with such other information and
projections as may be reasonably necessary or advisable to enable the
Trustee to effect the sale of such Security Collateral; and
(e) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Security Collateral or any
part thereof valid and binding and in compliance with applicable law.
The Trustee is authorized, in connection with any sale of the Security
Collateral pursuant to Section 20 hereof, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral (i) any registration
statement or prospectus, and all supplements and amendments thereto, prepared
pursuant to clause (a) above, (ii) any information and projections provided to
it pursuant to clause (d) above and (iii) any other material information in its
possession relating to the Security Collateral.
The Company acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Trustee or the Holders by reason of the
failure by the Company to perform any of the covenants contained in this Section
21 and, consequently, agrees that, if the Company shall fail to perform any of
such covenants, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the value of the Security Collateral on the date the Trustee
shall demand compliance with this Section 21.
SECTION 22. REGULATORY MATTERS. (a) The Company shall take, and shall
cause each issuer of any of the Pledged Shares to take, all action that the
Trustee may request in the exercise of its rights and remedies hereunder, which
includes the right to require the Company or any issuer of any of the Pledged
Shares to transfer or assign the Pledged Shares to any party or parties. In
furtherance of this right, the Company shall, and shall cause each issuer of the
Pledged Shares, (i) to cooperate fully with the Trustee in obtaining all
approvals and consents from each Governmental Authority that the Trustee may
deem necessary or advisable to accomplish any such transfer or assignment of any
part of the Pledged Shares and (ii) to prepare, execute and file with any
Governmental Authority any application, request for consent, certificate or
instrument that the Trustee may deem necessary or advisable to accomplish any
such transfer or assignment of any part of the Pledged Shares; PROVIDED,
HOWEVER, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not otherwise so subject. If the
Company fails to execute, or fails to cause each issuer or owner of the Pledged
Shares to execute, such applications, requests for consent, certificates or
instruments, the clerk of any court that has jurisdiction over the Security
Documents may execute and file the same on behalf of the Company.
(b) To enforce the provisions of this Section 22, the Trustee
is authorized to request the consent or approval of any Governmental
Authority to a voluntary or an involuntary transfer of control of any
issuer of any of the Pledged Shares. In connection
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with the exercise of its remedies under this Agreement, the Trustee may
obtain the appointment of a trustee or receiver to assume, upon receipt
of all necessary judicial or other Governmental Authority consents or
approvals, control of any issuer of any of the Pledged Shares. Such
trustee or receiver shall have all rights and powers provided to it by
law or by court order or provided to the Trustee under this Agreement.
(c) Notwithstanding anything to the contrary contained in this
Agreement:
(i) the Trustee will not take any action hereunder
that would constitute or result in any transfer of control of
any issuer of any of the Pledged Shares without obtaining all
necessary Governmental Authority approvals; PROVIDED that the
Trustee and the Holders shall be entitled to rely on the
advice of regulatory counsel selected by the Trustee to
determine whether approvals of any Governmental Authority are
required; and
(ii) the Trustee shall not foreclose on, sell,
transfer or otherwise dispose of, or exercise any right to
vote or consent with respect to, any of the Pledged Shares as
provided herein or take any other action that would affect the
operational, voting or other control of the issuer of any
Pledged Shares, unless such action is taken in accordance with
the applicable provisions of the Louisiana Act; PROVIDED that
the Trustee and the Holders shall be entitled to rely on the
advice of regulatory counsel selected by, the Trustee to
determine compliance with applicable provision of the
Louisiana Act.
(d) The Company acknowledges that the approval of each
appropriate Governmental Authority to the transfer of control of an
issuer of Pledged Shares may be required, that the ownership thereof is
integral to the Trustee's realization of the value of such Pledged
Shares, that there is no adequate remedy at law for failure by the
Company to comply with the provisions of this Section 22 and that such
failure could not be adequately compensable in damages and, therefore,
the Company agrees that the provisions of this Section 22 may be
specifically enforced.
