On May 11, 1999, the Company issued $600 million of 8 5/8% Senior
Subordinated Notes due May 2009. The proceeds from this issuance were used to
refinance Horseshoe Gaming's 12 _% senior notes and refinance Horseshoe Gaming's
$130 million credit facility, of which $75 million was outstanding as of May 11,
1999. $342.3 million of such proceeds were placed in a secured proceeds account
to partially fund the Empress acquisition and consummate the change of control
offer on $150.0 million of Empress' 8 1/8% senior subordinated notes due 2006.
In January 2000, the change of control offer was consummated and all $150
million of Empress' 8 1/8% senior subordinated notes were retired, and any
remaining balance in the secured proceeds account was distributed to the
Company.
On June 30, 1999, the Company completed a $375 million Senior Secured
Credit Facility with a group of banks. The credit facility is comprised of a
$250 million revolver and a $125 million term loan. On December 1, 1999, the
Company used $175 million of the revolver and $125 million of the term loan to
partially fund the Empress acquisition, all of which was outstanding on December
31, 1999. As of March 4, 2000, the Company has repaid $65 million on the
outstanding revolver balance.
Liquidity, Capital Spending and Financing
Net cash provided by operating activities was $115.6 million, $83.8
million and $71.3 million for the years ended December 31, 1999, 1998 and 1997,
respectively. Net cash used in investing activities was $488.2 million, $90.4
million and $161.2 million, for the years ended December 31, 1999, 1998 and
1997, respectively. Cash flows from investing activities for 1999 include the
effects of the acquisition of Empress Joliet and Empress Hammond which include
additional goodwill of approximately $257.9 million and net property and
equipment of include $189.7 million. The fluctuations in investing cash flows
for 1998 and 1997 are mainly due to the expansion projects completed in
Horseshoe Tunica in December 1997 and Horseshoe Bossier City in January 1998.
Net cash provided by financing activities was $406.7 million, $42.1 million and
$59.4 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The additional borrowings completed in 1999 to complete the
acquisition of Empress Joliet and Empress Hammond accounted for the fluctuations
in financing cash flows in 1999 as compared to 1998. The primary reason for the
fluctuations in cash flows from financing activities in 1998 and 1997 are due to
the amount of borrowings necessary to complete the Company's expansion and
acquisition projects.
Cash and cash equivalents totaled $118.3 million as of December 31,
1999. We believe that our cash and cash equivalents on hand, cash from
operations and available borrowing capacity will be adequate to meet our
existing debt service obligations and capital expenditure commitments for the
next twelve months.
Ownership Repurchase Matters
On January 13, 1999, Horseshoe Gaming repurchased outstanding warrants
held by a third party which entitled such third party to purchase an approximate
6.99% ownership interest in Horseshoe Gaming from its largest shareholder, HGI,
for an exercise price of $510,000. Upon acquisition, Horseshoe Gaming exercised
the warrants and retired the membership units acquired from HGI. The total cost
of the warrants, including fees, expenses and the exercise price paid to HGI,
was approximately $34.4 million, which was recorded as a reduction in members'
equity in the first quarter of 1999.
31
In May 1999, Horseshoe Gaming purchased redeemable ownership interests
comprising an aggregate 7.2% of Horseshoe Gaming from five former employees for
an aggregate purchase price of $39.0 million. In June 1999, the first
installment of approximately $11.5 million was paid with the remaining amount to
be paid over a period not to exceed four years. During the third quarter of
1999, Horseshoe Gaming agreed to purchase redeemable ownership interests of 1.3%
of the Company from four current employees for $5.3 million. The first
installment of approximately $1.7 million was paid with the remaining amount to
be paid over a period not to exceed three years. The notes receivable from these
former and current employees was fully paid in connection with the first
installment payment made. Operating results for the year ended December 31, 1999
include a $2.9 million reduction in deferred compensation expense resulting from
the final valuation of these ownership interests.
During the third quarter of 1999, the Company also agreed to purchase
ownership interests of 3.2% of the Company from four owners totaling $18.3
million. During the third quarter of 1999, the first installment of
approximately $1.8 million was paid with the remaining amount to be paid over a
period not to exceed four years.
During the fourth quarter of 1999, the Company also agreed to purchase
ownership interests of 0.7% of the Company from five owners totaling $5.3
million to be paid in January 2004.
The Company has employment agreements and unit option agreements with
certain employees which contain put/calls whereby, upon termination of
employment, the Company must, at the election of any such employee, and may, at
the Company's election, purchase such employee's ownership interest for an
amount equal to the fair market value of such interest as determined by an
independent appraisal or an arbitration process. As of December 31, 1999, the
aggregate fair market value of all interests subject to such put/calls,
representing approximately 1.4% ownership of the Company, was $6.8 million. Such
agreements provide that the purchase price for the employee's ownership interest
shall be paid in cash, either upon transfer of the interest to us or in
installments over a period not to exceed five years depending on the aggregate
purchase price.
Louisiana Repurchase
In April 1999, Horseshoe Gaming exercised its option to acquire the
remaining 8.08% limited partnership interest in HE not held by NGCP for total
consideration of up to $30.4 million, which included payments for a non-compete
covenant, consents and a release of claims. The consideration for the repurchase
consisted of cash, payables to the former limited partners and offsets against
the negative capital account balances of the former limited partners.
Empress Acquisition
On December 1, 1999, the Company completed the acquisition of the
operating subsidiaries of Empress for a total purchase price of $651.4 million.
The acquisition was accomplished by merging two of our wholly owned subsidiaries
into the Empress subsidiaries that own Empress Hammond and Empress Joliet.
Consolidated operating results include the results of operations of Empress
Hammond and Empress Joliet since the date of their acquisition on December 1,
1999.
32
The preliminary allocation of the purchase price is as follows (in
millions):
PURCHASE PRICE:
Cash $494.9
Assumed liabilities 155.0
Tender premium on debt 1.5
------
Total purchase price $651.4
======
PRELIMINARY ALLOCATION OF PURCHASE PRICE:
Current assets $ 46.0
Property and equipment, net 189.7
Other assets, net 14.5
Intangible assets 15.0
Goodwill 415.0
Current liabilities (28.8)
------
Total allocation of purchase price $651.4
======
Other Items
During 1999, HE recorded an additional $10.3 million charge to adjust
the carrying value to its revised estimate of the net realizable value of the
Queen of the Red and the equipment on board that vessel. This additional charge
was made to reflect the current market conditions for idle riverboats. On March
6, 2000, HE received $.6 million from the sale of the equipment thereby reducing
the Company's expected net realizable value to $1.0 million.
Year 2000
Throughout 1999, the Company continued its efforts to address the
potential impact of the Year 2000 ("Y2K") on the technology systems and
equipment essential to its operations. All of the Company's business systems and
equipment were tested and evaluated and then replaced or renovated as necessary
to become compliant. The Company's systems and equipment were deemed Y2K
compliant before the end of 1999, and the Company has not experienced any
significant problems related to the turn of the century.
33
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk is changes in its interest rate
risk associated with long term debt. To date, the Company has not held or issued
derivative financial instruments for trading purposes, and the Company does not
enter into derivative transactions that would be considered speculative
positions. For debt obligations, the table presents principal cash flows and
related weighted average interest rates by expected maturity dates.
(1) The fair values are based on the borrowing rates currently available for
debt instruments with similar terms and maturities and market quotes of
the Company's publicly traded debt.
(2) The average interest rates were based on December 31, 1999, variable
rates. Actual rates in future periods could vary.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the Index to Consolidated Financial Statements and the Index to
Financial Statement Schedules included at "Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
34
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth information concerning our executive
officers, directors and other key personnel.
Age Position
--- --------
Jack B. Binion 63 Chairman of the Board of Directors, Chief Executive Officer and Secretary.
Peri Howard 39 Vice Chairperson of the Board of Directors.
Leslie Kenny 44 Director
Joseph J. Canfora 40 President
Kirk C. Saylor 43 Senior Vice President, Treasurer and Chief Financial Officer.
Roger Wagner 52 Senior Vice President and Chief Operating Officer.
Gary Border 48 Senior Vice President - Marketing.
David Carroll 45 Senior Vice President - Human Resources.
Floyd Hannon 58 Senior Vice President - Government Affairs
J. Lawrence Lepinski 53 Senior Vice President - General Manager of Horseshoe Bossier City.
Bob McQueen 46 Senior Vice President - General Manager of Horseshoe Tunica.
David Fendrick 51 General Manager of Empress Joliet
Rick Mazer 45 General Manager of Empress Hammond
Jon Wolfe 32 Vice President - Chief Information Officer.
John Moran 36 Vice President - Database Marketing and Analysis.
Mr. Binion has served as Chairman of the Board, Chief Executive Officer
and Secretary of the Company since formation in April 1999. Prior thereto, Mr.
Binion served as the Chief Executive Officer of Horseshoe Gaming, Inc. ("HGI",
the former manager of Horseshoe Gaming, L.L.C.) since inception in December 1992
and as Chief Executive Officer of the general partner of NGCP since immediately
prior to the Roll-Up Transaction. Mr. Binion also served as the Chief Executive
Officer of the general partner of RPG and NGCP, the entity that operates
Horseshoe Tunica and Horseshoe Bossier City, from its inception in May 1993
until it merged into HGI in the Roll-Up Transaction. From 1964 to July 1998, Mr.
Binion was the President and Chief Executive Officer of the Horseshoe Club,
which owns and operates Binion's Horseshoe Casino in Las Vegas, Nevada.
Ms. Howard has been our Vice-Chairperson of the board of directors since
its inception in April 1999 and previously served as a director of HGI since
January 1997. Ms. Howard has served in various capacities with Horseshoe Tunica
since 1995. Ms. Howard is the daughter of Mr. Binion's wife.
Ms. Kenny has been one of the Company's directors since its inception in
April 1999 and previously served as director of HGI since September 1998. Ms.
Kenny has been self-employed as a manicurist since 1983. Ms. Kenny is the
daughter of Mr. Binion's wife.
Mr. Canfora has been the Company's President since December 1, 1999.
Prior thereto, he served as the President of Empress Entertainment, Inc.,
Empress Hammond and Empress Joliet from June 1997 through November 1999. Mr.
Canfora was the President of Midwest Operations for Stations Casinos, Inc. from
1992 through June 1997.
35
Mr. Saylor has been our Senior Vice President and Chief Financial
Officer since the Company's formation in April 1999. Prior thereto, he served as
Vice President and Chief Accounting Officer of HGI since November 1998. He has
also served as the Company's Chief Financial Officer since August 1, 1998. From
November 1995 to November 1998, Mr. Saylor served as HGI's Corporate Controller.
From October 1994 to November 1995, Mr. Saylor served as Vice President and
Chief Financial Officer of Lone Star Casino Corp. in Las Vegas.
Mr. Wagner has been our Senior Vice President and Chief Operating
Officer since the Company's formation in April 1999. Prior thereto, he served in
the same capacity with HGI since November 1998. From October 1996 to March 1998,
Mr. Wagner served as President of the development company for Trump Hotel and
Casino Resorts in Atlantic City, New Jersey. Prior thereto, Mr. Wagner served as
President and Chief Operating Officer of Trump Castle Casino in Atlantic City,
New Jersey since January 1991.
Mr. Border has been the Company's Senior Vice President - Marketing
since the Company's formation in April 1999. Prior thereto, he served in the
same capacity with HGI since July 1996. Since 1987, Mr. Border served as
President and founder of Marketing Results, Inc. Mr. Border resigned from his
position as Senior Vice President - Marketing effective March 31, 2000.
Mr. Carroll has been the Company's Senior Vice President - Human
Resources since the Company's formation in April 1999. Prior thereto, he served
in the same capacity with HGI since November 1998. From August 1997 to November
1998, Mr. Carroll was Vice President - Human Resources of HGI. From September
1993 to November 1998, Mr. Carroll was Director of Human Resources for Harrah's
Casino in Shreveport, Louisiana.
Mr. Hannon has been the Company's Senior Vice President - Government
Affairs since the Company's formation in April 1999. Prior thereto, he served in
the same capacity with HGI since July 1999. From November 1993 to June 1999, Mr.
Hannon served as Deputy Director of the Indiana Gaming Commission.
Mr. Lepinski has been Senior Vice President and General Manager of the
Horseshoe Bossier City since September 1995. Prior thereto, Mr. Lepinski served
as General Manager of Bally's Saloon and Gambling Hall in Tunica, Mississippi
since August 1993.
Mr. McQueen has been Senior Vice President and General Manager of the
Horseshoe Tunica since July 1996 and prior to that as Vice President of Casino
Operations for Horseshoe Tunica since June 1994.
Mr. Fendrick has been General Manager of the Empress Joliet since August
1997. Prior thereto, Mr. Fendrick served as Vice President and General Manager
of Station Casino in Kansas City, Missouri from December 1994 the March 1997.
Mr. Mazer has been General Manager of the Empress Hammond since February
1996. Prior thereto, Mr. Mazer served as Director of Marketing and Advertising
for Empress Joliet from October 1995 to February 1996. Prior to joining the
Empress, Mr. Mazer was Vice President of Marketing for Par-A-Dice Riverboat
Casino in Peoria, Illinois from 1993 through 1995.
Mr. Wolfe has been the Company's Vice President and Chief Information
Officer since the Company's formation in April 1999. Prior thereto, he served in
the same capacity with HGI since October 1998. From October 1995 to October
1998, Mr. Wolfe was Director of Information
36
Systems for HGI. From July 1994 to October 1995 Mr. Wolfe was Director of
Information Systems for Horseshoe Tunica.
Mr. Moran has been the Company's Vice President - Database Marketing and
Analysis since the Company's formation in April 1999. Prior thereto, he served
in the same capacity with HGI since November 1998. From December 1996 to
November 1998 Mr. Moran was Director of Club Operations and Analysis for HGI.
From September 1995 to December 1996 Mr. Moran was Director of Club Operations
and Analysis for the Horseshoe Club and from February 1987 to September 1995 was
Director of Marketing Operations for the Claridge Casino and Hotel.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth all compensation awarded to, earned by or
paid to the Chief Executive Officer and the four most highly compensated
executive officers (the "Named Executive Officers") for their services to the
Company for the years ended December 31, 1999, 1998 and 1997.
The following table sets forth certain information regarding grants of
stock options made to the executive officers named in the Summary Compensation
Table during 1999, including information as to the potential realizable value of
such options at assumed annual rates of stock price appreciation for the
ten-year option terms. Additional information is provided concerning this
potential realizable value for all optionees receiving grants in 1999.
37
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
---------------------------- Value at Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options/ Appreciation for
Underlying SARs Granted Exercise Option/SAR Term (1)
Options/SARs to employees or Base Expiration --------------------------
Name Granted (#)(2) in 1999 Price ($/sh.) Date 5% 10%
---- -------------- ------------- ------------- ---------- ---------- ----------
Jack B. Binion --
Gary A. Border 25.622256 8.30% $ 13,660 12/31/08 $ 220,113 $ 557,810
Roger P. Wagner 18.301612 5.93% $ 13,660 12/31/08 $ 157,224 $ 398,436
Bob McQueen 14.641288 4.74% $ 13,660 12/31/08 $ 125,779 $ 318,748
Kirk C. Saylor 16.471448 5.33% $ 13,660 12/31/08 $ 141,501 $ 358,592
All Option/SARs 308.854441 100.00% $ 13,660 12/31/08 $2,653,276 $6,723,922
(1) The dollar amount under these columns are the result of calculations at
five percent and ten percent rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation. There is no assurance that the value realized by an
officer will be at or near the value estimated above.
(2) Employees vest in the right to exercise these options/SARs over a
four-year period. Options/SARs are subject to certain conditions,
including compliance with terms and conditions of the options/SARs as
approved by the Company. The executive officers listed above received
tandem SARs in conjunction with the listed options. The tandem SARs have
substantially identical terms to the options.
The following table sets forth certain information concerning stock
option exercises during 1999 by the executive officers named in the Summary
Compensation Table and information concerning option values.
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised,
Options/SARs Held at In-the-Money Options/SARs
Shares December 31, 1999 (#) at December 31, 1999 ($)(1)
Acquired on Value -------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- --------------
Jack B. Binion -- -- -- -- -- --
Gary A. Border -- -- 6.405564 19.216692 $ 63,928 $191,590
Roger P. Wagner -- -- 4.575403 13.726208 $ 45,663 $136,850
Bob McQueen -- -- 3.660322 10.980966 $ 36,530 $109,480
Kirk C. Saylor -- -- 4.117862 12.353586 $ 41,096 $123,165
(1) Amount represents the difference between the aggregate price of
unexercised options/SARs and a $23,640 per share price as determined by
the Company pursuant to the Equity Incentive Plan document. The $23,640
per share price represents the latest available fair market price as
determined pursuant to the plan document.
38
Compensation of Directors; Compensation Committee Interlocks and Insider
Participation
The Bylaws of the Company provide for a six-member Board of Directors.
There are currently three directors. Directors serve until the next annual
meeting of stockholders and until their successors have been elected and
qualified. Vacancies on the Board of Directors may be filled by a majority of
the remaining directors. The Chairman of the Board of Directors receives no
compensation for services on the Board, Peri Howard receives $230,000 and Leslie
Kenny receives no compensation for services on the board. Officers serve at the
discretion of the Board. The Board has no Compensation Committee.
The Company's Board of Directors also utilizes various individuals as
business advisors. One individual, whom is also an owner, received $ for his
advisory services to the Board in 1999.
EMPLOYMENT AGREEMENTS
Mr. Binion has provided services pursuing, developing and managing
gaming operations for the Company and its subsidiaries. A salary of $1,000,000
was accrued for Mr. Binion for his services during 1999 and 1998. There is no
existing employment agreement providing for Mr. Binion to receive compensation
for his services in the future.
Gary Border is employed as the Senior Vice President - Marketing for the
Company pursuant to an employment agreement with the Company dated November 23,
1998. Mr. Border's term of employment under the employment agreement expires
December 1, 2002. Mr. Border is responsible for supervising the marketing
departments of the Company, developing and creating marketing strategies,
creative strategies, planning and support for all national local markets,
assisting the general managers of various properties owned by subsidiaries or
affiliates of the Company and coordinating and overseeing the various department
heads charged with casino and hotel marketing. Mr. Border presently earns
compensation of three hundred fifty thousand dollars ($350,000) per year base
salary and a discretionary bonus not to exceed twenty-five thousand dollars
($25,000) annually. In addition, Mr. Border was granted a one hundred thousand
dollar ($100,000) signing bonus upon execution of the employment agreement. Mr.
Border resigned from the Company as Senior Vice President-Marketing effective
March 31, 2000.
Roger Wagner is employed as Senior Vice President and Chief Operating
Officer of the Company pursuant to an employment agreement executed on December
1, 1998. Mr. Wagner's term of employment under this agreement expires on
December 31, 2002. Mr. Wagner collaborates with Senior Management of the company
to develop operating objectives that will achieve the Company's profitability
and development goals. He directs and oversees company operations at each casino
and assures that each operating division is properly organized, staffed, and
directed to fulfill its responsibilities in accordance with company standards.
Mr. Wagner presently earns a base salary of three hundred thousand dollars
($300,000) and a discretionary bonus not to exceed 50% of base salary.
Robert McQueen is employed as a Senior Vice President - General Manager
of Horseshoe Tunica pursuant to an employment agreement with the Company dated
October 15, 1998. Mr. McQueen's term of employment under the employment
agreement expires October 15, 2001. Mr. McQueen is responsible for supervising
the day to day activities of Horseshoe Tunica. Mr. McQueen presently earns
compensation of two hundred seven thousand five hundred dollars ($207,500) per
year base salary and a bonus of ninety-five thousand dollars ($95,000) for
calendar years 1998 and 1999, and a discretionary bonus not to exceed 50% of his
base salary for each year thereafter.
39
Kirk Saylor is employed as a Senior Vice President - Chief Financial
Officer for the Company pursuant to an employment agreement with the Company
dated November 15, 1998. Mr. Saylor's term of employment under the employment
agreement expires December 1, 2002. Mr. Saylor is responsible for overseeing the
senior accounting operations of the Company's facilities and assisting in the
opening of any casino and hotel facilities to be developed or acquired by
subsidiaries or affiliates of the Company. Mr. Saylor presently earns
compensation of two hundred fifty thousand dollars ($250,000) per year base
salary and a discretionary bonus not to exceed 50% of the base salary.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding beneficial
ownership of common stock in the Company, as of March 1, 2000, by each person
who is known by the Company to own beneficially more than 5% of the outstanding
shares, by each director of the Company, each of the executive officers and by
all directors and executive officers of the Company as a group.
PERCENTAGE
NAME(1) NUMBER OF SHARES OF SHARES
------- ---------------- ---------
Jack B. Binion 21,329 (2) 89.48%
Phyllis M. Cope 1,907 (3) 8.00%
Leslie Kenny 1,194 5.01%
Peri Howard 3,629 (4) 15.22%
Scott Hamilton 1,272 (5) 5.33%
Wanda Parsons 1,907 (6) 8.00%
Directors and executive
officers as a group (10 persons) 21,361 (7) 89.61%
(1) The persons named in this table have sole voting power and investment power
with respect to all shares of capital stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in this table and these notes. Unless otherwise indicated, the address
for each of the persons or entities listed above is c/o the Company at 2300
Empress Road, Joliet, IL 60436.
(2) Includes (a) the 9,779 shares held by Mr. Binion as an individual; (b) the
1,907 shares owned by Phyllis M. Cope; (c) the 3,629 shares owned by Peri
Howard; (d) the 1,194 shares owned by Leslie Kenney; (e) the 1,272 shares owned
by Scott Hamilton; (f) the 1,907 shares owned by Wanda Parsons; and (g) the
1,644 shares held by members of Mr. Binion's family or trusts for the benefit of
members of Mr. Binion's family. Mr. Binion expressly disclaims beneficial
ownership of the 11,550 shares which are held of record members of Mr. Binion's
family or by trusts established for the benefit of certain members of the
families of Mr. Binion or Phyllis M. Cope, for purposes of Sections 13(d) and
13(g) of the Exchange Act.
(3) Includes 954 shares held by Phyllis M. Cope, as Trustee of the Ted J.
Fechser Trust, and 953 shares held by Phyllis M. Cope, as Trustee of the Fancy
Ann Fechser Trust. Phyllis M. Cope expressly disclaims beneficial ownership of
any shares held by her as trustee of such trusts, which are trusts established
for the benefit of certain members of the families of Mr. Binion or Phyllis M.
Cope, for purposes of Sections 13(d) and 13(g) of the Exchange Act.
40
(4) Includes 275 shares held by Peri Howard, as Trustee of the Ted J. Fechser
Trust, 275 shares held by Peri Howard, as Trustee of the Fancy Ann Fechser
Trust, 275 shares held by Peri Howard, as Trustee of the James Christopher
Fechser Trust, 275 shares held by Peri Howard, as Trustee of the Robert Daniel
Fechser Trust, 275 shares held by Peri Howard, as Trustee of the Katie O'Neill
Trust, 275 shares held by Peri Howard, as Trustee of the Kellie O'Neill Trust,
275 shares held by Peri Howard, as Trustee of the Rachel Fechser Trust 275
shares held by Peri Howard, as Trustee of the Ben E. Johnson Trust, 55 shares
held by Peri Howard, as Trustee of the Bonnie Binion Trust, and 55 shares held
by Peri Howard, as Trustee of the Benny Behnen Trust; 55 shares held by Peri
Howard, as Trustee of the Jack Behnen Trust, 1,261 shares held by Peri Howard as
an individual and 4 shares subject to options that are currently exercisable or
will become exercisable within 60 days. Peri Howard expressly disclaims
beneficial ownership of any shares held by her as trustee of such trusts, which
are trusts established for the benefit of certain members of the families of Mr.
Binion or Phyllis M. Cope, for purposes of Sections 13(d) and 13(g) of the
Exchange Act.
(5) Includes 636 shares held by Scott Hamilton, as Trustee of the James C.
Fechser Trust, and 636 shares held by Scott Hamilton, as Trustee of the Rachel
Fechser Trust. Scott Hamilton expressly disclaims beneficial ownership of any
shares held by him as trustee of such trusts, which are trusts established for
the benefit of certain members of the families of Mr. Binion or Phyllis M. Cope,
for purposes of Sections 13(d) and 13(g) of the Exchange Act.
(6) Includes 954 shares held by Wanda Parsons, as Trustee of the Katie O'Neill
Trust, and 953 shares held by Wanda Parsons, as Trustee of the Kellie O'Neill
Trust. Wanda Parsons expressly disclaims beneficial ownership of any shares held
by her as trustee of such trusts, which are trusts established for the benefit
of certain members of the families of Mr. Binion or Phyllis M. Cope, for
purposes of Sections 13(d) and 13(g) of the Exchange Act.
(7) Includes 27 shares subject to options that are currently exercisable or will
become exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company conducts a portion of its marketing through an entity that
is owned by the wife of an officer. Amounts paid to this company for fees and
reimbursable expenses totaled $3,157,000, $3,625,000 and $2,648,000 for the
years ended December 31, 1999, 1998 and 1997, respectively.
The Company has made loans to various employees (including some who are
now former employees) with ownership interests in the Company. The notes were
repaid during 1999 out of the proceeds of the put/call provisions relating to
such ownership interests. The amount outstanding under these loans was
$2,677,000 as of December 31, 1998.
The Company and Walter Haybert, the former Chief Financial Officer of
the Company, are parties to an agreement whereby the Company has agreed to pay
Mr. Haybert $150,000 per year for each of 1999 and 2000 as advances against the
purchase price for his interest in the Company. Mr. Haybert's interest in the
Company is subject to purchase by the Company pursuant to the put/call
provisions that were contained in his employment agreement with the Company.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
41
Number
(a)(1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:
HORSESHOE GAMING HOLDING CORP. F-2
(a)(2) INDEX TO FINANCIAL STATEMENT SCHEDULES:
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS S-2
All other schedules are omitted as the required information is
inapplicable or not present in amounts sufficient to require submission of the
schedule, or because the information is presented in the consolidated financial
statements or related notes thereto.
The exhibits listed on the accompanying Exhibit Index are filed as part
of this Form 10-K.
(b) REPORTS ON FORM 8-K:
In the fourth quarter of 1999 a Form 8-K was filed, dated December 16,
1999 reporting under Item 2 the Company's acquisition of Empress Entertainment,
Inc.'s two operating subsidiaries.
On February 11, 2000 Form 8-K/A was filed to amend the previously filed
Form 8-K to include the financial statements of Empress Entertainment, Inc.
42
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, in the
City of Joliet, State of Illinois, on March 30, 2000.
Horseshoe Gaming Holding Corp.
a Delaware corporation
By: /s/ Jack B. Binion
-------------------------------
Jack B. Binion
Its: Chief Executive Officer,
Secretary and Chairman of the
Board of Directors
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Jack B. Binion Chief Executive Officer, Secretary and March 30, 2000
---------------------------- Chairman of the Board of Directors
Jack B. Binion (Principal Executive Officer)
/s/ Peri Howard Director March 30, 2000
----------------------------
Peri Howard
/s/ Leslie Kenny Director March 30, 2000
----------------------------
Leslie Kenny
/s/ Kirk C. Saylor Chief Financial Officer and Treasurer March 30, 2000
---------------------------- (Principal Financial and Accounting
Kirk C. Saylor Officer)
43
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Horseshoe Gaming Holding Corp. and Subsidiaries Page
----------------------------------------------- ----
Report of Independent Public Accountants F-2
Consolidated Financial Statements:
Balance sheets as of December 31, 1999 and 1998 F-3
Statements of operations for the years ended December 31, 1999, 1998 and 1997 F-4
Statements of stockholders' equity for the years ended December 31, 1999, 1998 and 1997 F-5
Statements of cash flows for the years ended December 31, 1999, 1998 and 1997 F-6
Notes to consolidated financial statements F-7
F-1
Report of Independent Public Accountants
To Horseshoe Gaming Holding Corp.:
We have audited the accompanying consolidated balance sheets of Horseshoe Gaming
Holding Corp. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Horseshoe Gaming Holding Corp.
and subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
March 3, 2000.
F-2
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
----------------------------
1999 1998
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 118,276 $ 84,151
Restricted cash 159,002 --
Accounts receivable, net of allowance for doubtful
accounts of $11,089 and $10,346 14,876 9,653
Inventories 4,219 3,548
Prepaid expenses and other 6,212 4,484
----------- -----------
Total current assets 302,585 101,836
----------- -----------
Property and Equipment, net 546,464 375,307
Other Assets:
Assets held for resale 1,630 12,000
Goodwill, net 463,847 36,124
Other, net 94,718 35,181
----------- -----------
$ 1,409,244 $ 560,448
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 164,245 $ 1,174
Accounts payable 8,514 8,252
Accrued expenses and other 87,588 40,599
----------- -----------
Total current liabilities 260,347 50,025
----------- -----------
Long-term Liabilities:
Long-term debt, less current maturities 1,094,703 387,544
Other long-term liabilities 12,840 --
----------- -----------
Total long-term liabilities 1,107,543 387,544
----------- -----------
Commitments and Contingencies (Notes 9, 10, 12 and 13)
Minority Interest -- (1,965)
Redeemable Ownership Interests, net of deferred
compensation of $0 and $272 6,760 53,693
Members' Equity -- 71,151
Stockholders' Equity
Common Stock, $1.00 par value, 50,000 shares authorized,
25,000 shares issued, 23,772 shares outstanding 25 --
Additional paid-in capital 41,360 --
Retained earnings 16,789 --
----------- -----------
58,174 --
Less 1,228 shares of treasury stock at cost (23,580) --
----------- -----------
Total Stockholders' Equity 34,594 --
----------- -----------
$ 1,409,244 $ 560,448
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
Years Ended December 31,
---------------------------------------
1999 1998 1997
--------- --------- ---------
Revenues:
Casino $ 487,536 $ 429,825 $ 321,236
Food and beverage 52,969 48,263 29,990
Hotel 33,566 35,448 8,773
Retail and other 16,413 9,980 4,305
--------- --------- ---------
590,484 523,516 364,304
Less promotional allowances (64,931) (62,340) (29,211)
--------- --------- ---------
Net revenues 525,553 461,176 335,093
--------- --------- ---------
Expenses:
Casino 266,482 245,234 175,394
Food and beverage 16,911 15,959 10,981
Hotel 12,054 11,785 7,877
Retail and other 6,934 6,910 1,425
General and administrative 66,627 57,202 43,600
Corporate expenses 8,088 12,947 22,490
Development 327 515 1,653
Preopening -- 653 2,964
Asset write-down 10,346 12,911 --
Depreciation and amortization 41,806 33,888 19,411
--------- --------- ---------
Total expenses 429,575 398,004 285,795
--------- --------- ---------
Operating Income 95,978 63,172 49,298
Other Income (Expense):
Interest expense (65,219) (39,861) (20,792)
Interest income 11,887 2,189 4,996
Other, net (620) 412 (849)
--------- --------- ---------
Income before Extraordinary Loss
on Early Retirement of Debt 42,026 25,912 32,653
Extraordinary Loss on Early Retirement of Debt (9,653) (787) (5,243)
--------- --------- ---------
Net Income $ 32,373 $ 25,125 $ 27,410
========= ========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
Additional
Members' Common Treasury Paid-in Retained
Equity Stock Stock Capital Earnings Total
-------- -------- -------- -------- -------- --------
Balance, December 31, 1996 $ 79,782
Distributions:
Cash (11,056)
Payable (15,000)
Increase in redeemable
ownership interests (16,541)
Net income 27,410
--------
Balance, December 31, 1997 64,595
Cash distributions (17,012)
Revaluation of land
contribution (1,109)
Increase in redeemable
ownership interests (448)
Net income 25,125
--------
Balance, December 31, 1998 71,151
Cash distributions (10,616)
Decrease in redeemable
ownership interests 2,181
Warrant repurchase (34,426)
Net income
--------
Balance, June 30, 1999 41,679
Exchange of members'
ownership interests
for 25,000 shares of
common stock
at $1.00 par value (41,679) $ 25 $ -- $ 41,654 $ -- $ 41,679
Dividends:
Cash -- -- -- -- (566) (566)
Payable -- -- -- -- (1,629) (1,629)
Increase in redeemable
ownership interests -- -- -- (294) -- (294)
Purchase of stock for
treasury -- -- (23,580) -- -- (23,580)
Net income -- -- -- -- 18,984 18,984
-------- -------- -------- -------- -------- --------
Balance, December 31, 1999 $ -- $ 25 $(23,580) $ 41,360 $ 16,789 $ 34,594
======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Years Ended December 31,
---------------------------------------------
1999 1998 1997
--------- --------- ---------
Cash flows from operating activities:
Net income $ 32,373 $ 25,125 $ 27,410
Adjustments to reconcile net income to
net cash provided by operating activities:
Minority interest in income (loss) of subsidiary 311 (640) 420
Depreciation and amortization 41,806 33,888 19,411
Asset write-down 10,346 12,911 --
Amortization of debt discounts,
deferred finance charges and other 3,631 2,741 2,313
Loss on disposal of property -- -- 389
Provision for doubtful accounts 4,643 11,937 7,556
Increase in redeemable ownership interests 470 4,245 15,066
Extraordinary loss on early retirement of debt 9,653 787 5,243
Change in assets and liabilities 14,773 (22,238) (6,482)
--------- --------- ---------
Net cash provided by operating activities 118,006 68,756 71,326
--------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment (205,090) (46,576) (215,576)
Increase (decrease) in construction payables -- (26,290) 13,879
Proceeds from sale of property -- 383 --
Goodwill (257,928) -- --
Net decrease (increase) in escrow funds -- -- 42,235
Net increase in other assets (25,603) (17,902) (1,717)
--------- --------- ---------
Net cash used in investing activities (488,621) (90,385) (161,179)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 867,146 85,000 175,438
Payments on debt (236,895) (10,185) (97,877)
Capital distributions (12,811) (17,012) (11,056)
Warrant repurchases (34,426) -- --
Redeemable ownership payments (16,642) -- --
Increase in restricted cash (159,002) -- --
Purchase of treasury stock (1,788) -- --
Distributions to minority holders (842) (8) (910)
Debt issue costs and commitment fees -- (725) (6,191)
--------- --------- ---------
Net cash provided by financing activities 404,740 57,070 59,404
--------- --------- ---------
Net change in cash and cash equivalents 34,125 35,441 (30,449)
Cash and cash equivalents, beginning of period 84,151 48,710 79,159
--------- --------- ---------
Cash and cash equivalents, end of period $ 118,276 $ 84,151 $ 48,710
========= ========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Horseshoe Gaming Holding Corp. (the "Company"), a Delaware corporation, conducts
casino gaming, hotel and other related operations at riverboat casinos under the
"Empress", "Horseshoe" and "Binion" names in Joliet, Illinois; Hammond, Indiana;
Bossier City, Louisiana and Tunica County, Mississippi.
On April 15, 1999, the Company acquired over 90% of the aggregate ownership of
Horseshoe Gaming, LLC ("Horseshoe Gaming") from Horseshoe Gaming's members in
exchange for interests in the Company. The remaining ownership interests of
Horseshoe Gaming either were contributed to the Company in exchange for
interests in the Company or acquired by the Company or Horseshoe Gaming such
that on December 31, 1999, the Company owned 100% of Horseshoe Gaming.
A description of each principal subsidiary is as follows:
- New Gaming Capital Partnership ("NGCP") is a Nevada limited partnership
which was formed on February 4, 1993. NGCP is 100% owned by the Company
and its subsidiary, Horseshoe GP, Inc. In April 1999, the Company
purchased the remaining 8.08% limited partner interests in Horseshoe
Entertainment, L.P. ("HE"), a Louisiana limited partnership which owns
and operates the Horseshoe Bossier City (see Note 10), not held by NGCP.
As of December 31, 1999 and 1998, NGCP owned 100% and 91.92%,
respectively, of HE.
- Robinson Property Group, Limited Partnership ("RPG") is a Mississippi
limited partnership which was formed on June 7, 1993. RPG owns and
operates the Horseshoe Tunica located in Tunica County, Mississippi, and
is 100% owned by the Company and its subsidiary, Horseshoe GP, Inc.
- Empress Casino Joliet Corporation ("Empress Joliet" or "ECJC") is an
Illinois Corporation, which was formed on December 26, 1990. The Company
acquired Empress Joliet from Empress Entertainment, Inc. on December 1,
1999 (see Note 4). Empress Joliet owns and operates the Empress Casino
and Hotel in Joliet, Illinois and is 100% owned by the Company.
- Empress Casino Hammond Corporation ("Empress Hammond" or "ECHC") is an
Indiana Corporation, which was formed on November 25, 1992. The Company
acquired Empress Hammond from Empress Entertainment, Inc. on December 1,
1999 (see Note 4). Empress Hammond owns and operates the Empress Casino
in Hammond, Indiana and is 100% owned by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries (see Note 1), since the Company holds more than a 50%
ownership interest in all of its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments with an original maturity of
three months or less and are stated at the lower of cost or market.
F-7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Restricted Cash
Restricted cash represents the remaining proceeds from the Company's 8.625%
Senior Subordinated Notes which were placed in a secured proceeds account and
used in January 2000 to retire the assumed Empress debt (see Notes 4 and 8). The
proceeds were invested in U.S. Treasuries.
Inventories
Inventories are stated at the lower of cost, as determined on a first-in,
first-out basis, or market value and consist primarily of food, beverage, retail
merchandise, kitchen smallwares and employee wardrobe.
Property and Equipment
Property and equipment are stated at cost. The costs of normal repairs and
maintenance are expensed as incurred while major expenditures that extend the
useful lives of assets are capitalized.
Depreciation is provided on the straight-line basis over the estimated useful
lives as follows:
Buildings, boat, barge and improvements 15 to 30 years
Furniture, fixtures and equipment 3 to 10 years
Capitalized Interest
The Company capitalizes interest for associated borrowing costs of major
construction projects. Capitalization of interest ceases when the asset is
substantially complete and ready for its intended use. Interest capitalized
during the years ended December 31, 1999, 1998 and 1997, was $8,000, $163,000
and $11,191,000, respectively.
Goodwill
Goodwill is amortized on a straight-line basis over 25 years, which management
estimates is the related minimum benefit period. Management regularly evaluates
whether or not the future undiscounted cash flows of HE, RPG, ECJC and ECHC are
sufficient to recover the carrying amount of the goodwill associated with each
entity. Additionally, management continually monitors such factors as the status
of new or proposed legislation, the competitive environment and the general
economic conditions of the markets in which it operates. If the estimated future
undiscounted cash flows are not sufficient to recover the carrying amount of
goodwill and, accordingly, an impairment has occurred, management intends to
write down the carrying amount of goodwill to its estimated fair value based on
discounted cash flows. The amount of amortization expense recorded for the years
ended December 31, 1999, 1998 and 1997, was $3,597,000, $1,668,000 and
$1,662,000, respectively.
Deferred Finance Charges
Deferred finance charges, which are included in other assets, consist of fees
and expenses incurred to obtain the Company's debt. The deferred finance charges
are being amortized over the term of the related debt using the effective
interest method (see Note 8).
Redeemable Ownership Interests
The Company is obligated to repurchase ownership interests totaling 1.4% of the
Company's outstanding equity interests issued to certain employees pursuant to
employment agreements in the event of their termination at a price equal to the
then fair market value, based on an independent appraisal. The estimated fair
value of such ownership interests is reported outside of equity in the
accompanying consolidated balance sheets for all periods presented and expensed
over the vesting period (see Note 12).
F-8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Dividends and Capital Distributions
The Company's debt agreements contain covenants that limit dividends and capital
distributions to its stockholders. Dividends and capital distributions to the
stockholders are to be based upon taxable income and the highest marginal
federal and state corporate statutory tax rates in effect, which are applicable
to any stockholder. Such dividends and distributions are to be paid quarterly
based upon estimated taxable income. After filing of their annual tax returns by
the Company and its subsidiaries, each stockholder is to reimburse the Company
for overpayments of capital distributions or the Company is to withhold such
amounts from future dividends to the stockholders.
Casino Revenues
In accordance with industry practice, casino revenues represent the net win from
gaming activities, which is the difference between gaming wins and losses.
Casino Promotional Allowances
Casino promotional allowances consist primarily of the retail value of
complimentary food and beverage, rooms and other services furnished to guests
without charge. Such amounts are included in gross revenues and deducted as
promotional allowances. The estimated costs of providing such complimentary
services, which are substantially included in casino department expenses, are as
follows (in thousands):
Years Ended December 31,
-------------------------------------
1999 1998 1997
------- ------- -------
Food and beverage $37,534 $36,705 $24,967
Hotel 8,384 8,325 3,360
Other operating expenses 7,599 5,067 664
------- ------- -------
$53,517 $50,097 $28,991
======= ======= =======
Advertising Costs
The Company expenses all costs associated with advertising as incurred, and such
amounts are included in general and administrative expenses in the accompanying
consolidated statements of operations.
Development and Preopening Expenses
The Company expenses all development and preopening costs related to new
construction as incurred in accordance with Statements of Position 98-5
"Reporting on the Cost of Start-up Activities." Total preopening costs of $0,
$653,000 and $2,964,000 were expensed during 1999, 1998 and 1997, respectively,
in conjunction with expansions at Horseshoe Bossier City and Horseshoe Tunica.
Corporate Expenses
Expenses associated with the management of the Company are recorded as corporate
expenses and are reflected in the accompanying consolidated statements of
operations in the periods such expenses are incurred. Included in corporate
expenses for the years ended December 31, 1999, 1998 and 1997 are normal
operating expenses and compensation expenses related to ownership interests in
the Company issued to employees pursuant to employment agreements (see Note 12).
Income Taxes
The Company is organized as a corporation under Delaware laws and has elected to
be taxed as an S Corporation for federal income tax purposes. During 1998, the
Company was organized as a limited
F-9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liability company under Delaware laws. The Internal Revenue Service classifies a
limited liability company as a partnership for federal income tax purposes if
the limited liability company lacks certain characteristics of corporations.
Management believed that the Company lacked such corporate characteristics and,
accordingly classified the Company as a partnership for federal income tax
purposes at December 31, 1998.
Accordingly, no provision is made in the accounts of the Company for federal
income taxes, as such taxes are liabilities of the stockholders or members.
The Company's income tax returns and the amount of allocable taxable income are
subject to examination by federal taxing authorities. If an examination results
in a change to taxable income, the income tax reported by the stockholders may
also change.
The tax bases in the Company's assets and liabilities were in excess of the
amounts reported in the accompanying consolidated financial statements by
$18,278,000 and $3,847,000 at December 31, 1999 and 1998, respectively. Taxable
income was in excess of net income reported in the accompanying consolidated
statements of operations for all periods presented.
Impairment of Long-Lived Assets
In accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," management continually evaluates whether events or changes in
circumstances indicate that the carrying amount of long-lived assets may not be
recoverable. Based on management's evaluations, there were no significant
impairments of long-lived assets during the year ended December 31, 1997. For
the years ended December 31, 1999 and 1998, the Company recorded a write-down in
the carrying value of an idle riverboat (see Note 6).
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities, at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain amounts from prior years have been reclassified to conform to the
current year presentation.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS
The following non-cash investing and financing activities are not reflected in
the Consolidated Statements of Cash Flows:
During 1999, the Company acquired ECHC and ECJC for cash plus the assumption of
debt. As a result, the Company increased debt by $151,500,000, which included
the tender premium of $1,500,000, increased accrued liabilities by $5,078,000
and increased goodwill by $156,578,000. The Company also recorded additional
liabilities and goodwill related to the acquisition of ECHC and ECJC totaling
$3,814,000.
During 1999, the Company purchased common stock held in treasury for $21,800,000
in notes payable.
Also, during 1999, the Company purchased certain ownership interests for
$28,100,000 in notes payable. The Company had previously recorded a redeemable
ownership liability for the repurchase of these ownership interests.
3. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
During 1999, the Company purchased the remaining 8.08% limited partnership
interest not held by NGCP for $30.6 million. The non-cash asset of $25.9 million
increased goodwill by $13.0 million and other assets
F-10
by $12.9 million. The non-cash liability increased accrued expenses by $10.6
million, other long-term accrued expenses by $12.8 million and minority interest
by $2.5 million.
During 1998, the carrying value of the land was adjusted to its estimated fair
market value as agreed to by RPG and the contributing partner. As a result, RPG
reduced the value of the land by $941,000 and reduced goodwill by $168,000 with
a corresponding reduction in partners' capital of $1,109,000.
Distributions totaling $15,000,000, accrued at December 31, 1997, were paid in
February 1998.
The net change in assets and liabilities consists of the following (in
thousands):
Years Ended December 31,
-------- -------- --------
1999 1998 1997
-------- -------- --------
(Increase) decrease in assets:
Accounts receivable $ (9,866) $ (8,072) $(13,091)
Inventories (671) (590) (1,523)
Prepaid expenses and other (1,730) (2,382) (493)
Increase (decrease) in liabilities:
Accounts payable 262 (2,226) 5,600
Accrued expenses and other 26,778 (8,968) 3,025
-------- -------- --------
$ 14,773 $(22,238) $ (6,482)
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest (in thousands) $ 54,681 $ 36,530 $ 29,524
4. ACQUISITION
On December 1, 1999, the Company acquired from Empress Entertainment, Inc.
("Empress"), all of the outstanding stock of two of Empress's operating
subsidiaries, Empress Hammond and Empress Joliet for $494.9 million in cash. The
acquisition was accomplished through two simultaneous merger transactions
(collectively the "Empress Mergers") of the Company's wholly owned subsidiaries,
Horseshoe Acquisition Indiana, Inc. ("Horseshoe Indiana") with and into Empress
Hammond, and Horseshoe Acquisition Illinois, Inc. ("Horseshoe Illinois") with
and into Empress Joliet. As additional consideration for the Empress Mergers,
the Company assumed the indebtedness and obligations of Empress, Empress River
Casino Finance Corporation, Empress Joliet, Empress Hammond and Hammond
Residential LLC, a wholly owned subsidiary of Empress Hammond ("Residential"),
under an Indenture, dated as of June 18, 1998, for $150 million 8.125% Senior
Subordinated Notes due 2006 and the payment of certain transaction costs. The
Empress Mergers were consummated pursuant to an Agreement and Plan of Merger,
dated as of September 2, 1998, by and among the Company, Horseshoe Gaming,
certain of the Company's affiliates named therein, Empress, Empress Joliet and
Empress Hammond (as amended by the First Amendment dated as of March 25, 1999
and by the Second Amendment dated as of July 23,1999, and as modified by the
Assumption Agreement dated as of November 18, 1999, collectively, the "Merger
Agreement").
The consideration was agreed upon as the result of arm's-length, good faith
negotiations between the parties to the Merger Agreement and their respective
representatives. Empress Joliet, Empress Hammond and Residential, will continue
to operate as wholly owned subsidiaries of the Company. The sources of the funds
used by the Company to pay the cash merger consideration consisted of funds
obtained under: (i) an Indenture conveying $600 million in 8.625% Senior
Subordinated Notes due 2009, dated as of May 11, 1999, between the Company and
U.S. Trust Company, National Association, as trustee; and (ii) a Credit
Agreement, dated as of June 30, 1999, by and among the Company, DLJ Capital
Funding, Inc., as Syndication Agent, Canadian Imperial Bank of Commerce, as
Administrative Agent, Wells Fargo Bank, National Association, as Documentation
Agent, and the Lenders listed therein.
4. ACQUISITION (CONTINUED)
The transactions have been recorded using the purchase method of accounting. The
purchase price of the acquisitions and related preliminary allocation consist of
the following (in thousands):
PURCHASE PRICE:
Cash $ 493,900
Transactions costs 955
---------
Total cash consideration 494,855
Plus: Debt and accrued interest assumed 155,078
F-11
Tender premium on debt 1,500
---------
Total purchase price $ 651,433
=========
PRELIMINARY ALLOCATION OF PURCHASE PRICE:
Current assets $ 46,018
Property and equipment 189,695
Other assets, net 14,518
Intangible assets 15,000
Goodwill 414,986
Current liabilities (28,784)
---------
Total allocation of purchase price $ 651,433
=========
The Company is currently in the process of allocating the purchase price among
the tangible and intangible assets acquired and the liabilities assumed in the
Empress acquisition. The Company estimates the value of other acquired
intangibles included in other assets, net in the accompanying Consolidated
Balance Sheets are $10.0 million for trademarks and $5.0 million for customer
lists, to be amortized over five years. Upon completion of the final purchase
price allocation, to the extent the purchase price exceeds the fair value of the
net identifiable tangible and intangible assets acquired, such excess will be
allocated to goodwill and amortized over approximately 25 years.