SECTION 23. INDEMNITY AND EXPENSES. (a) The Company agrees to indemnify
the Trustee from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from the Trustee's gross negligence or bad faith as determined by a final
judgment of a court of competent jurisdiction. The indemnification of the
Trustee set forth in the immediately preceding sentence is cumulative and not
exclusive of any indemnity of the Trustee set forth in the Indenture or provided
for under the TIA.
(b) The Company will pay upon demand to the Trustee the amount
of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Trustee
may incur in connection with (i) the
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administration of this Agreement, (ii) the custody, preservation, use
or operation of, or the sale of, collection from or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any
of the rights of the Trustee or the Holders hereunder or (iv) the
failure by the Company to perform or observe any of the provisions
hereof, and all amounts so incurred by the Trustee shall be entitled to
the benefits of Section 7.7 of the Indenture.
SECTION 24. SECURITY INTEREST ABSOLUTE. The obligations of any
Collateral Grantor under this Agreement are independent of the Secured
Obligations, and a separate action or actions may be brought and prosecuted
against any Collateral Grantor to enforce this Agreement irrespective of whether
any action is brought against the Company or whether the Company is joined in
any such action or actions. All rights of the Trustee and the pledge, assignment
and security interest hereunder, and all obligations of each Collateral Grantor
hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other amendment or waiver of or any consent to any departure from the
Indenture, including, without limitation, any increase in the Secured
Obligations resulting from the issuance of additional Notes by the
Company or any of its subsidiaries or otherwise;
(c) any taking, exchange, release or nonperfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Secured
Obligations;
(d) any manner of application of Collateral, or proceeds
thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Secured Obligations or any other assets of the Company or any of its
subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Company or any of its subsidiaries; or
(f) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Company or a third party
grantor of a security interest.
SECTION 25. AMENDMENTS; WAIVERS; ETC. No amendment or waiver of any
provision of this Agreement, and no consent to departure by the Company
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
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given. No failure on the part of the Trustee to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof or consent
thereto, nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.
SECTION 26. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and, mailed (first class, postage prepaid),
telegraphed, telecopied, telexed, cabled or delivered to the Company or to the
Trustee, as the case may be, addressed to it at its address specified in the
Indenture or below its signature line on the signature pages hereof or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with the terms of
this Section 26. All such notices and other communications shall, when mailed
(first class, postage prepaid), telecopied, telegraphed, telexed or cabled,
respectively, be effective when deposited in the mails, telecopied, delivered to
the telegraph company confirmed by telex answerback or delivered to the cable
company, respectively, addressed as aforesaid.
SECTION 27. CONTINUING SECURITY INTEREST; ASSIGNMENT UNDER THE
INDENTURE. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the date on which
the Secured Obligations shall have been paid in full and the Indenture shall
have been satisfied and discharged in accordance with Section 8.1 thereof, (b)
be binding upon the Company, its successors and assigns and (c) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee, the Holders and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Holder may
assign or otherwise transfer all or any portion of its rights and obligations
under the Notes held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Holder herein or otherwise.
SECTION 28. RELEASE AND TERMINATION. (a) On the date on which the
Secured Obligations shall have been paid in full, or on which Legal Defeasance
or Covenant Defeasance shall have occurred, and the Indenture shall have been
satisfied and discharged in accordance with Article VIII thereof, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the Company. Upon any such termination, the
Trustee, at the Company's expense, will return to the Company such of the
Collateral in its possession as shall not have been sold, transferred or
otherwise applied pursuant to the terms of the Notes, the Indenture and the
Security Documents, and will execute and deliver to the Company such documents
prepared by the Company and delivered to the Trustee as the Company shall
reasonably request to evidence such termination.