The following unaudited pro-forma financial information assumes the acquisitions
occurred at the beginning of each period presented. These results have been
prepared for comparative purposes only and do not purport to be indicative of
what would have occurred had the acquisitions been made at the beginning of
these periods, or as a prediction of results which may occur in the future.
December 31,
------------------------
1999 1998
-------- --------
(unaudited) (unaudited)
Net revenues $940,507 $857,842
Operating income 165,167 112,834
Net income 56,811 14,790
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
December 31,
---------------------------
1999 1998
--------- ---------
Land $ 28,349 $ 16,093
Buildings, boat, barge and improvements 528,610 333,071
Furniture, fixtures and equipment 158,306 83,360
Less: accumulated depreciation (170,868) (61,330)
--------- ---------
544,397 371,194
Construction in progress 2,067 4,113
--------- ---------
Property and Equipment, net $ 546,464 $ 375,307
========= =========
F-12
6. ASSETS HELD FOR RESALE
In January 1998, HE replaced its riverboat casino facility ("Queen of the Red")
with a new riverboat casino facility. The Queen of the Red, along with its
related gaming equipment is reported as assets held for resale in the
accompanying consolidated balance sheets. During 1999, HE recorded an asset
write-down of $10,346,000 reducing the carrying value of the Queen of the Red to
its current estimated net realizable value of $1,630,000. The estimated net
realizable value was based on recent market information concerning riverboats
being held for sale. In 1998, based on an appraisal of the Queen of the Red,
management reduced the carrying value of the Queen of the Red by $12,911,000.
Management is continuing to evaluate various options for use of the Queen of the
Red, including sale. Subsequent to December 31, 1999, HE sold the gaming
equipment from the Queen of the Red for $630,000 thereby reducing the carrying
value to $1,000,000.
7. ACCRUED EXPENSES AND OTHER
Accrued expenses and other consist of the following (in thousands):
December 31,
----------------------
1999 1998
------- -------
Payroll and related tax liabilities $13,006 $ 8,674
Vacation and other employee benefits 7,417 3,157
Accrued interest 17,476 5,491
Gaming, sales, use and property taxes 7,720 3,815
Progressive slot and slot club liabilities 12,531 6,691
Other accrued expenses 29,438 12,771
------- -------
$87,588 $40,599
======= =======
8. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31,
------------------------
1999 1998
-------- --------
8.625% Senior Subordinated Notes (effective interest rate of
8.657%), due May 15, 2009, net of unamortized
discount of $2,050 $597,950 $ --
9.375% Senior Subordinated Notes (effective interest of 9.384%),
due June 15, 2007, net of unamortized
discount of $121 and $137 159,879 159,863
8.125% Empress Senior Subordinated Notes (effective interest rate
of 8.125%), due July 1, 2006, including call premium
of $1,500 151,500 --
Senior Secured Revolving Credit Facility, secured by substantially
all of the assets of the Company, $250 million borrowing
capacity, due September 30, 2004, with varying
interest rates ranging from 8.33% to 8.73% 175,000 --
Senior Secured Credit Facility Tranche B Term Loan, $125 million
borrowing capacity, secured by substantially all of the assets
of the Company, principal of $313 plus interest due quarterly
with remaining principal and interest due September 30, 2006,
with varying interest rates ranging
from 8.58% to 8.63% 124,687 --
F-13
8. LONG-TERM DEBT (CONTINUED)
December 31,
-------------------------------
1999 1998
----------- -----------
(in thousands)
12.75% Senior Notes (effective interest rate of 13.01%),
substantially paid in full in May 1999, paid in full and
retired in September 1999, net of unamortized
discount of $909 $ -- $ 127,681
Senior Secured Revolving Credit Facility, secured by
substantially all of the assets of the Company, paid in
full and retired in May 1999 -- 100,000
Notes Payable, interest ranging from 6% to 12%, due in
various installments through January 2004 49,932 1,174
----------- -----------
1,258,948 388,718
Less: current maturities (164,245) (1,174)
----------- -----------
$ 1,094,703 $ 387,544
=========== ===========
On June 15, 1997, the Company issued $160,000,000 of 9.375% Senior Subordinated
Notes ("Subordinated Notes") due June 15, 2007. The Subordinated Notes were
issued at 99.899% of par value. The Subordinated Notes are unsecured and require
semi-annual interest payments on June 15 and December 15. A portion of the
proceeds were used to retire a previously outstanding credit facility (see
below), as well as retire $13 million in senior notes. An extraordinary loss on
early retirement of debt of $5,243,000 was recognized in 1997 for prepayment
penalties and premium, and the write-off of unamortized discounts and deferred
finance charges. The remaining proceeds were used to fund a portion of the
expansion of the Company's existing facilities.
During 1998, the Company repurchased some of its senior notes from individual
note holders in the open market totaling $8,410,000. An extraordinary loss on
early retirement of debt of $787,000 was recognized in 1998 for prepayment
penalties, premium and the write-off of unamortized discounts and deferred
finance charges.
In May 1999, the Company completed a private placement offering of $600 million
of 8.625% Senior Subordinated Notes due 2009. The proceeds from the notes were
used to retire the 12.75% senior notes of $128.6 million and the Company's
Amended and Restated Senior Secured Revolving Credit Facility of $75 million. An
extraordinary loss on the early retirement of debt of $9.6 million was
recognized in 1999 for prepayment penalties, premium and the write-off of
unamortized discounts and deferred finance charges. The remaining proceeds
amounting to $342.3 million were placed in a secured proceeds account of which
$151.5 million was used to fund the redemption of Empress 8.125% Senior
Subordinated Notes in January 2000 and $190.8 million was used to partially fund
the acquisition of ECJC and ECHC.
On June 30, 1999, the Company completed its $375.0 million Senior Secured Credit
Facility (the "Credit Facility"). The Credit Facility consists of a $250.0
million, five-year revolver and a $125.0 million, seven-year loan. On December
1, 1999, the Company borrowed $175.0 million of the revolver and the entire
$125.0 million term loan to complete the funding requirement for the purchase of
ECJC and ECHC. All of the operating subsidiaries guarantee the obligations under
the Credit Facility. The term loan requires quarterly principal payments of
$312,500 through September 2005 and $29,375,000 quarterly thereafter. The
revolving loan commitment is permanently reduced by $9,375,000 per quarter
beginning December 31, 2001, $12,500,000 per quarter beginning December 31, 2002
and $40,625,000 per quarter beginning December 31, 2003. As of March 4, 2000, a
combined $234.7 million was outstanding under the Credit Facility.
The Company's debt agreements contain covenants that, among other things, (i)
limit the amount of dividends the Company can pay to its stockholders; (ii)
limit the amount of additional indebtedness which may be incurred by the Company
and its subsidiaries; (iii) prohibit any consolidation or merger of the Company
or its subsidiaries with an affiliate or third party, any sale of substantially
all of the Company or
F-14
8. LONG-TERM DEBT (CONTINUED)
its subsidiaries' assets, or any payment of subordinated indebtedness prior to
its scheduled maturity; and (iv) limit the amount of restricted payments, as
defined, the Company may make.
As of December 31, 1999, the five year maturities for long-term debt were
$164,245,000 (2000), $10,158,000 (2001), $10,774,000 (2002), $69,059,000 (2003)
and $128,446,000 (2004).
As of December 31, 1999 the fair market value of the 8.625% Senior Subordinated
Notes, based on quoted market prices was $580,500,000. As of December 31, 1999
and 1998, the fair market value of the 9.375% Senior Subordinated Notes, based
on quoted market prices was $159,600,000 and $164,800,000, respectively. As of
December 31, 1998, the fair market value of the 12.75% Senior Notes, based on
market quoted market prices was $138,170,000. The fair market value of the
Company's other long-term debt approximated its carrying value as of December
31, 1999 and 1998, based on the borrowing rates currently available for debt
with similar terms.
9. LEASE COMMITMENTS
The Company and its subsidiaries lease both real estate and equipment used in
the operations and classifies those leases as either operating or capital leases
following the provisions of SFAS No. 13 "Accounting for Leases."
Empress Hammond entered into a lease providing for the right to use the site of
the development and the parking structure, which was conveyed to the City of
Hammond upon completion. The lease expires on the fifth anniversary of Empress
Hammond's procurement of its operating license from the Indiana Gaming
Commission (June 21, 1996). The term of the lease automatically extends for a
period equal to each renewal period of the operating license provided that the
total term will not exceed 75 years. Empress Hammond has paid in full the rent
for the amount of $1.00 per year for the term of the lease.
Rent expense for the years ended December 31, 1999, 1998 and 1997 was
approximately $2,486,000 $2,105,000 and $1,741,000, respectively.
In January 2000, the Company signed a three year lease for computer equipment.
The leases require monthly payments of $51,079 and expire on December 31, 2002.
As of December 31, 1999, our future minimum rental commitments are $2,098,000
(2000), $1,495,000 (2001), $1,230,000 (2002), $216,000 (2003) and $205,000
(2004).
In addition to these minimum rental commitments, certain of the Company's
operating leases provide for contingent rentals based on a percentage of
revenues in excess of specified amounts.
10. OWNERSHIP REPURCHASE MATTERS
On January 13, 1999, Horseshoe Gaming repurchased outstanding warrants held by a
third party which entitled such third party to purchase an approximate 6.99%
ownership interest in Horseshoe Gaming from its largest stockholder, Horseshoe
Gaming, Inc. ("HGI"), for an exercise price of $510,000. Upon acquisition,
Horseshoe Gaming exercised the warrants and retired the membership units
acquired from HGI. The total cost of the warrants, including fees, expenses and
the exercise price paid to HGI, was approximately $34.4 million, which was
recorded as a reduction in members' equity in the first quarter of 1999.
In May 1999, Horseshoe Gaming purchased redeemable ownership interests
comprising an aggregate 7.2% of Horseshoe Gaming from five former employees for
an aggregate purchase price of $39.0 million. In June 1999, the first
installment of approximately $11.5 million was paid with the remaining amount to
be paid
F-15
10. OWNERSHIP REPURCHASE MATTERS (CONTINUED)
over a period not to exceed four years. During the third quarter of 1999,
Horseshoe Gaming agreed to purchase redeemable ownership interests of 1.3% of
the Company from four current employees for $5.3 million. The first installment
of approximately $1.7 million was paid with the remaining amount to be paid over
a period not to exceed three years. The notes receivable from these former and
current employees was fully paid in connection with the first installment
payment made. Operating results for the year ended December 31, 1999 includes a
$2.9 million reduction in deferred compensation expense resulting from the final
valuation of these ownership interests.
During the third quarter of 1999, the Company also agreed to purchase ownership
interests of 3.2% of the Company from four owners totaling $18.3 million. During
the third quarter of 1999, the first installment of approximately $1.8 million
was paid with the remaining amount to be paid over a period not to exceed four
years.
During the fourth quarter of 1999, the Company also agreed to purchase ownership
interests of 0.7% of Horseshoe Gaming from five owners totaling $5.3 million to
be paid in January 2004.
The Company has employment agreements and unit option agreements with certain
employees which contain put/call options whereby, upon termination of
employment, the Company must, at the election of any such employee, and may, at
the Company's election, purchase such employee's ownership interest for an
amount equal to the fair market value of such interest as determined by an
independent appraisal or an arbitration process. As of December 31, 1999, the
aggregate fair market value of all interests subject to such put/call options,
representing approximately 1.4% ownership of the Company, was $6.8 million. Such
agreements provide that the purchase price for the employee's ownership interest
shall be paid in cash, either upon transfer of the interest to the Company or in
installments over a period not to exceed five years depending on the aggregate
purchase price.
In April 1999, the Company exercised an option to acquire the remaining 8.08%
limited partnership interest in HE not held by NGCP for total consideration of
$30.6 million, which included payments for a non-compete covenant, consents and
a release of claims. The consideration for the repurchase consisted of $2.1
million cash, offsets against the negative capital account balances of the
former limited partners and payables amounting to $26.0 million. As of December
31, 1999, the remaining amount to be paid to these limited partners totaled
$23.8 million, of which $11.0 million is included in accrued expenses and $12.8
million is included in other long-term liabilities.
11. TRANSACTIONS WITH RELATED PARTIES
Mr. Binion has provided services pursuing, developing and managing gaming
operations for the Company and its subsidiaries. Mr. Binion has never received
compensation for his services, although the Company accrued compensation for Mr.
Binion equal to the fair value of his services for each of the years ended
December 31, 1999 and 1998. Mr. Binion does not have an employment agreement to
receive compensation for his services; however, the Company and Mr. Binion may
enter into such an employment agreement during 2000.
The principals of a placement agent used by the Company to secure financing own
approximately 3.9% of the Company. Fees were paid to the placement agent during
1997 for various financial advisory services totaling $600,000.
Notes receivable (including accrued interest) from employees and former
employees with ownership interests in the Company totaling $583,000 and
$3,037,000 are included in other assets in the accompanying consolidated balance
sheets as of December 31, 1999 and 1998, respectively.
The notes to employees are secured by their ownership interests in the Company
and have various due dates and interest rates ranging from 7% to 10%.
F-16
11. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
Included in other assets in the accompanying consolidated balance sheets at
December 31, 1999 and 1998 are notes receivable from the former limited partners
of HE totaling $8,252,000 and $8,163,000, respectively. The notes receivable
will be offset from the payments to be made to these limited partners pursuant
to the acquisition of their ownership interest in HE by the Company.
The Company conducts a portion of its marketing through an entity that is owned
by the wife of an officer. Fees and expenses paid to this company were
$3,157,000, $3,625,000 and $2,648,000 for the years ended December 31, 1999,
1998 and 1997, respectively.
12. EMPLOYEE COMPENSATION AND BENEFITS
Employment Agreements
Certain current and former key employees are covered under employment agreements
that provide certain benefits in the event of such employees' termination. These
employment agreements include a put/call provision, which if exercised by the
employee, would require the Company to repurchase such employees' respective
ownership interests in the Company in the event of termination at the then fair
market value based on an independent appraisal. Accordingly, these compensation
agreements are accounted for as variable stock purchase plans. Compensation
expense is recorded each period equal to the change in the fair market value of
ownership interests issued and the vesting schedule pursuant to these
agreements.
The total ownership interest in the Company issued to employees pursuant to such
employment agreements was 1.4%, 4.1% and 4.1% as of December 31, 1999, 1998 and
1997, respectively. As of December 31, 1998, all employees/former employees were
fully vested. The amount of compensation expense recorded in the accompanying
consolidated statements of operations related to these ownership interests was
$470,000, $4,245,000 and $15,066,000 for the years ended December 31, 1999, 1998
and 1997, respectively. Some of the employment agreements also included a
guaranteed severance payment in the event of termination. The amount of such
liability was $ 0 and $1,810,000 at December 31, 1999 and 1998, respectively
(see Note 10.)
Unit Option Plan
During 1997, the Company approved the 1997 Unit Option Plan, which provides for
certain employees to be granted options to purchase membership units in
Horseshoe Gaming at a fixed exercise price of $3.47 per unit. The options vest
in three equal annual installments beginning one year subsequent to the date of
the option holder's employment and expire after 10 years. As of December 31,
1999, 631,225 units had been granted all of which had vested. As of December 31,
1999, 126,245 units, which were exchanged for 33.6 options to purchase stock in
the Company at an exercise price of $13,009.75 per share, remained unexercised.
The Unit Option Plan contains a put/call provision under the same terms as
described above for the employment agreements. Accordingly, the Unit Option Plan
is accounted for as a variable stock purchase plan. Compensation expense is
recorded each period based on vesting an amount equal to the change in the fair
market value of the stock in the Company, provided such value exceeds the
exercise price of the options. The net value is included in redeemable ownership
interests in the accompanying consolidated balance sheets. The Company
recognized compensation expense of $1,544,000 and $1,107,000 related to this
option plan during 1998 and 1997, respectively, and during 1999, a reduction of
$391,000 resulting from the final valuation of the options.
In 1998, one former employee that had a Unit Option Agreement (126,245 units)
elected not to renew his employment agreement and exercised his option to
purchase the units pursuant to the Unit Option Agreement and his option to put
the units back to the Company at fair market value. The exercise price was
deducted from the proceeds received by the employee for the redemption of his
units (see Note 10).
F-17
12. EMPLOYEE COMPENSATION AND BENEFITS (CONTINUED)
In 1999, two employees that had unit options under the Unit Option Agreement
(378,735 units), exercised their options pursuant to the Unit Option Agreement
and put them back to the Company at fair market value. The exercise price was
deducted from the proceeds received by the employees for the redemption of their
units.
During 1999, the Company approved the 1999 Equity Incentive Plan which provides
for certain employees to be granted options (with tandem SARs) to purchase stock
in the Company and SARs to certain other employees to share in the increase in
the market value of the Company. The exercise price for the options/SARs is
determined in accordance with the plan document and represents the fair market
value at the date of grant. The options/SARs vest over a period of four years
and expire in ten years. Total compensation expense recognized during 1999 was
$735,000.
The following table represents option (with tandem SAR) activity for 1999:
Number of Average Price
Shares per Share
------ -------
Balance, December 31, 1998 -- $ --
Issued 127.23 13,660
Cancelled -- --
Exercised -- --
------ -------
Balance, December 31, 1999 127.23 $13,660
====== =======
The following table represents SAR activity for 1999:
Effective January 1, 1995, a 401(k) savings plan was established for RPG whereby
eligible employees may contribute up to 15% of their salary. Beginning January
1, 1996, employees of the Company and its subsidiaries other than RPG were
allowed to participate in the RPG 401(k) savings plan. The Company matches 50%
of the employees' contributions up to a maximum of 6% of their salary, and the
employees vest in the matching contribution over six years. Employees are
eligible to participate in the plan on the first day of the next calendar
quarter following six months of service. The Company's matching contributions
were $1,205,000, $923,000 and $716,000 for the years ended December 31, 1999,
1998 and 1997, respectively.
Upon the acquisition of ECJC and ECHC, on December 1, 1999, the Company took
over the 401(k) plan of ECJC and ECHC. The Company's contributions to the plan
are based on a discretionary percentage of employee contributions and may
include an additional discretionary amount. The Company's contributions for the
period from acquisition through December 31, 1999 totaled $67,000.
F-18
13. COMMITMENTS AND CONTINGENCIES
Litigation
The City of Hammond is a plaintiff in a condemnation proceeding filed in
September 1995 in Lake Superior Court in Lake County, Indiana in which the City
of Hammond condemned a small parcel of land for the construction of the overpass
located near Empress Hammond. This case was transferred on a change in venue in
the summer of 1998 to Newton County, Indiana. On September 28, 1998, the jury
returned a $5.2 million verdict against the City of Hammond. Under the terms of
the Development Agreement between Empress Hammond and the City of Hammond,
Empress Hammond is responsible for reimbursing the City of Hammond for its
costs, fees and any judgments. The City of Hammond appealed this decision to the
Indiana appellate court. As a result, it is not yet clear how much, if any, or
when, the condemnation award will be paid.
On July 21, 1998, a lawsuit was filed against Empress Hammond and Empress Joliet
and four of their employees by two former female employees of Empress Joliet,
alleging that Empress Hammond and Empress Joliet committed gender discrimination
and sexual harassment in violation of Title VII of the Civil Rights Act of 1964
and permitted a hostile work environment to exist at its facilities. The lawsuit
also alleges certain tort claims and seeks certification as a class action on
behalf of similarly situated current and former female employees of Empress
Joliet and Empress Hammond, and seeks injunctive relief and money damages.
Empress denies the allegations in the complaint and intends to vigorously
contest this matter. Although Empress has agreed to indemnify the Company with
respect to this claim and others, there can be no assurances that such indemnity
will be adequate or available to the Company or that any judgment in this matter
would not have a material adverse effect on the Company.
The Company and its subsidiaries are from time to time, party to legal
proceedings arising in the ordinary course of business. The Company is unaware
of any legal proceedings which, even if the outcome were unfavorable to the
Company, would have a material adverse impact on either its financial condition
or results of operations.
As a condition to its license in Indiana, Empress Hammond made various financial
and other commitments to the City of Hammond, Indiana and other Indiana
governmental bodies pursuant to a Development Agreement. As of December 31,
1999, approximately $14.5 million of such commitments remained outstanding
primarily for commercial development, residential development and the
construction of a hotel. In addition, under the terms of the Development
Agreement, Empress Hammond is required to make annual payments of approximately
$1.3 million for public safety services and other uses as well as an annual
payment based on a varying percentage of Empress Hammond's adjusted gross
receipts.
F-19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Horseshoe Gaming Holding Corp.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of Horseshoe Gaming Holding
Corp. and subsidiaries included in this Form 10-K, and have issued our report
thereon dated March 3, 2000. Our audits were made for the purpose of forming an
opinion on those statements taken as a whole. The schedule listed under Item
14(a)2 is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements,
and in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Memphis, Tennessee,
March 3, 2000.
S-1
SCHEDULE II
HORSESHOE GAMING HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Additions
Balance at Charged to Deductions Balance at
Beginning Costs and from Other Close
Description of Period Expenses Reserves Changes of Period
----------- --------- ---------- ---------- ------- ----------
Year Ended December 31, 1999
Allowance for Doubtful Accounts $10,346 $ 4,643 $ (7,815)(a) $ 3,915(b) $11,089
======= ======= ======== ========== =======
Year Ended December 31, 1998
Allowance for Doubtful Accounts $ 8,965 $11,937 $(10,556)(a) $ -- $10,346
======= ======= ======== ========== =======
Year Ended December 31, 1997
Allowance for Doubtful Accounts $ 3,452 $ 7,556 $ (2,043)(a) $ -- $ 8,965
======= ======= ======== ========== =======
(a) Uncollectable accounts written off, net of amounts recovered.
(b) Includes balances assumed in the Empress Acquisition.
S-2
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
------ ----------- -------------
1.1## Purchase Agreement, dated May 6, 1999, by and among Horseshoe Gaming
Holding Corp. and the initial purchasers.
2.1++++ First Amendment to Deposit Escrow Agreement, by and among Horseshoe
Gaming, L.L.C. and Empress Entertainment, Inc., dated March 25,
1999.
2.2++++ First Amendment to Agreement and Plan of Merger, dated as of March
25, 1999, to the Agreement and Plan of Merger, dated as of September
22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
(Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
Acquisition Indiana, Inc., Empress Casino Joliet Corporation,
Empress Casino Hammond Corporation and Empress Entertainment, Inc.
2.3+++ Agreement and Plan of Merger, dated as of September 2, 1998, by and
among Horseshoe Gaming, L.L.C., Horseshoe Gaming (Midwest), Inc.,
Empress Acquisition Illinois, Inc., Empress Acquisition Indiana,
Inc., Empress Casino Joliet Corporation, Empress Casino Hammond
Corporation and Empress Entertainment, Inc.
2.4## Subscription and Reorganization Agreement, dated as of April 23,
1999, by and among Horseshoe Gaming Holding Corp, Horseshoe Gaming,
L.L.C., Robinson Property Group, Inc., and others listed therein.
2.5### Second Amendment to Agreement and Plan of Merger, dated as of July
23, 1999, to the Agreement and Plan of Merger, dated as of September
22, 1998, by and among Horseshoe Gaming, L.L.C., Horseshoe Gaming
(Midwest), Inc., Empress Acquisition Illinois, Inc., Empress
Acquisition Indiana, Inc., Empress Entertainment, Inc., Empress
Casino Joliet Corporation and Empress Casino Hammond Corporation.
2.6++++ Assumption Agreement, dated as of November 18, 1999, by and among
Horseshoe Gaming L.L.C., Horseshoe Gaming (Midwest), Inc., Empress
Acquisition Illinois, Inc., Empress Acquisition Indiana, Inc.,
Empress Entertainment, Inc., Empress Casino Joliet Corporation,
Empress Casino Hammond Corporation, Horseshoe Acquisition Illinois,
Inc., Horseshoe Acquisition Indiana, Inc., and Horseshoe Gaming
Holding Corp.
3.1## Certificate of Incorporation of Horseshoe Gaming Holding Corp.
3.2## By-laws of Horseshoe Gaming Holding Corp.
4.1## Indenture, dated as of May 11, 1999, by and between Horseshoe Gaming
Holding Corp. and U.S. Trust Company, National Association.
4.2## Second Supplemental Indenture, dated as of May 11, 1999, to
Indenture, dated as of October 10, 1995, by and between Horseshoe
Gaming, L.L.C., Robinson Property Group Limited Partnership and U.S.