(b) Notwithstanding anything to the contrary contained herein,
upon a release of any part of the Collateral pursuant to Section 11.04
of the Indenture, the Secured Party shall execute, deliver or
acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence such release, provided, however,
that no part of the
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Collateral will be released except as expressly set forth in Section
11.04 of the Indenture. Once any such Collateral is released, such
Collateral shall be expressly excluded from and shall no longer be
deemed Collateral under this Security Agreement and shall not be
subject to any of the representations, covenants or obligations under
this Security Agreement.
SECTION 29. GAMING LAWS. Each of the provisions of this Agreement is
subject to and shall be enforced in compliance with, the provisions of the
Louisiana Act.
SECTION 30. THE MORTGAGES. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to real property or leases of real
property, and the terms of this Agreement shall be controlling in the case of
all other Collateral.
SECTION 31. GOVERNING LAW; TERMS. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Louisiana, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of Louisiana. Unless otherwise
defined herein or in the Indenture, terms used in Article 9 of the Uniform
Commercial Code adopted by the State of Louisiana are used herein as therein
defined.
SECTION 32. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page of this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 33. INTERACTION WITH INDENTURE. Notwithstanding any other
provision of this Security Agreement, the terms and provisions of this Security
Agreement shall be subject and subordinate to the terms of the Indenture. To the
extent that the Indenture provides the Company with a particular cure or notice
period, or establishes any limitations or conditions on Trustee's actions with
regard to a particular set of facts, the Company shall be entitled to the same
cure periods and notice periods and Trustee shall be subject to the same
limitations and conditions in place of the cure periods, notice periods,
limitations and conditions provided for under the Indenture; provided, however,
that such cure periods, notice periods, limitations and conditions shall not be
cumulative as between the Indenture and this Security Agreement. In the event of
any conflict or inconsistency between the provisions of this Security Agreement
and those of the Indenture, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of the Indenture shall govern.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their officers thereunto duly authorized as of
the date first above written.
LOUISIANA CASINO CRUISES, INC.
By:_____________________________
Name:
Title:
Address: 1717 River Road North
Baton Rouge, Louisiana 70802
U. S. BANK TRUST NATIONAL ASSOCIATION
By:______________________________
Name:
Title:
Address: 180 East 5th Street
St. Paul Minnesota 55101
Attention: Corporate Trust Administration
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SCHEDULE I
ASSIGNED AGREEMENTS
1. Casino Consulting and Management Agreement, dated as of December 11,
1992, between the Company and Carnival Management Services, Inc., as
amended by an amendment dated October 8, 1993. Carnival Management
Services, Inc. is now CRC Holdings, Inc. d/b/a Carnival Resorts &
Casinos.
23
<PAGE>
SCHEDULE II
LOCATIONS OF EQUIPMENT AND INVENTORY
1. 1717 River Road North
Baton Rouge, Louisiana 70802
24
<PAGE>
SCHEDULE III
TRADE NAMES OF LOUISIANA CASINO CRUISES, INC.
1. Casino Rouge
25
<PAGE>
SCHEDULE IV
DEPOSIT ACCOUNTS
<TABLE>
<CAPTION>
ACCOUNT
INSTITUTION TYPE NUMBER
- ----------- ---- -------
<S> <C> <C>
Bank One Payroll 79000648930
P.O. Box 3399 Operating 79000648922
Baton Rouge, LA 70821 Lottery 79000573000
Depository 79000514942
Cage Disb. 79000536628
Gaming License Disb. 79000573868
Restricted Cash (Marquis Fund) 79000537144
Dental 79000537020
Liberty Bank & Trust Minority Donation 2296799
7990 Scenic Highway
Baton Rouge, LA 70807
</TABLE>
26
<PAGE>
EXHIBIT A
FORM OF DEPOSIT ACCOUNT LETTER
________________, 199_
(NAME AND ADDRESS
OF DEPOSIT ACCOUNT BANK]
LOUISIANA CASINO CRUISES, INC.
Ladies and Gentlemen:
Reference is made to account no._______________________ (the "PLEDGED
ACCOUNT") into which certain moneys, instruments and other properties are
deposited from time to time by Louisiana Casino Cruises, Inc. (the "COMPANY").