Trust Company, National Association.
4.9* Intercompany Senior Secured Note due September 30, 2000, executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.15## Amendment No. 1 to Second Pledge Agreement, from Jack Binion, B&O
Development Limited Partnership, JBB Gaming Investments, L.L.C. in
favor of United States Trust Company of New York for the benefit of
the Holders of 12.75% Senior Notes due September 30, 2000.
4.17## Amendment No. 1 to Second Pledge Agreement, from Horseshoe Gaming,
L.L.C. in favor of United States Trust Company of New York for the
ratable benefit of the Holders of 12.75% Senior Notes due September
30, 2000.
4.19## Amendment No. 1 to Second Ship Mortgage on the Whole of the Queen of
the Red by Horseshoe Entertainment in favor of Horseshoe Gaming,
L.L.C.
4.22## Amendment No. 1 to Second Deed of Trust, Security Agreement and
Assignment of Leases and Rents from Robinson Property Group,
Limited Partnership to Rowan H. Taylor, Jr. for the benefit of
Horseshoe Gaming, L.L.C. and United States Trust Company of New York
for the ratable benefit of the Holders of 12.75% Senior Notes due
September 30, 2000.
4.24## Amendment No. 1 to Second Ship Mortgage on the Whole of the
Horseshoe Casino & Hotel, Tunica executed by Robinson Property Group
Limited Partnership, as Owner and Mortgagor, in favor of Horseshoe
Gaming, L.L.C. and United Trust Company of New York.
4.26**** Intercompany Senior Secured Note due September 30, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.27**** Intercompany Senior Secured Note due September 30, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.28+ Purchase Agreement for 9 3/8% Series A Senior Subordinated Notes by
and among Horseshoe Gaming, L.L.C. and Robinson Property Group
Limited Partnership, as
guarantor, and Wasserstein Perella Securities, Inc. as Initial
Purchaser.
4.29+ Form of 9 3/8% Senior Subordinated Note due 2007 of Horseshoe
Gaming, L.L.C.
4.30+ Indenture, dated as of June 15, 1997, by and among Horseshoe Gaming,
L.L.C., U.S. Trust Company of Texas, N.A., as Trustee, and Robinson
Property Group Limited Partnership, as guarantor, with respect to
the 9 3/8% Senior Subordinated Notes due 2007.
4.31+ Exchange and Registration Rights Agreement, dated as of June 25,
1997, by and among Horseshoe Gaming, L.L.C., Robinson Property Group
Limited Partnership and Wasserstein Perella Securities, Inc.
4.32+ Intercompany Senior Secured Note due June 15, 2007 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.33+ Intercompany Senior Secured Note due June 15, 2007 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.34++ Intercompany Senior Secured Note due June 15, 2000 executed by
Robinson Property Group Limited Partnership in favor of Horseshoe
Gaming, L.L.C.
4.35++ Intercompany Senior Secured Note due June 15, 2000 executed by
Horseshoe Entertainment in favor of Horseshoe Gaming, L.L.C.
4.37## Amendment No. 1 to the Amended and Restated Note Assignment, dated
as of May 11, 1999, from Horseshoe Gaming, L.L.C. in favor of the
Holders of Senior Secured Credit Facility Notes due September 30,
2000.
4.51#### Horseshoe Gaming Holding Corp. Credit Agreement, dated as of June
30, 1999, by and among Horseshoe Gaming Holding Corp., the Lenders
listed therein, DLJ Capital Funding, Inc. and Canadian Imperial Bank
of Commerce.(1)
4.52++++++ Indenture dated as of June 18, 1998 by and between Empress
Entertainment, Inc., as issuer, the Guarantors named therein and
U.S. Bank National Association as Trustee with respect to Empress' 8
1/8%, $150 million Senior Subordinated Notes due 2006.
4.53++++++ Supplemental Indenture, dated as of December 1, 1999, among Empress
Casino Hammond Corporation, Empress Residential, L.L.C. and Empress
Casino Joliet Corporation (collectively, the "Subsidiary
Guarantors") with respect to the unconditional guarantee of all of
the Company's obligations under Indenture covering the 9 3/8% Senior
Subordinated Notes due 2007 by the Subsidiary Guarantors.
4.54++++++ Supplemental Indenture, dated as of December 1, 1999, among New
Gaming Capital Partnership, Horseshoe Entertainment, Horseshoe
Gaming, L.L.C., Horseshoe GP, Inc., Empress Casino Hammond
Corporation, Empress Residential, L.L.C., Empress Casino Joliet
Corporation, Robinson Property Group, Limited Partnership and
Bossier City Land Corporation (collectively, the "Guaranteeing
Subsidiaries") with respect to the unconditional guarantee of all of
the Company's obligations under Indenture covering the 8 1/8%%
Senior Subordinated Notes due 2009 by the Guaranteeing Subsidiaries.
4.55++++++ Supplemental Indenture dated as of December 1, 1999, between
Horseshoe Gaming Holding Corp., to the 9 3/8% Senior Subordinated
Notes due 2007 and U.S. Trust Company of Texas, N.A.
4.56++++++ Amendment No. 1 to Horseshoe Gaming Holding Corp. Credit Agreement,
dated as of November 18, 1999, by and among Horseshoe Gaming Holding
Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
Canadian Imperial Bank of Commerce.
4.57++++++ Amendment No. 2 to Horseshoe Gaming Holding Corp. Credit Agreement,
dated as of November 30, 1999, by and among Horseshoe Gaming Holding
Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
Canadian Imperial Bank of Commerce.
4.58++++++ Amendment No. 3 to Horseshoe Gaming Holding Corp. Credit Agreement,
dated as of January 20, 2000, by and among Horseshoe Gaming Holding
Corp., the Lenders listed therein, DLJ Capital Funding, Inc. and
Canadian Imperial Bank of Commerce.
10.1## Settlement Term Sheet, dated as of May 19, 1999, by and among Jack
B. Binion, Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C., Paul R.
Alanis, Loren Ostrow, John Schreiber and Cliff Kortman.
10.2## Horseshoe Note Pledge and Security Agreement, dated as of and on May
11, 1999, by and among Horseshoe Gaming Holding Corp., Horseshoe
Gaming, L.L.C. and U.S. Trust Company, National Association.
10.3## Promissory Note, dated May 11, 1999, from Horseshoe Gaming, L.L.C.
to Horseshoe Gaming Holding Corp. for $240,349,125.00.
10.4## Registration Rights Agreement, dated May 11, 1999, by and among
Horseshoe Gaming Holding
(1) In accordance with item 601 of Regulation S-K, the Registrant has not
filed the schedules to this Agreement with the Securities and Exchange
Commission. The Registrant undertakes to supplementally provide a copy of such
schedules to the Securities and Exchange Commission upon request.
Corp. and the initial purchasers.
10.5## Security and Control Agreement, dated as of and on May 11, 1999, by
and among Horseshoe Gaming Holding Corp. and U.S. Trust Company,
National Association.
10.6## Guarantee, dated as of May 11, 1999, by Robinson Property Group,
Limited Partnership for the benefit of Horseshoe Gaming Holding
Corp.
10.7## Guarantee, dated as of May 11, 1999, by Horseshoe Entertainment for
the benefit of Horseshoe Gaming Holding Corp.
10.8## Stockholders' Agreement for Horseshoe Gaming Holding Corp., dated as
of April 29, 1999, by and among Horseshoe Gaming Holding Corp. and
parties listed therein.
10.9* 401(k) Plan of Robinson Property Group Limited Partnership.
10.11+ Second Amended and Restated Employment Agreement, dated as of
October, 1, 1995, by and between Horseshoe Gaming, Inc. and Walter
J. Haybert.
10.12* Employment Agreement, dated January 1, 1996, by and between
Horseshoe Gaming, Inc. and Paul Alanis.
10.13* Employment Agreement, dated January 1, 1996, by and between
Horseshoe Gaming, L.L.C. and Loren S. Ostrow.
10.14+ Second Amended and Restated Employment Agreement, dated as of
October 1, 1995, by and between Horseshoe Gaming, Inc. and John
Michael Allen.
10.15+ Second Amended and Restated Employment Agreement, dated as of
October 1, 1995, by and between Horseshoe Gaming, Inc. and John J.
Schreiber.
10.16+ 1997 Unit Option Plan of Horseshoe Gaming, L.L.C.
10.17++++ Unit Option Agreement, dated as of February 1, 1997, by and between
Horseshoe Gaming, L.L.C. and Larry Lepinski.
10.18++++ Unit Option Agreement, dated as of February 1, 1997 by and between
Horseshoe Gaming, L.L.C. and Cliff Kortman.
10.19++++ Warrant Purchase Agreement, dated as of December 21, 1998, by and
between Hanwa Co., Ltd. and Horseshoe Gaming, L.L.C.
10.20++++ Settlement Agreement, dated as of December 31, 1998, by and among
Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Hollywood Park,
Inc.
10.21++++ Settlement Agreement, dated as of February 3, 1999, by and among
Horseshoe Gaming, Inc., Horseshoe Gaming, L.L.C. and Mike Allen.
10.22++++ Letter Agreement, dated October 19, 1998, by Horseshoe Gaming, Inc.
and Horseshoe Gaming, L.L.C. and accepted by Walter Haybert.
10.23++++ Letter Agreement, dated January 4, 1999, by Horseshoe Gaming, Inc.
and Horseshoe Gaming, L.L.C. and accepted by Walter Haybert.
10.24++++ Mutual General Release, dated February 23, 1999, by and among
Horseshoe Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe GP,
Inc., Robinson Property Group Limited Partnership, New Gaming
Capital Partnership, Horseshoe Entertainment, and Nobutaka
Mutaguchi.
10.25++++ Exclusive License Agreement, dated July 2, 1998, by and between
Horseshoe Gaming, L.L.C. and Horseshoe License Company.
10.26++++ Amended and Restated Employment Agreement, dated November 23, 1998,
by and between Horseshoe Gaming, Inc. and Gary Border.
10.27++++ Amended and Restated Employment Agreement, dated November 23, 1998,
by and between Horseshoe Gaming, Inc. and Larry Lepinski.
10.28++++ Amended and Restated Employment Agreement, dated October 15, 1998,
by and between Horseshoe Gaming, Inc. and Robert McQueen.
10.29++++ Amended and Restated Employment Agreement, dated November 23, 1998,
by and between Horseshoe Gaming, Inc. and Kirk Saylor.
10.30## Amended and Restated Employment Agreement, dated November 23, 1998,
by and between Horseshoe Gaming, Inc. and David Carroll.
10.31## Amended and Restated Employment Agreement, dated November 23, 1998,
by and between Horseshoe Gaming, Inc. and John Moran.
10.32## Employment Agreement, dated as of November 3, 1998, by and between
Horseshoe Gaming, Inc. and Roger Wagner.
10.33++++ Unit Option Agreement, dated as of February 1, 1997, by and between
Horseshoe Gaming, L.L.C. and Urs Vogel.
10.34++++ Unit Option Agreement, dated as of February 1, 1997, by and between
Horseshoe Gaming, L.L.C. and Glen Buxton.
10.35# Agreement, dated as of April 21, 1999, by and among Horseshoe
Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP,
and New Gaming Capital Partnership; Jack B. Binion; The Robin Group,
Inc. and August Robin.
10.36# Agreement, dated as of April 21, 1999, by and among Horseshoe
Gaming, L.L.C., Horseshoe Gaming, Inc., Horseshoe Entertainment, LP,
and New Gaming Capital Partnership; Jack B. Binion; Wendell Piper;
Cassandra Piper; and Robert E. Piper, Jr.
10.37## Employment Agreement, dated as of January 11, 1999, by and between
Horseshoe Gaming, Inc. and Joseph J. Canfora.
10.38## Consulting Agreement, dated as of July 23, 1999, by and between
Horseshoe Gaming, L.L.C. and Empress Entertainment, Inc.
10.39++++++ Employment Agreement dated as of March 2000, by and between Empress
Casino Hammond Corporation and Rick Mazer.
10.40++++++ Employment Agreement dated as January 6, 2000, by and between
Empress Casino Joliet Corporation and David Fendrick.
10.41++++++ Release Agreement dated as July 1, 1999 by and between Horseshoe
Gaming, L.L.C. and Larry Lepinski.
10.42++++++ Release Agreement dated as July 1, 1999 by and between Horseshoe
Gaming, L.L.C. and Glenn Buxton.
10.43++++++ Stock Purchase Agreement dated as of July 1, 1999 by and between
Horseshoe Gaming L.L.C. and Rick Cook.
10.44++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Robert McQueen.
10.45++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Gary Border.
10.46++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Gary Anderson.
10.47++++++ Equity Incentive Plan dated as of January 1, 1999 by and between
Horseshoe Gaming Holding Corp. and certain employees.
10.48++++++ Promissory Note and Stock Purchase Agreement dated as of November
30, 1999 by and between Horseshoe Gaming L.L.C. and Alpine
Associates.
10.49++++++ Promissory Note and Stock Purchase Agreement dated as of November
30, 1999 by and between Horseshoe Gaming L.L.C. and Bear Stearns
F/A/O # 2000.
10.50++++++ Promissory Note and Stock Purchase Agreement dated as of November
30, 1999 by and between Horseshoe Gaming L.L.C. and Matthewson CRUT.
10.51++++++ Promissory Note and Stock Purchase Agreement dated as of November
30, 1999 by and between Horseshoe Gaming L.L.C. and Nobutaka
Mutaguchi.
10.52++++++ Promissory Note and Stock Purchase Agreement dated as of November
30, 1999 by and between Horseshoe Gaming L.L.C. and Post Balanced
Fund.
10.53++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Robert Fechser.
10.54++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Doyle Brunson.
10.55++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and Key Fechser.
10.56++++++ Stock Purchase Agreement dated as of August 1, 1999 by and between
Horseshoe Gaming L.L.C. and David Reese.
20.1+++ Press Release issued on September 2, 1998 by Horseshoe Gaming,
L.L.C. announcing that it had executed an agreement to acquire the
riverboat gaming operations of Empress Entertainment, Inc.
21.1++++++ Subsidiaries of Horseshoe Gaming Holding Corp.
24.1## Power of Attorney (included on signature page hereto).
27.1++++++ Financial Data Schedule
99.1## Form of Letter of Transmittal for Tender of all Outstanding 8 5/8%
Series A Senior Subordinated Notes Due 2009 in exchange for 8 5/8%
Series B Senior Subordinated Notes Due 2009 of Horseshoe Gaming
Holding Corp.
99.2## Form of Tender for all Outstanding 8 5/8% Series A Senior
Subordinated Notes Due 2009 in exchange for 8 5/8% Series B Senior
Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.
99.3## Form of Instruction to Registered Holder from Beneficial Owner of 8
5/8% Series A Senior Subordinated Notes Due 2009 of Horseshoe Gaming
Holding Corp.
99.4## Form of Notice of Guaranteed Delivery for Outstanding 8 5/8% Series
A Senior Subordinated Notes Due 2009 in exchange for 8 5/8% Series B
Senior Subordinated Notes Due 2009 of Horseshoe Gaming Holding Corp.
* Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration
Statement on Form
** S-4 (No. 333-0214) (the "1996 Form S-4") filed on January 8, 1996.
Filed as an Exhibit to Horseshoe Gaming, L.L.C. Amendment No. 1 to
the 1996 Form S-4 filed on April 26, 1996.
*** Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
Quarter Ended June 30, 1996.
**** Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
Quarter Ended March 31, 1997.
+ Filed as an Exhibit to Horseshoe Gaming, L.L.C. Registration
Statement on Form S-4 (No. 333-33145) filed on August 7, 1997.
++ Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the
Year Ended December 31, 1997.
+++ Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 8-K filed on
September 12, 1998.
++++ Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-K for the
fiscal year ended December 31, 1998.
# Filed as an Exhibit to Horseshoe Gaming, L.L.C. Form 10-Q for the
Quarter Ended March 31, 1999.
## Filed as an Exhibit to Horseshoe Gaming Holding Corp.'s Form S-4
Registration Statement filed on June 15, 1999.
### Filed as an Exhibit to Amendment No. 1 to Horseshoe Gaming Holding
Corp's Form S-4 Registration Statement filed on July 30, 1999.
#### Filed as an Exhibit to Amendment No. 2 to Horseshoe Gaming Holding
Corp's Form S-4 Registration Statement filed on August 2, 1999.
++ Filed as an Exhibit to Amendment No. 3 to Horseshoe Gaming Holding
Corp's Form S-4 Registration Statement filed on August 10, 1999.
++++ Filed as an Exhibit to Horseshoe Gaming Holding Corp. Form 8-K on
December 16, 1999.
++++++ Filed herewith.
EXHIBIT 4.52
EMPRESS ENTERTAINMENT, INC., as Issuer,
THE GUARANTORS NAMED HEREIN
and
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
INDENTURE
Dated as of June 18, 1998
$150,000,000
8 1/8% Senior Subordinated Notes due 2006
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of June 18, 1998
Page
PARTIES....................................................................................................... 1
RECITALS OF THE COMPANY....................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.................................................. 2
Section 1.01. Definitions....................................................................... 2
Section 1.03. Rules of Construction............................................................. 23
Section 1.04. Form of Documents Delivered to Trustee............................................ 24
Section 1.05. Acts of Holders................................................................... 25
Section 1.06. Notices, etc., to the Trustee and the Company..................................... 26
Section 1.07. Notice to Holders; Waiver......................................................... 26
Section 1.08. Conflict with Trust Indenture Act................................................. 27
Section 1.09. Effect of Headings and Table of Contents.......................................... 27
Section 1.10. Successors and Assigns............................................................ 27
Section 1.11. Separability Clause............................................................... 27
Section 1.12. Benefits of Indenture............................................................. 27
Section 1.13. GOVERNING LAW..................................................................... 27
Section 1.14. No Recourse Against Others........................................................ 28
Section 1.15. Independence of Covenants......................................................... 28
Section 1.16. Exhibits and Schedules............................................................ 28
Section 1.17. Counterparts...................................................................... 28
Section 1.18. Duplicate Originals............................................................... 28
Section 1.19. Incorporation by Reference of TIA................................................. 28
ARTICLE TWO
SECURITY FORMS........................................................................................... 29
Section 2.01. Form and Dating................................................................... 29
Section 2.02. Execution and Authentication; Aggregate Principal Amount.......................... 30
Section 2.03. Restrictive Legends............................................................... 30
Section 2.04. Book-Entry Provisions for Global Notes............................................ 33
Section 2.05. Special Transfer Provisions....................................................... 34
ARTICLE THREE
THE NOTES................................................................................................ 36
Section 3.01. Title and Terms................................................................... 36
Section 3.02. Denominations..................................................................... 36
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Section 3.03. Temporary Notes................................................................... 37
Section 3.04. Registration; Registration of Transfer and Exchange............................... 37
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes....................................... 38
Section 3.06. Payment of Interest; Interest Rights Preserved.................................... 39
Section 3.07. Persons Deemed Owners............................................................. 40
Section 3.08. Cancellation...................................................................... 40
Section 3.09. Computation of Interest........................................................... 40
Section 3.10. Legal Holidays.................................................................... 41
Section 3.11. CUSIP Number...................................................................... 41
Section 3.12. Payment of Additional Interest Under Registration Rights Agreement................ 41
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE........................................................................ 41
Section 4.01. Defeasance........................................................................ 41
Section 4.02. Covenant Defeasance............................................................... 42
Section 4.03. Conditions to Defeasance or Covenant Defeasance................................... 42
Section 4.04. Deposited Money and U.S. Government Obligations To
Be Held in Trust, Etc............................................................. 43
Section 4.05. Reinstatement..................................................................... 44
Section 4.06. Repayment to Company.............................................................. 44
ARTICLE FIVE
REMEDIES................................................................................................. 45
Section 5.01. Events of Default................................................................. 45
Section 5.02. Acceleration of Maturity; Rescission and Annulment................................ 46
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Other Remedies........................................................... 47
Section 5.04. Trustee May File Proofs of Claims................................................. 47
Section 5.05. Trustee May Enforce Claims Without Possession of Notes............................ 48
Section 5.06. Application of Money Collected.................................................... 48
Section 5.07. Limitation on Suits............................................................... 49
Section 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest.............................................................. 49
Section 5.09. Restoration of Rights and Remedies................................................ 50
Section 5.10. Rights and Remedies Cumulative.................................................... 50
Section 5.11. Delay or Omission Not Waiver...................................................... 50
Section 5.12. Control by Majority............................................................... 50
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Section 5.13. Waiver of Past Defaults........................................................... 50
Section 5.14. Undertaking for Costs............................................................. 51
Section 5.15. Waiver of Stay, Extension or Usury Laws........................................... 51
ARTICLE SIX
THE TRUSTEE.............................................................................................. 52
Section 6.01. Certain Duties and Responsibilities............................................... 52
Section 6.02. Notice of Defaults................................................................ 53
Section 6.03. Certain Rights of Trustee......................................................... 53
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
Notes or Application of Proceeds Thereof.......................................... 54
Section 6.05. Trustee and Agents May Hold Notes; Collections; etc............................... 55
Section 6.06. Money Held in Trust............................................................... 55
Section 6.07. Compensation and Indemnification of Trustee and Its Prior Claim................... 55
Section 6.08. Conflicting Interests............................................................. 55
Section 6.09. Corporate Trustee Required; Eligibility........................................... 56
Section 6.10. Resignation and Removal; Appointment of Successor Trustee......................... 56
Section 6.11. Acceptance of Appointment by Successor............................................ 57
Section 6.12. Successor Trustee by Merger, etc.................................................. 58
Section 6.13. Preferential Collection of Claims Against Issuers................................. 58
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY........................................................ 59
Section 7.01. Preservation of Information; Company To Furnish
Trustee Names and Addresses of Holders............................................ 59
Section 7.02. Communications of Holders......................................................... 59
Section 7.03. Reports by Trustee................................................................ 59
Section 7.04. Reports by Company and Each Guarantor............................................. 60
ARTICLE EIGHT
SUCCESSOR CORPORATION.................................................................................... 60
Section 8.01. When Company May Merge, etc....................................................... 60
Section 8.02. Successor Substituted............................................................. 61
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................................................... 62
Section 9.01. Without Consent of Holders........................................................ 62
Section 9.02. With Consent of Holders........................................................... 62
Section 9.03. Compliance with Trust Indenture Act............................................... 63
Section 9.04. Effect of Supplemental Indentures................................................. 64
Section 9.05. Revocation and Effect of Consents................................................. 64
Section 9.06. Notation on or Exchange of Notes.................................................. 64
Section 9.07. Trustee May Sign Amendments, etc.................................................. 65
ARTICLE TEN
COVENANTS................................................................................................ 65
Section 10.01. Payment of Principal, Premium and Interest........................................ 65
Section 10.02. Maintenance of Office or Agency................................................... 65
Section 10.03. Money for Note Payments To Be Held in Trust....................................... 66
Section 10.04. Existence......................................................................... 67
Section 10.05. Payment of Taxes and Other Claims................................................. 67
Section 10.06. Insurance......................................................................... 67
Section 10.07. Compliance Certificate............................................................ 68
Section 10.08. Reporting Requirements............................................................ 68
Section 10.09. Limitation on Guarantees by Restricted Subsidiaries............................... 68
Section 10.10. Limitation on Incurrence of Indebtedness and Preferred Stock...................... 69
Section 10.11. Limitation on Restricted Payments................................................. 71
Section 10.12. Limitation on Transactions with Affiliates........................................ 72
Section 10.13. Limitation on Sale of Assets and Subsidiary Stock; Event of Loss.................. 73
Section 10.14. Change of Control................................................................. 75
Section 10.15. Limitation on Liens............................................................... 78
Section 10.16. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries................................................. 78
Section 10.17. Restrictions on Sale of Capital Stock of Restricted Subsidiaries.................. 78
Section 10.18. Limitation on Designations of Unrestricted Subsidiaries........................... 79
Section 10.19. Limitation on Other Senior Subordinated Indebtedness.............................. 80
Section 10.20. Limitation on Lines of Business................................................... 80
Section 10.21. Limitation on Status as Investment Company........................................ 80
ARTICLE ELEVEN
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REDEMPTION OF NOTES...................................................................................... 80
Section 11.01. Optional and Special Redemption................................................... 80
Section 11.02. Required Regulatory Redemption.................................................... 81
Section 11.03. Applicability of Article.......................................................... 81
Section 11.04. Election To Redeem; Notice to Trustee............................................. 82
Section 11.05. Selection of Notes To Be Redeemed................................................. 82
Section 11.06. Notice of Redemption.............................................................. 82
Section 11.07. Deposit of Redemption Price....................................................... 83
Section 11.08. Notes Payable on Redemption Date.................................................. 83
Section 11.09. Notes Redeemed or Purchased in Part............................................... 84
ARTICLE TWELVE
SATISFACTION AND DISCHARGE............................................................................... 84
Section 12.01. Satisfaction and Discharge of Indenture........................................... 84
Section 12.02. Application of Trust Money........................................................ 85
ARTICLE THIRTEEN
GUARANTEE OF NOTES....................................................................................... 85
Section 13.01. Guarantee......................................................................... 85
Section 13.02. Execution and Delivery of Guarantee............................................... 87
Section 13.03. Additional Guarantors............................................................. 87
Section 13.04. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness............................................................... 88
Section 13.05. Release of a Guarantor............................................................ 88
Section 13.06. Waiver of Subrogation............................................................. 89
ARTICLE FOURTEEN
SUBORDINATION OF NOTES AND GUARANTEES.................................................................... 89
Section 14.01. Notes Subordinate to Senior Indebtedness; Guarantee
Obligations Subordinated to Guarantor Senior Indebtedness......................... 89
Section 14.02. Payment Over of Proceeds upon Dissolution, etc.................................... 90
Section 14.03. Suspension of Payment When Designated Senior
Indebtedness is in Default; Suspension of Guarantee Obligations
When Guarantor Senior Indebtedness in Default..................................... 91
Section 14.04. Trustee's Relation to Senior Indebtedness and Guarantor
Senior Indebtedness............................................................... 93
Section 14.05. Subrogation....................................................................... 93
Section 14.06. Provisions Solely To Define Relative Rights....................................... 94
Section 14.07. Trustee To Effectuate Subordination............................................... 94
Section 14.08. N o Waiver of Subordination Provisions............................................. 95
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Section 14.09. Notice to Trustee................................................................. 95
Section 14.10. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 96
Section 14.11. Rights of Trustee as a Holder of Senior Indebtedness or
Guarantor Senior Indebtedness; Preservation of Trustee's Rights................... 97
Section 14.12. Article Applicable to Paying Agents............................................... 97
Section 14.13. No Suspension of Remedies......................................................... 97
TESTIMONIUM...................................................................................................
SIGNATURES....................................................................................................
Exhibit A Form of Initial Note................................................................................ A-1
Exhibit B Form of Exchange Note............................................................................... B-1
Exhibit C Form of Certificate To Be Delivered in Connection with
Subsequent Transfers to Non-QIB Accredited Investors................................................ C-1
Exhibit D Form of Certificate To be Delivered in Connection with Transfers
Pursuant to Regulation S............................................................................ D-1
Exhibit E Form of Guarantee................................................................................... E-1
vi
INDENTURE, dated as of June 18, 1998, among EMPRESS ENTERTAINMENT,
INC., a corporation incorporated under the laws of the State of Delaware (the
"Company"), as issuer; Empress Casino Joliet Corporation, a corporation
incorporated under the laws of the State of Illinois, Empress River Casino
Finance Corporation, a corporation incorporated under the laws of the State of
Delaware, Empress Casino Hammond Corporation, a corporation incorporated under
the laws of the State of Indiana, and Hammond Residential, L.L.C., a limited
liability company organized under the laws of the State of Indiana, each as a
Guarantor; and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking
corporation, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the issuance of $150,000,000 aggregate
principal amount of 8 1/8% Senior Subordinated Notes due 2006 (the "Initial
Notes"), and the issuance of 8 1/8% Senior Subordinated Notes due 2006, to be
exchanged for the Initial Notes, including the Exchange Securities and the
Private Exchange Securities contemplated by the Registration Rights Agreement
(as defined herein) (the "Exchange Notes" and, together with the Initial Notes,
the "Notes");
Each of the Guarantors has agreed to guarantee, jointly, severally and
unconditionally, the Notes.
Upon the effectiveness of the Exchange Offer Registration Statement or
the Shelf Registration Statement (each as defined herein), this Indenture will
be subject to, and shall be governed by, the provisions of the Trust Indenture
Act (as defined herein) that are required to be part of and to govern indentures
qualified under the Trust Indenture Act; and
All acts and things necessary have been done to make (i) the Notes,
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company and (ii) this Indenture a valid
agreement of the Company in accordance with the terms of this Indenture.
NOW, THEREFOR, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders (as defined herein) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Notes, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.0. Definitions.
"Acquired Indebtedness" with respect to the Company means Indebtedness
of another person existing at the time such person becomes a Restricted
Subsidiary or is merged or consolidated into or with the Company or one of its
Restricted Subsidiaries, and not incurred in connection with or in anticipation
of, such merger or consolidation or of such person becoming a Restricted
Subsidiary.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Adjusted Consolidated Net Income" means Consolidated Net Income,
minus 100% of the amount of any writedowns, writeoffs, or negative extraordinary
charges not otherwise reflected in Consolidated Net Income during such period.
"Affiliate" means, (i) any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any of the Restricted Subsidiaries; (ii) with respect to the Company and any
Restricted Subsidiary, so long as the Company is an S Corporation, any director
or stockholder of the Company or such Restricted Subsidiary; (iii) any spouse,
immediate family member, or other relative who has the same principal residence
of any person described in clauses (i) or (ii) above; and (iv) any trust in
which any person described in clauses (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means (a) the
power to direct the management and policies of a person, directly or through one
or more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise; or (b) the beneficial ownership of 10% or more of any
class of voting Capital Stock of a person (on a fully diluted basis) or of
warrants or other rights to acquire such class of Capital Stock (whether or not
presently exercisable).
"Affiliate Transaction" has the meaning set forth under Section 10.12.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any person other than the
Company or a Restricted Subsidiary, in one or a series of related transactions,
of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially
all of the assets of any division or line of business of the Company or any
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" will not include (a) any sale
of the Capital Stock of an Unrestricted Subsidiary or any other person (other
than a Restricted Subsidiary) in which the Company or any Restricted Subsidiary
has an ownership interest or any merger or consolidation involving only an
Unrestricted Subsidiary or any other person (other than a Restricted Subsidiary)
in which the
2
Company or any Restricted Subsidiary has an ownership interest or any sale,
issuance, conveyance, transfer, lease or other disposition of properties or
assets governed by the provisions described in Article Eight; (b) sales of
property or equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any sale, conveyance,
transfer, lease or other disposition of any property or asset either (i) in the
ordinary course of business and consistent with past practice or (ii) whether in
one transaction or a series of related transactions, involving assets with a
fair market value not in excess of $2.0 million; (d) the sale of the Company's
airplane owned on the Issue Date; or (e) the sale, transfer, lease, conveyance
or other disposition of all or any portion of a parcel of real estate located in
Joliet, Illinois owned by the Company and its Restricted Subsidiaries, comprised
of approximately 350 acres, the legal description of which is set forth on
Exhibit F attached hereto (the "Joliet Real Estate").
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal (or redemption) payment of such security or
instrument and multiplied by the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bank Indebtedness" means any and all amounts payable from time to
time under or in respect of the Credit Facility, including principal, premium
(if any), interest, (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such a proceeding), fees,
charges, expenses, reimbursement obligations, guarantees, indemnities and all
other amounts and other liabilities payable thereunder or in respect thereof.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States Federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors, or any amendment to, succession to or change in any such law.
"Beneficial Owner" for purposes of the definition of Change of Control
has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange
Act, 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, with respect to any person, the board of
directors, management committee or similar governing body or any authorized
committee thereof responsible for the management of the business and affairs of
such person.
"Board Resolution" means, with respect to any person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such person
to have been duly adopted by the Board of Directors of such person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
3
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York,
are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) required to be classified and accounted for as a capital
lease obligation under GAAP, and, for the purpose of the Indenture, the amount
of such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP consistently applied.
"Cash Equivalent" means (i) any evidence of Indebtedness with a
maturity of not more than one year 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); (ii) time deposits and certificates of deposit and
commercial paper or bankers' acceptances with a maturity of not more than one
year of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of not more than one year
issued by a corporation that is not an Affiliate of the Company organized under
the laws of any state of the U.S. or the District of Columbia and rated at least
A-1 by Standard & Poor's Rating Services, a division of the McGraw Hill
Companies, Inc. or at least P-1 by Moody's Investors Service, Inc.; and (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i) and (ii) above entered into
with any financial institution meeting the qualifications specified in clause
(ii) above.
"Casino" means a gaming establishment owned by the Company or a
Restricted Subsidiary, and containing at least 200 slot machines or at least 15
gaining tables, or containing at least 10,000 square feet dedicated to the
operation of games of chance, and any hotel, building, restaurant, theater,
parking facilities, retail shops, land, equipment and other property or asset
directly ancillary thereto or used in connection therewith.
"Change of Control" means (i) any merger or consolidation of, or any
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, the Company in each case on a consolidated
basis, in one transaction or a series of related transactions, if, immediately
after giving effect to such transaction, 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 Excluded Persons or entities of which a majority
of voting power is owned by such Excluded Persons, is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the aggregate voting power
normally entitled to vote in the election of directors of the transferee; (ii)
the time that 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
4
Excluded Persons or entities of which a majority of voting power is owned by
such Excluded Persons, is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the aggregate voting power of all classes of
Capital Stock then outstanding of the Company normally entitled to vote in
elections of directors; or (iii) 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 or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of the assets of the Company and its Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another person or group may be
uncertain.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" or "SEC" means the Securities and Exchange Commission, as
from time to time constituted, or if at any time after the execution of this
Indenture such Commission is not existing and performing the applicable duties
now assigned to it, then the body or bodies performing such duties at such time.
"Company" means Empress Entertainment, Inc., a Delaware corporation,
unless and until a successor replaces it in accordance with this Indenture, and
thereafter means such Surviving Person.
"Company Request" or "Company Order" means a written request or order
of the Company signed in the name of the Company by an Officer of the Company.
"Consolidated Depreciation and Amortization Expense" means, for any
period, the total amount of depreciation and amortization expense and other non-
cash expenses (excluding any non-cash expense that represents an accrual,
reserve or amortization of a cash expenditure for a past, present or future
period) for the Company and its Restricted Subsidiaries (but excluding its
Unrestricted Subsidiaries or other persons other than its Restricted
Subsidiaries, even though such amounts may be included in a consolidated
calculation in accordance with GAAP) for such period on a consolidated basis as
defined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period adjusted to add thereto (to the extent deducted from net
revenues in determining
5
Consolidated Net Income), without duplication, the sum of (i) Consolidated
Income Tax Expense; (ii) Consolidated Depreciation and Amortization Expense; and
(iii) Consolidated Fixed Charges.
"Consolidated Fixed Charge Coverage Ratio" on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA attributable to continuing
operations and businesses (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of) for the Reference Period to
(b) the aggregate Consolidated Fixed Charges (exclusive of amounts attributable
to operations and businesses permanently discontinued or disposed of, but only
to the extent that the obligations giving rise to such Consolidated Fixed
Charges would no longer be obligations contributing to Consolidated Fixed
Charges subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation: (i) Acquisitions or Assets
Sales (or transactions which would constitute Asset Sales but for the exclusions
set forth in clause (a), and in the last sentence, of the definition of "Asset
Sales") which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period; (ii) transactions giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio shall
be assumed to have occurred on the first day of the Reference Period; (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
prior to the relevant Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of such Reference Period; and (iv) the
Consolidated Fixed Charges attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the average rate in
effect from the beginning of the Reference Period to the relevant Transaction
Date had been the applicable rate for the entire period, unless such person or
any of its Subsidiaries is a party to an Interest Swap Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Consolidated Fixed Charges" means, for any period, the aggregate
amount (without duplication) of (a) interest expensed or capitalized, paid,
accrued, or scheduled to be paid or accrued in accordance with GAAP (including,
in accordance with the following sentence, interest attributable to Capitalized
Lease Obligations) during such period in respect of all of Indebtedness of the
Company and its Restricted Subsidiaries (but excluding its Unrestricted
Subsidiaries or other persons other than its Restricted Subsidiaries, even
though such amounts may be included in a consolidated calculation in accordance
with GAAP), including (i) original issue discount and non-cash interest payments
or accruals on any Indebtedness; (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP; and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptance financings and currency and Interest Swap Obligations, in each case
to the extent attributable to such period and determined on a consolidated basis
in accordance with GAAP; (b) one-third of the rental expense for such period
attributable to operating leases of the Company and its Restricted Subsidiaries;
and (c) the amount of dividends paid or payable by the Company or any
6
of its Restricted Subsidiaries in respect of Disqualified Capital Stock (other
than by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by such person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP; (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Restricted Subsidiary of such person of an obligation of another person shall be
deemed to be the interest expense attributable to the Indebtedness guaranteed;
and (z) any interest expense or premium for the period from and after the Issue
Date relating to the 10 3/4% Notes shall be excluded from Consolidated Fixed
Charges.
"Consolidated Income Tax Expense" means, for any period, the provision
for Federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries (but excluding its Unrestricted Subsidiaries or other
persons other than its Restricted Subsidiaries, even though such amounts may be
included in a consolidated calculation in accordance with GAAP), for such period
as determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period, the net
income (or loss) of the Company and its Restricted Subsidiaries (but excluding
Unrestricted Subsidiaries or other persons other than its Restricted
Subsidiaries, even though such amounts may be included in a consolidated
calculation in accordance with GAAP), determined on a consolidated basis in
accordance with GAAP, for such period, adjusted to exclude (only to the extent
included in computing such net income (or loss) and without duplication): (a)
all gains which are extraordinary (as determined in accordance with GAAP) or are
either unusual or nonrecurring (including, without limitation, any gain from the
sale or other disposition of assets outside the ordinary course of business or
from the sale of any Capital Stock, but gains from the sale of Capital Stock of
Unrestricted Subsidiaries (or other persons other than Restricted Subsidiaries)
or a merger or consolidation involving Unrestricted Subsidiaries (or other
persons other than Restricted Subsidiaries) shall be included in the calculation
of net income); (b) the portion of net income, if positive, of any Restricted
Subsidiary allocable to minority interests therein, except to the extent of the
amount of any dividends or distributions actually paid in cash to the Company or
a Restricted Subsidiary; (c) the net income, if positive, of any person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (d) any interest expense or premium for the period from and
after the Issue Date relating to the 10 3/4% Notes, and any interest income
relating to securities deposited in connection with the covenant defeasance
thereof.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 180 E. Fifth Street, St. Paul, Minnesota 55101; attention: Corporate Trust
Administration.
"Credit Agreement" means the Credit Agreement to be dated as of June
17, 1998 among the Company, certain of the Company's Subsidiaries, the lenders
named therein, Wells Fargo Bank, National Association, and Wells Fargo Bank, as
in effect on the Issue Date, and as such agreement may be amended, renewed,
extended, substituted, refinanced, replaced,
7
supplemented or otherwise modified from time to time, and includes (a) related
notes, guarantees and other agreements executed in connection therewith and (b)
any agreement (i) extending the maturity of all or any portion of the
Indebtedness thereunder, (ii) adding additional borrowers or guarantors
thereunder and (iii) increasing the amount to be borrowed thereunder; provided,
however, that in the case of clauses (i), (ii) and (iii), any such agreement is
not prohibited by this Indenture.
"Credit Facility" means the $100.0 million revolving line of credit,
including a subfacility for the issuance of standby and documentary letters of
credit, established pursuant to the Credit Agreement.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"Currency Agreement Obligations" means the obligations of any person
under a foreign exchange contract, currency swap agreement or other similar
agreement or arrangement to protect such person against fluctuations in currency
values.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, or such other
depositary as the Company may appoint as a successor thereto.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness
outstanding under the Credit Facility and (b) any other Senior Indebtedness in a
principal amount of at least $10 million outstanding which, at the time of
determination, is specifically designated in the instrument governing such
Senior Indebtedness as "Designated Senior Indebtedness" by the Company.
"Designation" has the meaning set forth in Section 10.18.
"Designation Amount" has the meaning set forth in Section 10.18.
"Disqualified Capital Stock" means (a) except as set forth in (b),
with respect to any person, Capital Stock of such person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes; and (b) with respect to any
Subsidiary of such person, any Capital Stock.
"Dollars" or "$" means lawful money of the United States of America.
"Equity Offering" has the meaning set forth in Section 11.01.
8
"Event of Default" has the meaning set forth in Section 5.01.
"Event of Loss" means, with respect to any property or asset, any
loss, destruction or damage of such property or asset or any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
any property or asset, or confiscation or requisition of the use of such
property or asset.
"Event of Loss Amount" has the meaning setforth in Section 10.13.
"Excess Proceeds" has the meaning set forth in Section 10.13.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Notes" has the meaning set forth in the preamble hereto.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Exchange Securities" has the meaning set forth in the Registration
Rights Agreement.
"Excluded Persons" means, collectively, the existing stockholders of
the Company as of the Issue Date and any of their respective estates, spouses,
heirs, ancestors, lineal descendants, legatees, and legal representatives and
the trustee of any bona fide trust of which one or more of the foregoing are the
sole beneficiaries.
"Existing Indebtedness" means Indebtedness outstanding on the date of
the Indenture.
"Facility" means one or more Casinos and related facilities operated
by the Company or any of its Restricted Subsidiaries that are located within a
ten-mile radius of one another.
"Fair Market Value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction. Fair Market Value shall be determined
by the Board of Directors of the Company acting in good faith evidenced by a
board resolution thereof delivered to the Trustee.
"FF&E Indebtedness" means Indebtedness which is secured by a Lien upon
any tangible personal property acquired after the Issue Date, constituting
operating assets, which are financed, purchased or leased for the purpose of
engaging in or developing a Related Business.
9
"GAAP" means U.S. generally accepted accounting principles as in
effect on the Issue Date.
"Gaming Authority" means any Governmental Authority with appropriate
jurisdiction and authority relating to a Gaming License.
"Gaming Jurisdiction" means any foreign, Federal, state or local
jurisdiction in which the Company, any Restricted Subsidiary or any of their
respective Subsidiaries has a direct or indirect beneficial, legal or voting
interest in an entity that conducts casino gaming.
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities, including the Illinois Riverboat Act and the Indiana
Riverboat Act, any administrative rules or regulations promulgated thereunder,
and any of the corresponding statutes, rules, and regulations in each Gaming
Jurisdiction.
"Gaming Licenses" means every license, franchise or other
authorization on the Issue Date or thereafter required to own, lease, operate or
otherwise conduct riverboat, dockside or land-based gaming in any Gaming
Jurisdiction, and any applicable liquor licenses.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the U.S. or a 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.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantors" means all existing Restricted Subsidiaries of the Company
and all future Restricted Subsidiaries of the Company.
"Guarantor Senior Indebtedness" means, with respect to the
Indebtedness of any Guarantor, any such Indebtedness represented by a guarantee
by such Guarantor of any Senior Indebtedness or any Senior Indebtedness of any
such Guarantor.
"Holder" or "Noteholder" means a person in whose name a Note is
registered in the Note Register.
"incur" has the meaning set forth in Section 10.10 and "incurrence,"
"incurred" and "incurring" shall have the meanings correlative to the foregoing.
10
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, with respect to any
person, (i) in respect of borrowed money (whether or not 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 (other than surety or performance bonds),
notes, debentures or similar instruments; (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
such as would constitute trade payables to trade creditors in the ordinary
course of business that are not more than 90 days past their original due date
or are being contested in good faith; (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks; (v) for the payment of money
relating to a Capitalized Lease Obligation; or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to any letter
of credit; (b) all net obligations of such person under Interest Swap
Obligations and foreign currency hedges; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such person has
guaranteed or that is otherwise its legal liability; (d) all obligations to
purchase, redeem or acquire any Capital Stock; (e) all obligations secured by a
Lien, to which the property or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of such person
are subject, whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be such person's legal liability, provided, that
the amount of such obligations shall be limited to the lesser of the fair market
value of the assets or property to which such Lien attaches and the amount of
the obligation so secured; and (f) any and all deferrals, renewals, extensions,
refinancings and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b), (c), (d) or (e), or this clause (f), whether or
not between or among the same parties.
"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Wasserstein Perella Securities, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated due date of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any person
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such person
to such other person calculated by applying a fixed or a floating rate of
interest on the same notional amount or any other arrangement involving payments
by or to such other person based upon fluctuations in interest rates.
11
"Investment" by any person in any other person means (without
duplication) (a) the acquisition by such person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities, including any
options or warrants, of such other person or any agreement to make any such
acquisition; (b) the making by such person of any deposit with, or advance, loan
or other extension of credit to, such other person (including the purchase of
property from another person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other person) or any
commitment to make any such advance, loan or extension (but excluding accounts
receivable arising in the ordinary course of business that are not more than 30
days past their original due date); (c) other than the Subsidiary Guarantees,
the entering into by such person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other person; or (d) the making of any capital contribution by such person to
such other person.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Joliet Real Estate" shall have the meaning given to such term in the
definition of "Asset Sale" set forth above.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Cash Proceeds" means the aggregate amount of U.S. Legal Tender or
Cash Equivalents received by the Company or a Restricted Subsidiary in the case
of a sale of Qualified Capital Stock and by the Company or a Restricted
Subsidiary in respect of an Asset Sale, less, in each case, the sum of all fees,
commissions and other (in the case of an Asset Sale, reasonable and customary)
expenses incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by the Company or such Restricted
Subsidiary) of income, franchise, sales and other applicable taxes required to
be paid by the Company or such Restricted Subsidiary in connection with such
Asset Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market
value of property (valued at the fair market value thereof at the time of
receipt in good faith by the Board of Directors of the Company or the applicable
Restricted Subsidiary), other than securities of the Company or a Restricted
Subsidiary, received by the Company or a Restricted Subsidiary after payment of
expenses, commissions, discounts and the like incurred in connection therewith.
"Non-Recourse Indebtedness" means Indebtedness of a person to the
extent that under the terms thereof or any other document, instrument or filing
no personal recourse shall be had against such person for the payment of the
principal of, premium, if any, or interest on, such Indebtedness, and
enforcement of obligations on such Indebtedness is limited only to recourse
12
against interests in property and assets purchased with the proceeds of the
incurrence of such Indebtedness and as to which none of the Company or any
Restricted Subsidiary provides any credit support or is directly or indirectly
liable. Indebtedness shall not lose is characterization as Non-Recourse
Indebtedness solely as a result of a person being personally liable for losses
caused by misappropriation, fraud or wilful breaches of representations and
warranties.
"Non-payment Default" means, for purposes of Article Fourteen hereof,
any default (other than a Payment Default) with respect to any Designated Senior
Indebtedness of the Company or any Guarantor pursuant to which the maturity
thereof may be accelerated.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Note Guarantee" means a guarantee by a Guarantor, if any, of the
Notes and the Company's obligations under this Indenture.
"Notes" has the meaning set forth in the preamble hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase" means any Change of Control Offer or Asset Sale
Offer.
"Offer to Purchase Price" means any Change of Control Purchase Price
or Asset Sale Offer Price.
"Offering" shall have the meaning set forth in the Offering
Memorandum.
"Offering Memorandum" means the offering memorandum dated as of June
11, 1998 relating to the Offering and sale of the Notes.
"Officer" means, with respect to any person, the Chairman, President,
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
General Counsel, any Vice President, Treasurer or Secretary, or any other
officer designated by the Board of Directors serving in a similar capacity.
"Officer's Certificate" means, with respect to the Company or any
Restricted Subsidiary, a certificate signed by two Officers of the Company or
such Restricted Subsidiary and otherwise complying with the requirements of the
Indenture.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel to the Company or a Restricted Subsidiary, and who shall
be reasonably acceptable to the Trustee.
13
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company or any Affiliate thereof) in trust
for the Holders of such Notes; provided, however, that if such Notes are to
be redeemed, notice of such redemption has been duly and irrevocably given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Notes with respect to which the Company has effected defeasance
or covenant defeasance as provided in Article Four, to the extent provided
in Sections 4.02 and 4.03; and
(iv) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Notes are held by a bona fide purchaser
in whose hands the Notes are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor under the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor under the Notes or any Affiliate
of the Company or such other obligor.
"Paying Agent" means any person authorized by the Company to pay the
principal, premium, if any, or interest on any Notes on behalf of the Company.