Pursuant to the Security Agreement dated as of January 27, 1999 (the "SECURITY
AGREEMENT"), the Company has granted to U.S. Bank Trust National Association, as
trustee (the "TRUSTEE") for the Holders referred to in the Indenture dated as of
January 27, 1999 (the "INDENTURE") between the Company, the Subsidiary
Guarantors referred to therein and the Trustee, a security interest in certain
property of the Company, including, among other things, the following (the
"ACCOUNT COLLATERAL"): (a) the Pledged Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Pledged Account; (b) all interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Account Collateral; and (c) all proceeds of any and all of the foregoing Account
Collateral and, to the extent not otherwise included, all (i) payments under
insurance (whether or not the Trustee is the loss payee thereof), or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash.
It is a condition to the continued maintenance of the Pledged Account with you
that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Trustee that the description of the Pledged Account set forth therein or on
Schedule IV of the Security Agreement is correct and that you have received no
notice of any other pledge or assignment of the Pledged Account.
Further, you hereby agree with the Trustee that:
(a) Notwithstanding anything to the contrary in any other
agreement relating to the Pledged Account, the Pledged Account is and
will be subject to the terms and conditions of the Security Agreement,
will be maintained solely for the benefit of the Trustee, will be
entitled "U.S. Bank Trust National Association, as Trustee, Re:
Louisiana Casino Cruises, Inc." and will be subject to written
instructions only from an officer of the Company unless and until such
time as you receive written instructions from the Trustee of the
occurrence and continuance of an Event of Default (as defined in
Section 6.1 of the Indenture), in which case the Pledged Account shall
be subject solely to the
27
<PAGE>
written instructions of the Trustee. In the event that such
instructions shall conflict with any provision of this or any other
Agreement regarding the Pledged Account, written instructions from the
Trustee shall control.
(b) If any property subject hereto is at any time attached,
garnished or levied upon under any order of a court of competent
jurisdiction or if the payment, assignment, transfer, conveyance or
delivery of any such property shall be stayed or enjoined by any such
court order, or if any order, judgment or decree shall be made or
entered by any court of competent jurisdiction affecting such property
or any part thereof, then and in any of such events you are authorized,
in your sole discretion, to rely upon and comply with any such order,
writ, judgment or decree which you are advised by legal counsel of your
own choosing is binding upon you and if you comply with any such order,
writ, judgment or decree you shall not be liable to any of the parties
hereto or to any other person, firm or corporation by reason of such
compliance even though such order, writ, judgment or decree may be
subsequently reversed, modified, annulled, set aside or vacated.
(c) All transfers referred to in paragraph (b) above shall be
made by you irrespective of and without deduction for any counterclaim,
defense, recoupment of set-off and shall be final, and you will not
seek to recover from the Trustee or the Holders for any reason any such
payment once made.
(d) The Trustee shall be entitled to exercise any and all
rights of the Company in respect of the Pledged Account in accordance
with the terms of this letter agreement and the Security Agreement, and
you shall comply in all respects with such exercise.
You shall not be personally liable for any act taken or omitted
hereunder if taken or omitted by you in good faith and in the exercise of your
own best judgment. You shall also be fully protected in relying upon any written
notice, demand, certificate or document that you in good faith believe to be
genuine.
The Company hereby agrees to pay you reasonable compensation for your
services and shall reimburse you for all reasonable out-of-pocket expenses
(including, without limitation, reasonable compensation and expenses of your
counsel).
The Company also covenants to indemnify you for, and to defend you and
hold you harmless against, any loss, liability or expense incurred without
negligence or bad faith on your part, arising out of or in connection with the
acceptance or administration of this letter agreement or the performance of its
duties hereunder, including the costs and expenses of defending yourself against
or investigating any claim or liability hereunder, except to the extent that any
such loss, liability or expense was due to your negligence or bad faith.