"Payment Blockage Period" shall have the meaning set forth in Section
14.03.
"Payment Default" means any default in the payment when due (whether
Stated Maturity, by acceleration or otherwise) of principal or interest on, or
of unreimbursed amounts under drawn letters of credit or fees relating to
letters of credit constituting, any Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, of the Company or any Guarantor.
"Permitted Indebtedness" has the meaning set forth in Section 10.10.
14
"Permitted Investments" means the aggregate of (a) any Investment in
the Company or in any Restricted Subsidiary; (b) any Investment in Cash
Equivalents or purchases by the Company or any Restricted Subsidiary of any of
the Notes in open market purchase transactions; (c) any Investment by the
Company or any Restricted Subsidiary in a person, if as a result of such
Investment (i) such person becomes a Restricted Subsidiary of the Company that
is engaged in a Related Business, or (ii) such person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary that is
engaged in a Related Business; (d) any Restricted Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 10.13; (e) any acquisition of assets solely in
exchange for the issuance of Qualified Capital Stock of the Company or its
Restricted Subsidiaries; (f) any Investment of the Joliet Real Estate or
proceeds from the sale of the Joliet Real Estate; and (g) Investments, the
aggregate fair market value of which (measured on the date each such Investment
was made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (g) that are at
the time outstanding, do not exceed $50.0 million.
"Permitted Liens" means any of the following:
(a) Liens existing on the date of the Indenture;
(b) Liens securing Obligations of the Company or any of the
Restricted Subsidiaries under any Senior Indebtedness permitted to be
incurred under the Indenture, including, without limitation, Liens to
be incurred under the Credit Agreement;
(c) Liens to secure Obligations of the Company or any of its
Restricted Subsidiaries under any FF&E Indebtedness permitted to be
incurred pursuant to clause (b)(v) of Section 10.10 that do not exceed
$7.5 million at any one time outstanding per Facility;
(d) Liens to secure Obligations of the Company or any of its
Restricted Subsidiaries under any Purchase Money Indebtedness or Non-
Recourse Indebtedness permitted to be incurred pursuant to clause
(b)(iv) of Section 10.10 in an amount not to exceed $7.5 million in
the aggregate at any one time outstanding;
(e) Liens to secure Obligations of the Company or any of the
Restricted Subsidiaries under any Refinancing Indebtedness incurred to
refinance any Indebtedness referred to in the foregoing clauses (a)
through (d), provided that (i) the Indebtedness to be refinanced was
secured and (ii) the Lien does not extend beyond the amount of
Indebtedness to be refinanced;
(f) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by
appropriate proceedings by the Company or the applicable Restricted
Subsidiary if adequate reserves with
15
respect thereto are maintained on the books of the Company or such
Restricted Subsidiary, as applicable, in accordance with GAAP;
(g) statutory Liens of carriers, warehousemen, mechanics,
landlords, materialmen, repairmen or other like Liens arising by
operation of law in the ordinary course of business and consistent
with industry practices and Liens on deposits made to obtain the
release of such Liens if (i) the underlying obligations are not
overdue; or (ii) such Liens are being contested in good faith and by
appropriate proceedings by the Company or the applicable Restricted
Subsidiary and adequate reserves with respect thereto are maintained
on the books of the Company or such Restricted Subsidiary, as the case
may be, in accordance with GAAP;
(h) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary
course of business and consistent with industry practices which, in
the aggregate, are not substantial in amount, and which 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 Restricted Subsidiary)
or interfere with the ordinary conduct of the business of the Company
or a Restricted Subsidiary; provided, that any such Liens are not
incurred in connection with any borrowing of money or any commitment
to loan any money or to extend any credit; and
(i) Liens created by the Indenture.
"person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any person, Capital Stock of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over Capital
Stock of any other class of such person.
"Private Exchange Securities" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Initial Notes in the form set forth in Section 2.03.
"Purchase Money Indebtedness" means any Non-recourse Indebtedness of
such person owed to any seller or other person which is incurred to finance the
acquisition of any real or personal tangible property of a Related Business
within 90 days of such acquisition.
"Qualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary that is not Disqualified Capital Stock.
16
"Qualified Exchange" means any defeasance, redemption, repurchase or
other acquisition of Capital Stock or Indebtedness of a Guarantor with the Net
Proceeds received by such Guarantor from the substantially concurrent sale of
Qualified Capital Stock of such Guarantor or in exchange for Qualified Capital
Stock of such Guarantor.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Redeemable Capital Stock" means any class or series of Capital Stock
to the extent that, either by its terms, by the terms of any security into which
it is convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed 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 Stated Maturity, or is convertible into
or exchangeable for debt securities at any time prior to such Stated Maturity.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to the Indenture and the form
of Note included therein.
"Redemption Price" means, with respect to any Note to be redeemed, the
price at which it is to be redeemed pursuant to this Indenture and the terms of
the Notes.
"Reference Period" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) ended immediately preceding the relevant date upon which such
determination is to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part; or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock of such person in a principal amount
or, in the case of Disqualified Capital Stock, liquidation preference, not to
exceed (after deduction of reasonable and customary fees and expenses incurred
in connection with the Refinancing) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing; provided, that (A) Refinancing Indebtedness of any Restricted
Subsidiary shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary; (B) Refinancing
Indebtedness shall not have an Average Life less than that of the Indebtedness
or Disqualified Capital Stock to be so refinanced at the time of such
refinancing; (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption payment) scheduled to come due earlier than the
scheduled maturity of any installment of principal of the Indebtedness (or
Disqualified Capital Stock) to be so refinanced which was scheduled to come
17
due on or prior to the Stated Maturity; and (D) if the Indebtedness or
Disqualified Capital Stock to be so refinanced was subordinate or junior in
right of payment to the Guarantee, then the Refinancing Indebtedness shall be so
subordinate or junior in right of payment to such Guarantee to an extent no less
favorable in respect thereof to the Holders.
"Registration Rights Agreement" means the Registration Rights
Agreement dated on or about the Issue Date between the Company and the Initial
Purchasers for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in the
Notes.
"Regulation S" means Regulation S under the Securities Act.
"Related Business" means the gaming business conducted (or proposed to
be conducted) by the Company, its Restricted Subsidiaries and their respective
Subsidiaries as of the Issue Date and any and all related businesses in support
of, ancillary to or attracting visitors to the gaming business of the Company,
its Restricted Subsidiaries and their respective Subsidiaries and additionally
expressly includes any riverboat, dockside or land-based gaming or horse racing
businesses or any business mandated by a Gaming Authority in order to obtain or
retain a Gaming License.
"Required Regulatory Redemption" shall have the meaning set for under
Section 11.02.
"Responsible Officer" means, with respect to the Trustee, the chairman
or vice chairman of the board of directors, the chairman or vice chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller and any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than Investments in Cash Equivalents;
provided, that a Restricted Investment shall not include (i) the extension of
credit to customers of Casinos consistent with industry practice in the ordinary
course of business; and (ii) a guaranty by a Guarantor of Indebtedness incurred
by another Guarantor or the Company in accordance with the covenant in Section
10.10.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Capital Stock of such person or any Restricted Subsidiary of such person; (b)
any payment on account of the purchase, redemption or other acquisition or
retirement for value of Capital Stock of such person or any Restricted
18
Subsidiary of any such person; (c) any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms or any defeasance of, any subordinated Indebtedness, directly or
indirectly, by such person or a Restricted Subsidiary of such person prior to
the scheduled maturity, and scheduled repayment of principal or scheduled
sinking fund payment, as the case may be, of such Indebtedness; and (d) any
Restricted Investment by such person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Capital Stock of an issuer to the extent payable
solely in shares of Qualified Capital Stock of such issuer; and (ii) any
Investment in the Company or any of the Restricted Subsidiaries by any of their
respective Subsidiaries.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to receive, at its request, and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been Designated by the Board of Directors of the Company, by a Board
Resolution delivered to the Trustee, as an Unrestricted Subsidiary pursuant to
and in compliance with the covenant described in Section 10.18. Except in the
case of the Guarantors that existed as of the Issue Date, any such Designation
may be Revoked by a Board Resolution of the Board of Directors of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"Revocation" has the meaning set forth in Section 10.18.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Commission thereunder.
"Senior Indebtedness" means (i) the Bank Indebtedness, and (ii) the
principal of, premium, if any, and interest on any Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Indebtedness of the Company. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include, to the extent constituting
Indebtedness, (i) Indebtedness evidenced by the Notes, (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
Indebtedness for goods, materials or services purchased in the ordinary course
of business or Indebtedness consisting of trade payables or other current
liabilities (other than any current liabilities owing under the Credit Facility
or the current portion of any long-term Indebtedness which would constitute
Senior Indebtedness but for the operation of this clause (v)), (vi) Indebtedness
of or amounts owed by the Company for compensation to employees or for services
rendered to the Company, (vii)
19
Indebtedness of or amounts owed by the Company or a Restricted Subsidiary to the
Company or another Restricted Subsidiary, (viii) any liability for Federal,
state, local or other taxes owed or owing by the Company, (ix) Indebtedness of
the Company to any other Subsidiary of the Company and (x) that portion of any
Indebtedness which at the time of issuance is issued in violation of the
Indenture.
"Senior Representative" means the representative or representatives
designated in writing to the Trustee of the holders of any class or issue of
Designated Senior Indebtedness; provided that, in the absence of a
representative of the type described above, any holder or holders of a majority
of the principal amount outstanding of any class or issue of Designated Senior
Indebtedness may collectively act as Senior Representative for such class or
issue.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary (i) the
assets of which (after intercompany eliminations) exceed 10% of the assets of
the Company and its Restricted Subsidiaries, considered as a whole, or (ii) the
Consolidated Net Income of which (before income taxes and extraordinary items)
exceeds 10% of the Consolidated Net Income of the Company and its Restricted
Subsidiaries, considered as a whole, or (iii) that holds a Gaming License with
respect to any Casino, if the Facility of which the Casino is a part (were such
facility operated by a single Restricted Subsidiary) would be a Significant
Subsidiary as set forth in (i) or (ii) above.
"Special Record Date" means the Special Record Date specified in the
Notes.
"Stated Maturity," when used with respect to any Note, means July 1,
2006.
"Subordinated Indebtedness" means Indebtedness of a Restricted
Subsidiary that is subordinated in right of payment to the Subsidiary Guaranty
of such Restricted Subsidiary to any extent.
"Subsidiary," with respect to any person, means (i) a corporation at
least a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof, has at least a majority ownership
interest.
"Surviving Person" means, with respect to any person involved in any
consolidation or merger, or any sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of its properties and assets as an
entirety, the person formed by or surviving such merger or consolidation or the
person to which such sale, assignment, conveyance, transfer or lease is made.
20
"Tax Amounts" with respect to any year means an amount equal to (a)
the higher of (i) the product of (A) the taxable income of the Company for such
year as determined in good faith by its Board of Directors; and (B) the Tax
Percentage (as defined); and (ii) the product of (A) the alternative minimum
taxable income attributable to the Company for such year as determined in good
faith by its Board of Directors; and (B) the Tax Percentage, plus (b) any
deficiencies, penalties or interest payable by the Company's stockholders solely
as a result of the taxable income of the Company, less (c) to the extent not
previously taken into account, any income tax benefit attributable to the
Company which could be realized by the Company's stockholders in the current or
a prior taxable year (including, without limitation, tax losses, alternative
minimum tax credits, other tax credits and carryforwards and carrybacks
thereof); provided, however, that in no event shall such Tax Percentage exceed
the lesser of (1) the highest aggregate applicable effective marginal rate of
Federal, state and local income tax or, when applicable, alternative minimum
tax, to which a corporation doing business in Chicago, Illinois would be subject
in the relevant year of determination (as certified to the Trustee by a
nationally recognized tax accounting firm) plus 500 "Basis Points"; and (2) 60%.
Any part of the Tax Amount not distributed in respect of a tax period for which
it is calculated shall be available for distribution in subsequent tax periods
(whether or not the Company ceases to qualify as an S Corporation prior to such
distribution). The term "Tax Percentage" is the highest aggregate applicable
effective marginal rate of Federal, state and local income tax or, when
applicable, alternative minimum tax, to which an individual resident of Chicago,
Illinois would be subject in the relevant year of determination (as certified to
the Trustee by a nationally recognized tax accounting firm). Distributions of
Tax Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with a reconciliation within 40 days of the earlier of (i)
the Company's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year; and (ii) the last date such form is required to be
filed (without regard to any extensions). The stockholders of the Company will
enter into a binding agreement with the Company to reimburse the Company for
certain positive differences between the distributed amount and the Tax Amount,
which difference must be paid at the time of such reconciliation; provided, that
in lieu thereof, the Company shall notify all stockholders that any such
positive differences will be set off against future distributions of Tax
Amounts.
"10 3/4% Notes" means the 10 3/4% Senior Notes due 2002 issued
pursuant to the terms of an indenture, dated April 7, 1994 among Empress River
Casino Finance Corporation, as issuer, the Guarantors named therein and First
Trust National Association, as Trustee.
"Transaction Date" has the meaning set forth under the definition of
"Consolidated Fixed Charge Coverage Ratio".
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, and as in effect from time to time.
"Trustee" means the person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
21
"Unrestricted Subsidiary" means a Subsidiary of the Company (other
than a Guarantor) designated as such pursuant to and in compliance with Section
10.18. Any such Designation may be Revoked by a Board Resolution of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a Depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
Holder of such Depositary receipt; provided, however, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the Holder of such Depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
Depositary receipt.
"U.S. Legal Tender" means such coin or currency of the United States
of America at the time of payment is legal tender for the payment of public and
private debts.
Section 1.02. Other Definitions.
-----------------
Defined in
Term Section
---- ----------
"Act" 1.05
"Agent Members" 2.04
"Asset Sale Offer" 10.13
"Asset Sale Offer Period" 10.13
"Asset Sale Offer Price" 10.13
"Asset Sale Offer Purchase Date" 10.13
"Asset Sale Offer Trigger Date" 10.13
"Authenticating Agent" 2.02
"Change of Control Date" 10.14
"Change of Control Offer" 10.14
"Change of Control Purchase Date" 10.14
"Change of Control Purchase Price" 10.14
"covenant defeasance" 4.03
"Defaulted Interest" 3.06
"Defeasance" 4.01
"Defeased Guarantees" 4.01
"Defeased Notes" 4.01
22
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" shall refer to the lawful
currency of the United States of America;
(f) the words "include," "included" and "including" as used herein
shall be deemed in each case to be followed by the phrase "without limitation";
(g) words in the singular include the plural, and words in the plural
include the singular; and
(h) any reference to a Section or Article refers to such Section or
Article of this Indenture unless otherwise indicated.
23
Section 1.04. Form of Documents Delivered to Trustee.
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 stating that, in the opinion of the signers, all conditions
precedent (including any covenants compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with, (b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of counsel,
all such conditions (including any covenants compliance with which constitutes a
condition precedent), have been complied with and (c) where applicable, a
certificate or opinion by an accountant that complies with Section 314(c) of the
Trust Indenture Act.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the person making such certificate or Opinion of
Counsel 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 contained in such Officers' Certificate
or Opinion of Counsel 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 whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and one
or more other such persons as to other matters, and any such person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
24
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Opinions of Counsel required to be delivered to the
Trustee may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government of other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Any certificate of opinion of an Officer of the Company, and Guarantor
of other obligor on the Notes may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of, or representations by, an accountant
or firm of accountants in the employ of the Company, unless such Officer knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to accounting matters upon which his
certificate or opinion may be based are erroneous. Any certificate or opinion of
any independent firm of public accountants filed with the Trustee shall contain
a statement that such firm is independent with respect to the Company.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution (as provided below in
subsection (b) of this Section 1.05) of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient including, without limitation, by verification from a notary
public or signature guarantee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every future Holder
of the same Note or the Holder of every Note issued upon the transfer thereof or
in exchange therefor or in lieu thereof to the same extent as the original
Holder, in respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
25
Section 1.06. Notices, etc., to the Trustee and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed, in writing, to or with the Trustee at its Corporate Trust
Office or at any other address previously furnished in writing to the
Holders and the Company by the Trustee or at the office of any drop
agent specified by or on behalf of the Trustee to the Holders and the
Company from time to time; and
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose (except as otherwise expressly provided
herein) hereunder if in writing and mailed, first-class postage
prepaid, to the Company, addressed to it at 2300 Empress Drive,
Joliet, Illinois 60436, Attention: General Counsel, with a copy to
D'Ancona & Pflaum, 30 North LaSalle Street, Chicago, Illinois 60602,
Attention: Joel D. Rubin, or at any other address previously furnished
in writing to the Trustee by the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise expressly provided herein)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Note Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Any notice when mailed to a Holder in the
aforesaid manner shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
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Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, such provision
of the Trust Indenture Act shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be, if this Indenture shall then be
qualified under the TIA.
Section 1.09. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and
Trustee shall bind their respective successors and assigns, whether so expressed
or not.
Section 1.11. Separability Clause.
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 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Notes issued pursuant hereto,
express or implied, shall give to any person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture, except as
provided in Article Thirteen and Article Fourteen.
SECTION 1.13. GOVERNING LAW.
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE COMPANY,
EACH GUARANTOR AND ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE
NOTES.
27
Section 1.14. No Recourse Against Others.
No director, officer, employee or stockholder of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or any Guarantor under the Notes, the Guarantees or this Indenture. Each Holder
of Notes by accepting a Note waives and releases all such liability, and such
waiver and release is part of the consideration for the issuance of the Notes.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
Section 1.16. Exhibits and Schedules.
All exhibits and schedules attached hereto are by this reference made
a part hereof with the same effect as if herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 1.18. Duplicate 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 1.19. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
Any terms incorporated by reference 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 therein.
28
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
Depositary rule or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication and shall show the date of its authentication.
The additional terms and provisions contained in the forms of Notes
and Guarantees, annexed hereto as Exhibits A and E, respectively, shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Notes will initially be issued in either of the following forms:
(a) Notes offered and sold in reliance on Rule 144A issued initially
in the form of one or more global Notes in registered form, substantially
in the form set forth in Exhibit A (the "U.S. Global Note"), deposited with
the Trustee, as custodian for the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in Section 2.03 hereof. The aggregate principal amount of
the U.S. Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the
Depositary.
(b) Notes offered and sold in offshore transactions in reliance on
Regulation S represented upon issuance by a temporary global Note (the
"Offshore Global Note" and, together with the U.S. Global Note, the "Global
Notes"), which will be exchangeable for certificated Notes in registered
form in substantially the form set forth in Exhibit A (the "Offshore
Physical Notes") only upon the expiration of the "40-day restricted period"
within the meaning of Rule 903(c)(3) of Regulation S.
Subsequent to the initial issuance of the Global Notes provided for in
paragraphs (a) and (b) above, physical certificates for notes transferred in
reliance on any exemption from registration under the Securities Act, other than
as described in the preceding two paragraphs, shall be issued in substantially
the form set forth in Exhibit A, subject to the Company's and the Trustee's
right prior to any such transfer to require the delivery of an Opinion of
Counsel, certifications and/or other information satisfactory to each of them
(the "U.S. Physical Notes"). The Offshore Physical Notes and the U.S. Physical
Notes are sometimes collectively herein referred to as the "Physical Notes."
Physical Notes may initially be registered in the name of the
29
Depositary or a nominee of such Depositary and be delivered to the Trustee as
custodian for such Depositary. Beneficial owners of Physical Notes, however, may
request registration of such Physical Notes in their names or the names of their
nominees.
Section 2.02. Execution and Authentication; Aggregate Principal
Amount.
The Notes shall be executed on behalf of the Company by two Officers
of the Company. The signature of any Officer on the Notes may be manual or
facsimile.
If an Officer or Assistant Secretary whose manual or facsimile
signature is on a Note was an Officer or Assistant Secretary at the time of such
execution but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $150,000,000 and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall specify the amount
of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or Exchange Notes and
whether the Notes are to be issued as Physical Notes or Global Notes or such
other information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $150,000,000, except as
provided in Section 3.05 hereof.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an agent to deal with the
Company or with any Affiliate of the Company.
Section 2.03. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
face thereof until the second anniversary of the Issue Date, unless otherwise
agreed by the Company and the Holder thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE OR
30
OTHER 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 THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S AND (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF
ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY
BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION
DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, 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) INSIDE THE UNITED STATES 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, (E)
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PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE
TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER,
SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D),(E) OR (F) ABOVE TO
REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER
INFORMATION SATISFACTORY TO THE COMPANY, THE TRUSTEE AND THE TRANSFER
AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
Each Global Note shall also bear a legend on the face thereof in
substantially the following form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH
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 DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
32
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE INDENTURE.
Section 2.04. Book-Entry Provisions for Global Notes.
This Section 2.04 shall apply only to the Global Notes deposited with
the Depositary or its custodian.
(1) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, the Global Notes initially
shall (i) be registered in the name of the Depositary or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.03.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Notes, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global
Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(2) Transfers of the Global Notes shall be limited to transfers in
whole, but, subject to the immediately succeeding sentence, not in part, to the
Depositary, its successors or their respective nominees. Interests of beneficial
owners in the Global Notes may be transferred or exchanged for Physical Notes in
accordance with the rules and procedures of the Depositary and the provisions of
Section 2.05 hereof. In addition, Physical Notes shall be transferred to all
beneficial owners in exchange for their beneficial interests in the Global Notes
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Notes and a successor depositary is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Note Registrar has received a
written request from the Depositary to issue Physical Notes.
(3) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(2), the Note Registrar shall
33
(if one or more Physical Notes are to be issued) reflect on its books and
records the date and a decrease in the principal amount of the Global Note in an
amount equal to the principal amount of the beneficial interest in the Global
Note to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(4) In connection with the transfer of the beneficial interests in an
entire Global Note to beneficial owners pursuant to paragraph (2), the Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(5) Any Physical Note constituting a Restricted Security delivered in
exchange for a beneficial interest in a Global Note pursuant to paragraph (2) or
(3) shall, except as otherwise provided by paragraphs (1)(a)(x) and (3) of
Section 2.05 hereof, bear the Private Placement Legend.
(6) The owner of a beneficial interest in a Global Note may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Notes.
Section 2.05. Special Transfer Provisions.
(1) Transfers to Non-QIB Institutional Accredited Investors and Non-
U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(a) the Note Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the second
anniversary of the Issue Date or (y) (A) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Note Registrar a
certificate substantially in the form of Exhibit C hereto or (B) in the
case of a transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Note Registrar a certificate substantially in the form of
Exhibit D hereto; and
(b) if the proposed transferor is an Agent Member holding a beneficial
interest in the Global Note, upon receipt by the Note Registrar of (x) the
certificate, if any, required by paragraph (a) above and (y) written
instructions given in accordance with the Depositary's and the Note
Registrar's procedures,
whereupon (i) the Note Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of outstanding Physical Notes)
a decrease in the principal
34
amount of the applicable Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and (ii) the
Company shall execute and the Trustee shall authenticate and deliver one or more
Physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(a) the Note Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Company and the Note
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Note Registrar in writing, that it is purchasing the Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member, and the Notes to be
transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in a Global Note, upon receipt by the Note
Registrar of written instructions given in accordance with the Depositary's
and the Note Registrar's procedures, the Note Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the applicable Global Note in an amount equal to the principal amount of
the Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(3) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date, or (ii) there is delivered to the Note Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(4) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
35
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.04 hereof or this
Section 2.05. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
during the Note Registrar's normal business hours upon the giving of reasonable
written notice to the Note Registrar.
In connection with any transfer of the Notes, the Trustee, the Note
Registrar and the Company shall be entitled to receive, shall be under no duty
to inquire into, may conclusively presume the correctness of, and shall be fully
protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Notes, or otherwise) received from any Holder and any transferee of any Note
regarding the validity, legality and due authorization of any such transfer, the
eligibility of the transferee to receive such Note and any other facts and
circumstances related to such transfer.
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $150,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 3.03, 3.04, 3.05, 9.05,
10.11, 10.13, 10.14 or 11.08.
The Notes shall be known and designated as the "8 1/8% Senior
Subordinated Notes due 2006" of the Company. The final Stated Maturity of the
Notes shall be July 1, 2006. Interest on the Notes will accrue at the rate of 8
1/8% per annum and will be payable semi-annually in arrears on January 1 and
July 1 in each year, commencing on January 1, 1999, to Holders of record on the
immediately preceding December 15 and June 15, respectively. Interest on the
Notes will accrue from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the Issue Date.
The additional terms and provisions contained in the forms of Notes
and the Guarantees, annexed hereto as Exhibits A and E, respectively, shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 3.02. Denominations.
The Notes shall be issuable only in fully registered form without
coupons and in denominations of $1,000 and any integral multiple thereof.
36
Section 3.03. Temporary Notes.
Pending the preparation and delivery of definitive Notes, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes. Temporary Notes may be printed, lithographed, typewritten,
mimeographed or otherwise produced, 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 consider appropriate, as
conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. 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 of the Company
designated for such purpose pursuant to Section 10.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like 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 3.04. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 10.02 being herein sometimes referred to
as the "Note Register") in which, subject to such reasonable regulations as the
person appointed as being responsible for the keeping of the Note Register (the
"Note Registrar") may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Note Register shall be in written form
or in any form capable of being converted into written form within a reasonable
period of time. The Trustee is hereby initially appointed Note Registrar for the
purpose of registering Notes and transfers of Notes as herein provided. The
Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note at the office
or agency of the Company designated pursuant to Section 10.02, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations, of a like aggregate principal amount and bearing
such restrictive legends as may be required by Section 2.03.
At the option of the Holder, Notes in certificated form may be
exchanged for other Notes of any authorized denomination or denominations, of a
like aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
indebtedness, and entitled to the same
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benefits under this Indenture, as the Notes surrendered upon such registration
of transfer or exchange and no such transfer or exchange shall constitute a
repayment of any obligation nor create any new obligations of the Company.
Every Note presented or surrendered for registration of transfer, or
for exchange or redemption, shall (if so required by the Company, the Trustee,
the Note Registrar or any co-registrar) be duly endorsed or be accompanied by a
written instrument of transfer in form satisfactory to the Company, the Trustee,
and the Note Registrar or any co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange or redemption of Notes, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 3.03, 9.05, 10.14, 10.15 or 11.08 not
involving any transfer.
None of the Company, the Trustee, the Note Registrar or any co-
registrar shall be required (a) to issue, register the transfer of or exchange
any Note during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of the Notes selected for redemption and
ending at the close of business on the day of such mailing, (b) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of Notes being redeemed in part or (c) to issue,
register, transfer or exchange any Note during a Change of Control Offer or an
Asset Sale Offer, if such note is tendered pursuant to such Change of Control
Offer or Asset Sale Offer.
When Notes are presented to the Note Registrar with a request to
register the transfer or to exchange them for an equal principal amount of Notes
of other authorized denominations, the Note Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at the Note
Registrar's request.
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes.
If (a) any mutilated Note is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company
and the Trustee, such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either of them may suffer
if a Note is replaced, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser, the Company
shall execute and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any replacement Notes under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that
38
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.06. Payment of Interest; Interest Rights Preserved.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid by check or wire
transfer to the person in whose name that Note (or one or more predecessor
Notes) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest"), shall forthwith cease to be payable
to the Holder on the Regular Record Date and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing at least
20 days before such payment date of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this subsection (a) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company in writing of such Special Record
Date. In the name and at the expense of the Company, the Trustee shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at its address as it appears in the Note Register, not less
than 10 days prior to such Special
39
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the persons in whose names the Notes (or their
respective predecessor Notes) are registered on such Special Record Date
and shall no longer be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this subsection
(b), such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.07. Persons Deemed Owners.
Prior to and at the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name any Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 3.06) interest on such Note and for all
other purposes whatsoever, whether or not such Note shall be 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 3.08. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, as evidenced by a Company Order instructing the Trustee that all
Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 3.08, except as expressly permitted by this Indenture. Cancelled
Notes shall be destroyed by the Trustee who shall provide proof of destruction
to the Company. The Trustee shall provide the Company with a list of all Notes
that have been cancelled from time to time as requested by the Company.
Section 3.09. Computation of Interest.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
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Section 3.10. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated Maturity of any Note
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal, premium, if any, or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date, date established for the payment of Defaulted Interest or at
the Stated Maturity, as the case may be, and no interest shall accrue with
respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
Stated Maturity, as the case may be, to the next succeeding Business Day.
Section 3.11. CUSIP Number.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and if so, the Trustee may use the CUSIP numbers in notices
of redemption or exchange as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. All Initial Notes shall bear identical CUSIP numbers and all Exchange
Notes shall bear identical CUSIP numbers. The Company shall promptly notify the
Trustee in writing of any change in the CUSIP number of the Notes.
Section 3.12. Payment of Additional Interest Under Registration
Rights Agreement.
Under certain circumstances the Company will be obligated to pay
certain additional amounts of interest to the Holders, as more particularly set
forth in section 2(e) of the Registration Rights Agreement. The terms of Section
2(e) of the Registration Rights Agreement are hereby incorporated herein by
reference and the Company shall be obligated to provide a copy of such
Registration Rights Agreement to the Trustee.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Defeasance.
The Company may, at its option at any time within the final year of
the Stated Maturity of the Notes, elect to have its obligations discharged with
respect to Outstanding Notes ("defeasance"). Such defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented, and the Indenture shall cease to be of further effect as to all
outstanding Notes and Guarantees, except as to (i) rights of Holders to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such
41
payments are due solely from the trust fund described below, (ii) the Company's
obligations with respect to such Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payments and money for security payments
held in trust and (iii) the rights, powers, trusts, duties and immunities of the
Trustee and the Company's obligations in connection therewith.
Section 4.02. Covenant Defeasance.
In addition, the Company may, at its option and at any time, elect to
have the obligations of the Company and all Guarantors released with respect to
Sections 10.05 through 10.20 and the provisions of Article Eight, and any
failure to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Notes ("covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Notes, the Company and the Guarantors may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section
5.01(c), (d), (e), (f), (g) or (i); provided as specified above, the remainder
of this Indenture and such Outstanding Notes shall be unaffected thereby.
Section 4.03. Conditions to Defeasance or Covenant Defeasance.
In order to exercise either defeasance or covenant defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender, 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
on the outstanding Notes at Stated Maturity or upon redemption in
accordance with Article Eleven, and the Holders must have a valid,
perfected, exclusive security interest in such trust;
(2) (a) in the case of defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the U.S. reasonably acceptable to the
Trustee confirming that (A) the Company has received from, or there has
been published by the Internal Revenue Service a ruling, or (B) since the
date of the Indenture, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of such Notes will not
recognize income, gain or loss for Federal income tax purposes as a result
of such 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 defeasance had not occurred; or (b) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an Opinion of
Counsel in the U.S. reasonably acceptable to such Trustee confirming that
the Holders of such Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and
will be subject to
42
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;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit, or insofar as Section 5.01 (d)
events are concerned, at any time in the period ending on the 91st day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(4) such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest with respect to any securities of the
Company or any Guarantor;
(5) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument to which the Company or any Guarantor is a party or
by which it is bound;
(6) the Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the deposit was not made by the Company with
the intent of preferring the Holders of such Notes over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
(7) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent under this Indenture to either defeasance or covenant defeasance,
as the case may be, have been complied with.
Opinions and certificates required to be delivered under this Section
shall be in compliance with the requirements set forth in Section 1.04 and this
Section 4.03.
Section 4.04. Deposited Money and U.S. Government Obligations To Be
Held in Trust, Etc.
Subject to the provisions of the last paragraph of Section 10.03, all
U.S. Legal Tender and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or such other person that would qualify to
act as successor trustee under Article Six, collectively for purposes of this
Section 4.04, the "Trustee") pursuant to Section 4.03 in respect of the
Company's election under either Section 4.01 or 4.02, shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent (other
than the Company or any Affiliate of the Company) 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, either at the Stated
Maturity or on the applicable Redemption Date, as the case may be, but such
money need not be segregated from other funds except to the extent required by
law; provided that the Trustee shall have been irrevocably instructed to apply
such U.S. Legal Tender or the proceeds of such U.S. Government Obligations to
said payments with respect to the Notes.
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The Company shall pay and indemnify the Trustee and its agents and
hold them harmless against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to Section 4.03 or
the principal, premium, if any, and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the Defeased Notes.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 4.03
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof to the Trustee,
are in excess of the amount thereof which would then be required to be deposited
to effect an equivalent defeasance or covenant defeasance.
Section 4.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 4.03, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Company and
each of the Guarantors under this Indenture, the Notes and the Guarantees shall
be revived and reinstated as though no deposit had occurred pursuant to Section
4.03, until such time as the Trustee or Paying Agent is permitted to apply all
such money and U.S. Government Obligations in accordance with Section 4.03;
provided, however, that if the Company or the Guarantors make any payment of
principal, premium, if any, or interest on any Note following the reinstatement
of its obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money and U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 4.06. Repayment to Company.
The Trustee shall pay to the Company (or, if appropriate, the
Guarantors) upon Company Request any money held by it for the payment of
principal, premium, if any, or interest that remains unclaimed for two years.
After payment to the Company or the Guarantors, Noteholders entitled to money
must look to the Company and the Guarantors for payment as general creditors
unless an applicable abandoned property law designates another person and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary
44
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) the failure by the Company to pay any installment of interest on
the Notes as and when due and payable and the continuance of any such failure
for 30 days;
(b) the failure to pay all or any part of the principal of, or
premium, if any, on, the Notes when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, or the failure by the
Company or any Restricted Subsidiary to comply with any of its obligations
described under Article Eight, Section 10.13 or Section 10.14;
(c) the failure by the Company to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 30 days
after written notice is 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 Notes outstanding;
(d) (i) the Company or any Significant Subsidiary commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any other
case or proceeding to be adjudicated bankrupt or insolvent, (ii) the Company or
any Significant Subsidiary consents to the entry of a decree or order for relief
in respect of the Company or such Significant Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (iii) the Company or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state bankruptcy law,
(iv) the Company or any Significant Subsidiary (x) consents to the filing of
such petition or the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or such Significant Subsidiary or of any substantial part of
their respective property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they become
due;
(e) default or defaults under one or more agreements, indentures or
instruments under which the Company or any Restricted Subsidiary then has
outstanding Indebtedness in excess of $10.0 million individually or in the
aggregate and either (i) such Indebtedness (or any payment of principal,
interest or premium thereon) is already due and payable or (ii) such default or
defaults results in the acceleration of the maturity of such Indebtedness;
(f) final unsatisfied judgments no longer subject to appeal not
covered by insurance aggregating in excess of $10.0 million at any one time
rendered against the Company or any of the Restricted Subsidiaries and not
stayed, bonded or discharged within 60 days; or
(g) the loss for 90 days of the legal right to conduct gaming
operations at any Casino which, if the Facility of which such Casino is a part
were operated by a single Subsidiary, would constitute a Significant Subsidiary.
45
The Company shall provide an Officers' Certificate to the Trustee
promptly upon any officer of the Company obtaining knowledge of any Default or
Event of Default that has occurred and, if applicable, describe such Default or
Event of Default and the status thereof.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (d) above relating to the Company or any of the
Significant Subsidiaries) unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the Holders of 25% of the
aggregate principal amount of the Notes then outstanding, by notice in writing
to the Company (and to the Trustee if given by Holders) (an "Acceleration
Notice"), may declare all principal of, and accrued and unpaid interest on, the
Notes due and payable immediately. If an Event of Default specified in clause
(d) above relating to the Company or any of the Significant Subsidiaries occurs,
all principal of, and accrued and unpaid interest on, the Notes will be
immediately due and payable without any declaration or other act on the part of
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes are generally authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, the Notes which have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes,
the Holders of a majority of the aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any Default or Event of
Default, except a Default or Event of Default in the payment of principal of, or
interest on, any Note not yet cured, or a Default or 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. Subject to the
provisions of this Indenture relating to the duties of the Trustee, the Trustee
will be under no obligation to exercise any of its rights or powers under this
Indenture at the request, order or direction of any of the Holders, unless such
Holders have offered to the Trustee reasonable security or indemnity. Subject to
all provisions of this Indenture and applicable law, the Holders of a majority
of the aggregate principal amount of the Notes at the time outstanding will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Other Remedies.
The Company covenants that if an Event of Default in payment of
principal, premium or interest specified in Section 5.01(a) or 5.01(b) hereof
occurs and is continuing, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal, premium, if any, and interest, with
interest upon the overdue principal, premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon overdue installments
of interest, at the rate then borne by the Notes; and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
46
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may, but is not
obligated under this paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not obligated under
this paragraph to, prosecute such proceeding to judgment or final decree, and
may, but is not obligated under this paragraph to, enforce the same against the
Company, the Guarantors or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Notes, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture and the Notes by such appropriate private or judicial proceedings as
the Trustee shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or the Notes or in aid of the exercise of any power granted
herein or therein, or (ii) proceed to protect and enforce any other proper
remedy. No recovery of any such judgment upon any property of the Company shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, the Guarantors or any other obligor
upon the Notes, or the property of the Company, the Guarantors or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise, but is not obligated under this paragraph
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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 the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof.
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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 5.05. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium, if
any, or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
Third: to Holders for principal amounts and premium, if any, owing
under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
premium; and
Fourth: to the Company or, to the extent the Trustee collects any
amount from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
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(a) the Holder or Holders of not less than 25.0% in aggregate
principal amount of the Outstanding Notes shall have made written
request(s) to the Trustee to institute proceedings in respect of such Event
of Default in its own name as Trustee hereunder;
(b) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(c) the Trustee for 15 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(d) no direction inconsistent with such written request has been given
to the Trustee during such 15-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture or any Note except in
the manner provided in this Indenture and for the equal and ratable benefit of
all the Holders.
Section 5.09. Unconditional Right of Holders To Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
cash payment, in U.S. Legal Tender, of the principal of, premium, if any, and
(subject to Section 3.06 hereof) interest on such Note on the respective Stated
Maturities expressed in such Note (or, in the case of redemption or repurchase,
on the respective Redemption Dates or date fixed for repurchase) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the express consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Note and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
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Section 5.10. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Notes shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or any Note or expose the Trustee to liability; and
(b) subject to the provisions of Section 315 of the TIA, the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Notes may on behalf of the Holders of all the Notes waive any
past Default hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, or interest
on any Note (which may only be waived with the consent of each Holder of
Notes affected); or
(b) in respect of a covenant or provision under this Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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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 Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture or the Notes, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption or repurchase, on or after the respective Redemption Dates or dates
fixed for repurchase).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
of, premium, if any, or interest on the Notes contemplated herein or in the
Notes or which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) 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; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee or
its counsel shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case 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
such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability 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 (a) of this Section 6.01; (ii) the Trustee shall
not be liable for any error of judgment made in good faith by an officer of the
Trustee or upon advice of its counsel, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not
be liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.12.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive an indemnity satisfactory to it in
its sole discretion against such risk, liability, loss, fee or expense which
might be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
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Section 6.02. Notice of Defaults.
Within 90 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the Note
Register, notice of such Default hereunder known to the Trustee; provided,
however, that, except in the case of a Default in the payment of the principal
of, premium, if any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of Responsible Officers or counsel of the Trustee
in good faith determines that the withholding of such notice is in the interest
of the Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of (S) 315 of the
TIA:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, approval, appraisal, bond, debenture, note, coupon, security,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution of the Company thereof;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate
of the Company;
(d) the Trustee and its agents may consult with counsel and any
written advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon in accordance with such advice or Opinion of Counsel;
(e) the Trustee and its agents shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, other evidence of indebtedness or other paper or
document but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books, records
and premises of
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the Company, personally or by agent or attorney during the reasonable
business hours of the Company;
(f) the Trustee and its agents may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
(other than an agent who is an employee of the Trustee) or attorney
appointed with due care by it hereunder; or
(g) the Trustee shall not be charged with knowledge of any
Default or Event of Default, as the case may be, with respect to the
Notes unless either (1) a Responsible Officer of the Trustee shall
have actual knowledge of the Default or Event of Default, as the case
may be, or (2) written notice of such Default or Event of Default, as
the case may be, shall have been given to the Trustee by the Company,
any other obligor on the Notes or by any Holder of the Notes.
(h) Except with respect to Section 10.01, the Trustee shall have
no duty to inquire as to the performance of the Company with respect
to the covenants contained in Article Ten. In addition, the Trustee
shall not be deemed to have knowledge of an Event of Default except
(i) any Default or Event of Default occurring pursuant to Sections
5.01(a), 5.01(b) or 10.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained
actual knowledge.
(i) Delivery of reports, information and documents to the Trustee
under Section 10.08 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained therein 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).
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
Notes or Application of Proceeds Thereof.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Guarantors, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or the Notes, except that the Trustee represents
that it is duly authorized to execute and deliver this Indenture, authenticate
the Notes and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility and Qualification on Form T-1 supplied to the
Company and the Guarantors in connection with the registration of any Notes and
Guarantees issued hereunder are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds thereof.
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Section 6.05. Trustee and Agents May Hold Notes; Collections; etc.
The Trustee, any Paying Agent, Note Registrar or any other agent of
the Company or the Guarantors, in its individual or any other capacity, may
become the owner or pledgee of Notes, with the same rights it would have if it
were not the Trustee, Paying Agent, Note Registrar or such other agent and,
subject to Sections 6.08 and 6.13 hereof and (S)(S) 310 and 311 of the Trust
Indenture Act, may otherwise deal with the Company or the Guarantors and
receive, collect, hold and retain collections from the Company or the Guarantors
with the same rights it would have if it were not the Trustee, Paying Agent,
Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required herein
or by law. The Trustee shall not be under any liability for interest on any
moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
Prior Claim.
The Company and the Guarantors covenant and agree: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); (b) to reimburse the Trustee and each predecessor Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ), except any such reasonable expense, disbursement or advance as
may arise from its negligence or bad faith; and (c) to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and the exercise or performance of any of its
powers or duties hereunder, including enforcement of this Section 6.07. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The obligations of the Company and the
Guarantors under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute an additional
obligation hereunder and shall survive the satisfaction and discharge of this
Indenture.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the provisions of (S)
310(b) of the TIA.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA (S)(S) 310(a)(1) and 310(a)(5) and which
shall have a combined capital and, surplus of at least $100,000,000 (or be a
member of a bank holding company with combined capital and surplus of at least
$100,000,000), and have an office or agency at which Notes may be presented for
transfer and redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of United States Federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed, may
at any time resign by giving written notice thereof to the Company and the
Guarantors at least 30 Business Days prior to the date of such proposed
resignation. Upon receiving such notice of resignation, the Company and the
Guarantors shall promptly appoint a successor trustee by written instrument, a
copy of which shall be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 Business Days after the giving
of such notice of resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) The Trustee may be removed at any time with 60 days written notice
by an Act of the Holders of a majority in principal amount of the Outstanding
Notes, delivered to the Trustee, the Company and the Guarantors.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of (S) 310(b)
of the TIA in accordance with Section 6.08 hereof after written request
therefor by the Company, the Guarantors or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
56
(2) the Trustee shall cease to be eligible under Section 6.09 hereof
and shall fail to resign after written request therefor by the Company, the
Guarantors or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company or the Guarantors may remove the
Trustee, or (ii) subject to Section 5.14, the Holder of any Note who has been a
bona fide Holder of a Note for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company or the Guarantors shall promptly appoint a successor Trustee. If, within
60 days after such resignation, removal or incapability, or the occurrence of
such vacancy, and the Company or the Guarantors have not appointed a successor
Trustee, a successor Trustee shall be appointed by act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company,
the Guarantors and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company and the
Guarantors. If no successor Trustee shall have been so appointed by the Company
or the Holders of the Notes and accepted appointment in the manner hereinafter
provided, the Holder of any Note who has been a bona fide Holder for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company and the Guarantors shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company, the Guarantors and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee as if originally named
as Trustee hereunder; but, nevertheless, on the written request of the Company,
the Guarantors or the successor Trustee, upon payment of amounts due it pursuant
to Section 6.07, such retiring Trustee shall duly assign, transfer and deliver
to the successor Trustee all moneys and property at
57
the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers, duties and
obligations of the retiring Trustee. Upon request of any such successor Trustee,
the Company and the Guarantors shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights and powers.
No successor Trustee with respect to the Notes shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 6.11, the Company and the Guarantors shall give notice thereof to
the Holders of the Notes, by mailing such notice to such Holders at their
addresses as they shall appear on the Note Register. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 6.10(f). If the Company or the Guarantors fail to give
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided such corporation shall be eligible under this
Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this Section
6.12 shall succeed to the trusts created by this Indenture any of the Notes
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee under this
Section 6.12 may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have been
authenticated.
Section 6.13. Preferential Collection of Claims Against Issuers.
The Trustee shall comply with Section 311(a) of the TIA, excluding any
creditor relationship listed in (S) 311(b) of the TIA. If the present or any
future Trustee shall resign or be removed, it shall be subject to (S) 311(a) of
the TIA to the extent provided therein.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish Trustee
Names and Addresses of Holders.
(a) 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; provided, however, that if and for so long as the Trustee shall not
be the Note Registrar, the Note Register shall satisfy the requirements relating
to such list. None of the Company, the Guarantors or the Trustee shall be under
any responsibility with regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the Trustee
(i) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished pursuant to this Section 7.01(b)
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with respect to their
rights under this Indenture or under the Notes pursuant to (S) 312(b) of the
TIA. The Trustee shall comply with (S) 312(b) of the TIA. The Company, the
Guarantors and the Trustee and any and all other persons benefited by this
Indenture shall have the protection afforded by (S) 312(c) of the TIA.
Section 7.03. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first May
15 following the date of this Indenture, the Trustee shall mail to all Holders,
as their names and addresses appear in the Note Register, a brief report dated
as of such May 15 that complies with (S) 313(a) of the TIA; provided, however,
that if no such event as described in (S) 313(a) of the TIA has occurred within
such period then no such report need be transmitted. The Trustee shall also
comply with (S)(S) 313(b), 313(c) and 313(d) of the TIA. At the time of its
mailing to Holders, a copy of each report shall be filed with the Company, the
Guarantors, the Commission and with each national securities exchange on which
the Notes are listed. The Company shall notify the Trustee when the Notes are
listed on any stock exchange or any delisting thereof.
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Section 7.04. Reports by Company and Each Guarantor.
The Company and each Guarantor shall:
(a) file with the Trustee copies of the reports and of the information
and documents which the Company and each Guarantor is required to provide to any
person under Section 10.08, hereof, and, if the Company or any Guarantor is not
required to file information, documents or reports pursuant to Section 13 or
Section 15(d) of the Exchange Act, to file with the Trustee and the Commission,
in accordance with, and so long as not prohibited by, the rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act in respect of a security listed and registered on
a national securities exchange as may be prescribed from time to time in such
rules and regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company and each Guarantor with the covenants of this Indenture as is required
from time to time by such rules and regulations (including such information,
documents and reports referred to in Trust Indenture Act Section 314(a)(2)); and
(c) transmit by mail to all Holders, in a manner and to the extent
provided in Trust Indenture Act Section 313(c), such summaries of any
information, documents and reports required to be filed by the Company and each
Guarantor pursuant to Section 10.08 hereof and subsections (a) and (b) of this
Section as is required and not prohibited by rules and regulations prescribed
from time to time by the Commission.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company shall not consolidate with or merge with or into another
person or, directly or indirectly, sell, lease or convey all or substantially
all of its assets (computed on a consolidated basis), to another person or group
of affiliated persons, unless (i)(A) the Surviving Person shall be a corporation
organized under the laws of the United States of America, any State thereof or
the District of Columbia and (B) the Surviving Person expressly assumes by
supplemental indenture executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company in connection
with the Notes and this Indenture and the Registration Rights Agreement, and in
each case, this Indenture and the Registration Rights Agreement shall remain in
full force and effect; (ii) immediately after giving effect to such transaction
or series of related transactions on a pro forma basis, no Default or Event of
Default shall have occurred and be continuing; and (iii) the Surviving Person
immediately after giving effect to such transaction or series of transactions on
a pro forma basis (including, without
60
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
could incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio provision contained in Section 10.10;
and (iv) such transaction will not result in the loss of any Gaming License held
by a Significant Subsidiary of the Company. For purposes of this Section 8.01,
the Consolidated Fixed Charge Coverage Ratio shall be determined on a pro forma
consolidated basis (after giving effect, and a pro forma basis, to the
transaction and any related incurrence of Indebtedness or Preferred Stock) for
the Reference Period which ended immediately preceding such transaction.