28
<PAGE>
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Trustee, the Holders and their
successors, transferees and assigns. You may terminate this letter agreement
only upon written notice to the Company and the Trustee; provided that you shall
not be entitled to exercise such right to resign until the earlier of (a) the
date upon which (i) the Company has established a new account with a successor
bank on terms and conditions satisfactory to the Company and the Trustee and
(ii) such successor escrow bank shall have entered into a letter with the
Company and the Trustee in substantially the same form as this letter agreement,
or (b) 90 days from the date of the delivery of a notice of termination. Upon
such termination, you shall close the Pledged Account and take such actions as
are necessary to effectuate the transfer of the Pledged Account to the successor
bank.
This letter agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this letter agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this letter agreement.
This letter agreement shall be governed by, and construed in accordance
with, the laws of the State of Louisiana.
Very truly yours,
LOUISIANA CASINO CRUISES, INC.
By:_____________________________
Name:
Title:
Acknowledged and
agreed to as of the date first
above written:
(NAME OF DEPOSIT ACCOUNT BANK]
By:____________________________
Name:
Title:
Receipt Acknowledged:
U.S. Bank Trust National Association, as Trustee
By:____________________________
Name:
Title:
29
<PAGE>
EXHIBIT B
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the
terms and provisions of, the Security Agreement dated as of January 27, 1999 (as
amended or otherwise modified from time to time, the "SECURITY AGREEMENT", the
terms defined therein being used herein as therein defined) from Louisiana
Casino Cruises, Inc. (the "COMPANY") to U. S. Bank Trust National Association,
as trustee (the "TRUSTEE") for the Holders under the Indenture referred to in
the Security Agreement, and hereby agrees with the Trustee that:
(a) The undersigned will make all payments to be made by it
under or in connection with the Agreement dated ___________________,
19__ (the "ASSIGNED AGREEMENT") between the undersigned and the Company
in accordance with the provisions of Section 15 of the Security
Agreement.
(b) All payments referred to in paragraph (a) above shall be
made by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Trustee or any Holder
for any reason any such payment once made.
(c) The Trustee shall be entitled to exercise any and all
rights and remedies of the Company under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the
undersigned shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written
consent of the Trustee, (i) cancel or terminate the Assigned Agreement
(other than in accordance with the terms of such Agreement), or (ii)
amend or otherwise modify the Assigned Agreement, or (iii) make any
prepayment of amounts to become due under or in connection with the
Assigned Agreement, except as expressly provided therein.
This Consent and Agreement shall be binding upon the undersigned and
its successors and assigns, and shall inure, together with the rights and
remedies of the Trustee hereunder, to the benefit of the Trustee, the Holders
and their successors, transferees and assigns. This Consent and Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Louisiana.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, 199_ [NAME OF OBLIGOR]
By:____________________________
Title:
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Financial Data Schedule contains summary information extracted from the
unaudited balance sheet of Louisiana Casino Cruises, Inc. as of November 30,
1998 and the related statement of operations for the year ended November 30,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<CASH> 13,525
<SECURITIES> 0
<RECEIVABLES> 455
<ALLOWANCES> 123
<INVENTORY> 452
<CURRENT-ASSETS> 16,531
<PP&E> 57,484
<DEPRECIATION> 15,980
<TOTAL-ASSETS> 62,023
<CURRENT-LIABILITIES> 4,890
<BONDS> 50,000
0
0
<COMMON> 1
<OTHER-SE> 7
<TOTAL-LIABILITY-AND-EQUITY> 62,023
<SALES> 0
<TOTAL-REVENUES> 70,845
<CGS> 0
<TOTAL-COSTS> 55,788
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,948
<INCOME-PRETAX> 4,347
<INCOME-TAX> 1,666
<INCOME-CONTINUING> 2,681
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,681
<EPS-PRIMARY> 2.57
<EPS-DILUTED> 2.46
</TABLE>