In connection with any consolidation, merger, transfer, lease or other
disposition contemplated hereby, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, transfer, lease or other disposition and the
supplemental indenture in respect thereof comply with the requirements under
this Indenture. In addition, each Guarantor, in the case of a transaction
described in the first paragraph under this Section 8.01, unless it is the other
party to the transaction or unless its Note Guarantee will be released and
discharged in accordance with its terms as a result of the transaction, will be
required to confirm, by supplemental indenture, that its Note Guarantee will
continue to apply to the obligations of the Company or the Surviving Person
under this Indenture.
Section 8.02. Successor Substituted.
Upon any consolidation or merger of the Company or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the Surviving Person, the Surviving
Person shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Notes and the
Registration Rights Agreement with the same effect as if such Surviving Person
had been named as the Company therein; and thereafter, except in the case of (a)
a lease or (b) any sale, assignment, conveyance, transfer, lease or other
disposition to a Restricted Subsidiary of the Company, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Notes.
For all purposes of this Indenture and the Notes (including the
provisions of this Article Eight and Sections 10.10, 10.11 and 10.15),
Subsidiaries of any Surviving Person shall, upon such transaction or series of
related transactions, become Restricted Subsidiaries unless and until designated
as Unrestricted Subsidiaries pursuant to and in accordance with Section 10.18
and all Indebtedness, and all Liens on property or assets, of such Surviving
Person and its Restricted Subsidiaries in existence immediately prior to such
transaction or series of related transactions will be deemed to have been
incurred upon consummation of such transaction or series of related
transactions.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company, the Guarantors, if any, when authorized by their board of
directors, and the Trustee may, without the consent of the Holders of any
Outstanding Notes, amend, waive or supplement this Indenture or the Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article Eight;
(c) to provide for uncertificated Notes in addition to certificated
Notes;
(d) to comply with any requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
(e) to provide for additional Guarantors of the Notes;
(f) to evidence the release of any Guarantor in accordance with
Article Thirteen hereof;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder;
provided, however, that the Company has delivered to the Trustee an
Opinion of Counsel stating that such change does not adversely affect the
legal rights of any Holder.
Section 9.02. With Consent of Holders.
Except as provided in Section 9.01, other amendments and modifications
of this Indenture or the Notes may be made by the Company, the Guarantors, if
any, and the Trustee with the consent of the Holders of not less than a majority
of the aggregate principal amount of the outstanding Notes; provided, however,
that no such modification or amendment may, without the consent of the Holder of
each outstanding Note affected thereby,
(i) change the Stated Maturity of any Note; or
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(ii) reduce the principal amount thereof or the rate (or extend
the time for payment) of interest thereon or any premium payable upon
the redemption thereof, or change the place of payment where, or the
coin or currency in which, any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date), or reduce any Offer to Purchase Price; or
(iii) alter the redemption provisions in a manner adverse to the
Holders; or
(iv) make the Notes subordinate to any Indebtedness or other
claims;
(v) change the provisions of Section 10.14.; or
(vi) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the
Indenture; or
(vii) modify any of the waiver provisions, except to increase any
required percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby.
The Holders of a majority in aggregate principal amount of the
outstanding Notes, on behalf of all Holders of Notes, may waive compliance by
the Company and the Guarantors with certain restrictive provisions of this
Indenture. Subject to certain rights of the Trustee, as provided in this
Indenture, the Holders of a majority in aggregate principal amount of the Notes,
on behalf of all Holders of the Notes, may waive any past default under this
Indenture (including any such waiver obtained in connection with a tender offer
or exchange offer for the Notes), except a default in the payment of principal,
premium or interest or a default arising from failure to purchase any Notes
tendered pursuant to an optional redemption or repurchase, or a default in
respect of a provision hereunder that cannot be modified or amended without the
consent of the Holder of each Note that is affected.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture or the Notes shall
comply with the TIA as then in effect if this Indenture shall then be qualified
under the TIA.
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Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
Nine, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.05. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Note or portion of that Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Note or portion of such Note by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
sentence of the immediately preceding paragraph, those persons who were Holders
at such record date (or their duly designated proxies), and only those persons,
shall be entitled to consent to such amendment, supplement or waiver or to
revoke any consent previously given, whether or not such persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder of Notes, unless it makes a change described in any of clauses
(i) through (ix) of Section 9.02. In that case, the amendment, supplement or
waiver shall bind each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note.
Section 9.06. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee shall (in accordance with the specific direction of the Company) request
the Holder of the Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an appropriate
notation on the Note about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
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Section 9.07. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article Nine if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If such amendment, supplement or waiver does affect the rights, duties,
liabilities or immunities of the Trustee, the Trustee may, but need not, sign
it. In signing or refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver is authorized or permitted by
this Indenture, that it is not inconsistent herewith and that it will be valid
and binding upon the Company in accordance with its terms.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of, premium, if
any, and interest on the Notes in accordance with the terms of the Notes and
this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes and the
Guarantees may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company or any Guarantor in respect of the
Notes, the Guarantees and this Indenture may be served. The office of the
Trustee shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any 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, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes and
the Guarantees may be presented or surrendered for any or all such purposes, and
may from time to time rescind such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan in The
City of New York for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and any change in the
location of any such other office or agency.
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Section 10.03. Money for Note Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, the
Company will, on or before each due date of the principal of, premium, if any,
or interest on any of the Notes, segregate and hold in trust for the benefit of
the Holders entitled thereto a sum sufficient to pay the principal, premium, if
any, or interest so becoming due until such sums shall be paid to such persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will, on or
before each due date of the principal of, premium, if any, or interest on any
Notes, deposit with a Paying Agent a sum in same day funds sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held in
trust for the benefit of the Holders entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of,
premium, if any, or interest on the Notes;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and liabilities
of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note
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and remaining unclaimed for two years after such principal, premium, if any, or
interest has become due and payable shall be paid to the Company upon receipt of
a Company Request therefor, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, 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 10.04. Existence.
Subject to Article Eight, each of the Company and each Guarantor will
do or cause to be done all things necessary to and will cause each of its
Restricted Subsidiaries to preserve and keep in full force and effect its
corporate existence and the corporate existence of each of the Restricted
Subsidiaries, and the rights (charter and statutory), licenses and franchises of
the Company and each of the Restricted Subsidiaries; provided, however, that the
Company, the Guarantors or their respective Restricted Subsidiaries shall not be
required to preserve any such right, license or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company, the Guarantors and their
respective Restricted Subsidiaries as a whole and that the loss thereof is not
disadvantageous in any material respect to the Holders; provided, further,
however, that the foregoing shall not prohibit a sale, transfer or conveyance of
a Subsidiary of the Company or any of its assets or Capital Stock in compliance
with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company and each Guarantor shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed (i) upon the Company or
any of its Restricted Subsidiaries or (ii) upon the income, profits or property
of the Company or any of its Restricted Subsidiaries and (b) all material lawful
claims for labor, materials and supplies, which, if unpaid, might by law become
a Lien upon the property of the Company or any of its Restricted Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently conducted.
Section 10.06. Insurance.
The Company will at all times keep all of its and the Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company in good faith to be financially sound and responsible,
against loss or damage to the extent that
67
property of similar character is usually so insured by corporations similarly
situated and owning like properties (which may include self-insurance, if
reasonable and in comparable form to that maintained by companies similarly
situated) except where the failure to do so could not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or prospects of the Company and the Restricted
Subsidiaries, taken as a whole.
Section 10.07. Compliance Certificate.
(a) The Company will deliver to the Trustee within 120 days after the
end of each of the Company's fiscal years a certificate to the Trustee from the
chief financial officer (or if the Company does not have a chief financial
officer, the Company's principal executive, financial or accounting officer) of
the Company as to his or her knowledge of the compliance of the Company, the
Guarantors and the Restricted Subsidiaries with all conditions and covenants
under this Indenture and any related documents and whether any Default or Event
of Default has occurred, such compliance to be determined without regard to any
period of grace or requirement of notice provided herein.
(b) The Company will deliver to the Trustee as soon as possible, and
in any event within 10 Business Days after the Company becomes aware of the
occurrence of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company or the
applicable Guarantor, as the case may be, is taking or proposes to take with
respect thereto.
Section 10.08. Reporting Requirements.
So long as any of the Notes are outstanding, the Company will file
with the Commission, to the extent then permitted by the Commission, the annual
reports, quarterly reports and other documents that the Company would have been
required to file with the Commission pursuant to Sections 13(a) and 15(d) of the
Exchange Act if the Company was subject to such Sections, and the Company will
promptly provide to the Trustee copies of such reports and documents; provided,
however, that if the Company is for any reason unable to make such filings it
will make available, upon request, to any Holder of Notes or prospective
purchaser of Notes the information specified in Rule 144A(d)(4) of the
Securities Act.
Section 10.09. Limitation on Guarantees by Restricted Subsidiaries.
The Company shall not cause or permit any of its Restricted
Subsidiaries, directly or indirectly, to guarantee the payment of any
Indebtedness of the Company or any Restricted Subsidiary unless such Restricted
Subsidiary (A) is a Guarantor or (B) simultaneously executes and delivers a
supplemental indenture to this Indenture pursuant to which it will become a
Guarantor on the basis provided for in Article Thirteen of this Indenture.
Notwithstanding the foregoing, any Note Guarantee by a Restricted Subsidiary
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any person not an Affiliate of the Company, of
all of the Capital Stock of such Restricted Subsidiary, or all or substantially
all the assets of such Restricted Subsidiary, pursuant to a transaction which is
in
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compliance with this Indenture. The Company shall cause each Restricted
Subsidiary hereafter formed or acquired, or any Unrestricted Subsidiary that is
designated as a Restricted Subsidiary to become a Guarantor by executing and
delivering a supplemental indenture providing for the guarantee of payment of
the Notes by such Restricted Subsidiary on the basis provided in this Indenture.
Section 10.10. Limitation on Incurrence of Indebtedness and
Preferred Stock.
(a) The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, suffer to exist, become directly or indirectly liable with respect to
(including as a result of an acquisition, merger or consolidation), extend the
maturity of, or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Preferred Stock on or after the Issue Date; provided
that the Company and its Restricted Subsidiaries may incur Indebtedness or
Preferred Stock if: (i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect to, on a pro
forma basis, such incurrence of such Indebtedness or Preferred Stock; and (ii)
on the date of the incurrence of such Indebtedness or Preferred Stock (the
"Incurrence Date"), the Consolidated Fixed Charge Coverage Ratio for the
Reference Period immediately preceding the Incurrence Date, after giving effect,
on a pro forma basis, to the incurrence of such Indebtedness or Preferred Stock
as of the first day of the Reference Period, would be at least 2.00 to 1.
(b) Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries, as applicable, may incur each of the following (collectively,
"Permitted Indebtedness"):
(i) Indebtedness of the Company or any Guarantor under the Credit
Agreement in an aggregate principal amount at any time outstanding not
to exceed $100.0 million, less the amount of all permanent repayments
thereof with the Net Cash Proceeds from an Asset Sale as provided in
Section 10.13;
(ii) Indebtedness under this Indenture, the Notes and the Note
Guarantees;
(iii) Indebtedness of the Company or any Restricted Subsidiary not
otherwise referred to in this paragraph that is outstanding on the
Issue Date, except Indebtedness repaid with the proceeds of the
issuance of the Notes as described under "Use of Proceeds" in the
Offering Memorandum (which is permitted hereunder);
(iv) The Company and its Restricted Subsidiaries may incur
Purchase Money Indebtedness or Non-Recourse Indebtedness, provided
that the amount of such Indebtedness outstanding at any time pursuant
to this paragraph (iv) (including any Indebtedness, whether or not
Refinancing Indebtedness, issued to
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refinance, replace or refund such Indebtedness) shall not, in the
aggregate, exceed $7.5 million;
(v) The Company and its Restricted Subsidiaries may incur FF&E
Indebtedness, provided, that the amount of such Indebtedness
outstanding at any time pursuant to this paragraph (v) (including any
Indebtedness, whether or not Refinancing Indebtedness, issued to
refinance, replace or refund such Indebtedness) shall not, in the
aggregate, exceed at any time the product of (i) $7.5 million, times
(ii) the number of Facilities being operated by the Company and its
Restricted Subsidiaries;
(vi) The Company and its REstricted Subsidiaries may incur
Refinancing Indebtedness with respect to any Indebtedness or Preferred
Stock, as applicable, described in clause (i) and clauses (iii)
through (v) of this covenant (so long as, in the case of Indebtedness
used to refinance, replace or retire Indebtedness in clause (iv), such
Refinancing Indebtedness is non-recourse as to any assets other than
the assets that secured such Indebtedness being refinanced, replaced
or retired; and in the case of clause (iii) of this covenant, other
than Refinancing Indebtedness with respect to the 10 3/4% Notes);
(vii) The Company and its Restricted Subsidiaries may incur
Indebtedness under Interest Swap Obligations, provided that in each
case the notional principal amount of such Interest Swap Obligation
does not exceed the principal amount Indebtedness to which such
Interest Swap Obligation relates;
(viii) The Company and its Restricted Subsidiaries may incur
Indebtedness in the form of (i) letters of credit and (ii) performance
bonds and surety bonds, the aggregate principal amount of which shall
not at any time exceed $7.5 million in the aggregate outstanding;
(ix) The Company may incur Indebtedness to a Restricted
Subsidiary, a Restricted Subsidiary may incur Indebtedness to the
Company and a Restricted Subsidiary may incur Indebtedness to another
Restricted Subsidiary; provided that any such Indebtedness is made
pursuant to an intercompany note and is expressly subordinated in
right of payment to the payment and performance of the Company's
obligations under the Notes or such Restricted Subsidiary's
obligations under the Subsidiary Guarantees, as applicable, and, upon
an Event of Default, such Indebtedness shall not be due and payable
until such Event of Default is cured, waived or rescinded; provided,
further, that any disposition, pledge or transfer of any such
Indebtedness to a person (other than a disposition, pledge or transfer
to a Restricted Subsidiary) shall be deemed to be an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as
applicable, not permitted by this clause (ix); and
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(x) The Company and its Restricted Subsidiaries may incur
Indebtedness in an aggregate principal amount outstanding at any time
of up to $25 million in the aggregate.
Section 10.11. Limitation on Restricted Payments.
(a) The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries, to, directly or indirectly, make any Restricted Payment
if, immediately prior to such proposed Restricted Payment or after giving effect
to such proposed Restricted Payment on a pro forma basis, (1) a Default or an
Event of Default shall have occurred and be continuing; or (2) the Company would
not be permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Fixed Charge Coverage Ratio test contained in Section 10.10; or
(3) the aggregate amount of all Restricted Payments made by the Company and its
Restricted Subsidiaries, including after giving pro forma effect to such
proposed Restricted Payment (including Restricted Payments described in clause
(a) of the following paragraph) from and after the Issue Date, would exceed the
sum of (a) 50% of the amount by which the aggregate Adjusted Consolidated Net
Income for the period (taken as one accounting period) commencing on the first
day of the fiscal quarter that includes the Issue Date, to and including the
last day of the full fiscal quarter ended immediately prior to the date of each
such calculation, exceeds permitted distributions of Tax Amounts made with
respect to such period (or, in the event Adjusted Consolidated Net Income less
permitted distributions of Tax Amounts made with respect to such period is a
deficit, then minus 100% of such deficit) plus (b) 50% of all cash dividends or
any other cash payments which represent distributions of net income (determined
in accordance with GAAP) paid by an Unrestricted Subsidiary or any other person
(other than a Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest to the Company or a Restricted Subsidiary
to the extent the same are not otherwise included in Adjusted Consolidated Net
Income or represent a return of capital, plus (c) 100% of the aggregate Net Cash
Proceeds received by the Company or any Restricted Subsidiary as a capital
contribution (other than capital contributions directly or indirectly made from
the Company or any Restricted Subsidiary and other than capital contributions
made from the proceeds of loans or advances described in clause (g) of the
following paragraph) or from the sale of Qualified Capital Stock after the Issue
Date plus (d) in the case of the disposition or repayment of any Investment in
an Unrestricted Subsidiary or any other person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest constituting a Restricted Payment made after the Issue Date, an amount
equal to the lesser of the return of capital with respect to such Investment and
the initial amount of such Investment which was treated as a Restricted Payment,
in either case, less the cost of the disposition or repayment of such
Investment.
(b) The restrictions set forth in paragraph (a), however, will not
prohibit
(a) the payment of any dividend or redemption payment within 60
days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of
the Indenture;
(b) a Qualified Exchange;
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(c) a Required Regulatory Redemption;
(d) with respect to each tax year that the Company qualifies as
an S Corporation under the Code, or any similar provision of state or
local law, distributions of Tax Amounts, provided, however, that prior
to any distribution of Tax Amounts, a knowledgeable and duly
authorized officer of the Company certifies, and counsel reasonably
acceptable to the Trustee opines, to the Trustee that the Company
qualifies as an S Corporation for Federal income tax purposes and for
the states in respect of which such distributions are being made (or
so qualified for the period or periods for which such Tax Amounts are
computed);
(e) for so long as no Default or Event of Default shall have
occurred and be continuing, Restricted Payments in an amount not to
exceed $10 million in the aggregate to pay for the redemption of
Capital Stock of the Company held by its directors or officers, or by
its stockholders, as of the Issue Date;
(f) for so long as no Default or Event of Default shall have
occurred and be continuing, Restricted Payments in the aggregate
amount of up to $10 million, which amount shall increase by $10
million on each of the first four anniversaries of the Issue Date,
provided that the Consolidated Fixed Charge Coverage Ratio for the
Reference Period immediately preceding the date of making any such
Restricted Payment permitted solely by this clause (f) would be at
least 3.00 to 1 on a pro forma basis, as if such Restricted Payment
were made on the first day of the Reference Period;
(g) for so long as no Default or Event of Default shall have
occurred and be continuing, loans or advances to officers, directors,
employees or stockholders of the Company or any Restricted Subsidiary
in an aggregate amount not to exceed $7.5 million at any time
outstanding, provided that (A) such loan or advance is used by the
officer, director, employee or stockholder receiving such loan or
advance to purchase Capital Stock of the Company or any Restricted
Subsidiary, and (B) the repayment of such loan or advance is secured
by a first priority pledge of the Capital Stock so purchased; and
(h) for so long as no Default or Event of Default shall have
occurred and be continuing, Permitted Investments.
Section 10.12. Limitation on Transactions with Affiliates.
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries, on or after the Issue Date, to enter into any
transaction, including any contract, arrangement, agreement, loan, advance,
guarantee or understanding and including any series of related transactions,
with or for the benefit of any Affiliate (an "Affiliate Transaction") unless
such Affiliate Transaction or series of related Affiliate Transactions are made
in good faith and (a) the terms of such Affiliate Transaction or series of
related Affiliate Transactions are fair and reasonable to the Company or such
Restricted Subsidiary, as applicable, and are at least as
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favorable to the Company or such Restricted Subsidiary, as applicable, as the
terms that could be obtained by the Company or such Restricted Subsidiary, as
applicable, in a comparable transaction made on an arms' length basis between
unaffiliated parties, (b) that with respect to any Affiliate Transaction
(including any series of related Affiliate Transactions) involving consideration
to either party in excess of $2.0 million, the Company shall have delivered to
the Trustee an Officer's Certificate certifying that such Affiliate Transaction
or series of related Affiliate Transactions complies with clause (a) above, and
(c) with respect to any Affiliate Transaction (including any series of related
Affiliate Transactions) involving consideration to either party in excess of
$5.0 million, either (A) such Affiliate Transaction or series of Affiliate
Transactions has been approved by a majority of the disinterested directors of
the Company or (B) the Company delivers to the Trustee a written favorable
opinion as to the fairness of such transaction to the Company from a financial
point of view, from an independent investment banking firm of national
reputation.
Notwithstanding the foregoing, any transactions solely between or
among the Company and its Restricted Subsidiaries, between or among the
Restricted Subsidiaries or between or among the Company and its Unrestricted
Subsidiaries shall not be deemed to be Affiliate Transactions for purposes of
this Section 10.12 (as long as in the case of Unrestricted Subsidiaries, the
Capital Stock which is not owned by any of the Company, a Restricted Subsidiary
or an Unrestricted Subsidiary, is not owned by an Affiliate of the Company or
any of its Restricted Subsidiaries).
Section 10.13. Limitation on Sale of Assets and Subsidiary Stock;
Event of Loss.
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries, directly or indirectly, to, make any Asset Sale unless
(a) no Default or Event of Default shall have occurred and be continuing at the
time of, or would occur after giving effect, on a pro forma basis, to, such
Asset Sale; (b) the Board of Directors of the Company determines in good faith
that the Company or such Restricted Subsidiary, as applicable, receives fair
market value as consideration for such Asset Sale, as evidenced by an Officers'
Certificate delivered to the Trustee; and (c) at least 75% of the consideration
for such conveyance, sale, lease, transfer or other disposition consists of U.S.
Legal Tender, Cash Equivalents or securities of a company with a market
capitalization of at least $500 million, which securities are traded on a
national securities exchange and are of a class and series of securities with a
minimum public float of $100 million.
Within 360 days following an Asset Sale, the Company and its
Restricted Subsidiaries must apply (or enter into a binding contractual
commitment to apply) the Net Cash Proceeds therefrom (a) first, to the extent
the Company or a Restricted Subsidiary elects (or is required by the terms of
any Senior Indebtedness), to permanently repay Senior Indebtedness (for purposes
of this clause, a repayment of any amount owing under a revolving credit
facility shall be deemed a permanent repayment to the extent the amount
represented by such repayment is not drawn upon by the Company for a period of
six months after such repayment); (b) second, to the extent the Company or a
Restricted Subsidiary elects, to reinvest in additional assets that are part of
a Related Business of the Company or a Restricted Subsidiary; and (c) third, to
the
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extent the Net Cash Proceeds, after application of (a) and (b), exceed $10
million (the "Excess Proceeds"), the Company shall make an offer (the "Asset
Sale Offer") to all Holders to purchase the Notes in the amount of the Excess
Proceeds at 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of payment (the "Asset Sale Offer Price").
Each Asset Sale Offer shall remain open for twenty (20) Business Days
following its commencement and no longer, except to the extent that a longer
period is expressly required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, the Company shall apply an
amount equal to the Excess Proceeds received from an Asset Sale included in such
Asset Sale Offer to the purchase of all Notes tendered (on a pro rata basis if
the Excess Proceeds are insufficient to purchase all Notes so tendered) at the
Asset Sale Offer Price.
Notice of an Asset Sale Offer shall be prepared and mailed by the
Company with a copy to the Trustee (or, at the Company's written request, by the
Trustee in the name and at the expense of the Company) not later than the 20th
business day after the Company is obligated to make an Asset Sale Offer (in
accordance with the immediately preceding paragraph) to each Holder at such
Holder's registered address, stating:
(i) that the Company is offering to purchase the maximum principal
amount of Notes that may be purchased with the Excess Proceeds (as provided
in the immediately preceding paragraph), at an offer price in U. S. Legal
Tender in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of the purchase (the
"Asset Sale Offer Purchase Date"), which shall be a Business Day, specified
in such notice, that is not earlier than 20 days or later than 60 days from
the date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if any, as of the
Asset Sale Offer Purchase Date;
(iii) that any Note not tendered will continue to accrue interest in
accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment of the Asset
Sale Offer Price, any Notes accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Offer Purchase
Date;
(v) that Holders electing to have Notes purchased pursuant to an Asset
Sale Offer will be required to surrender their Notes to the Paying Agent at
the address specified in the notice prior to 5:00 p.m., New York City time,
on the third Business Day prior to the Asset Sale Offer Purchase Date with
the "Option of Holder to Elect Purchase" included with the Asset Sale Offer
completed and must complete any form letter of transmittal proposed by the
Company (which letter must be completed correctly by such Holder) and which
is acceptable to the Trustee and the Paying Agent;
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(vi) that Holders of Notes will be entitled to withdraw their election
if the Paying Agent receives, not later than 5:00 p.m., New York City time,
on the third Business Day prior to the Asset Sale Offer Purchase 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, the Note certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in part will be
issued Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and
(viii) the instructions that Holders must follow in order to tender
their Notes.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceedings for the Asset Sale Offer.
With respect to any Asset Sale Offer effected pursuant to this Section
10.13, to the extent the aggregate principal amount of Notes tendered pursuant
to such Asset Sale Offer exceeds the Excess Proceeds, such Notes shall be
purchased pro rata based on the aggregate principal amount of such Notes
tendered by each Holder. To the extent the Excess Proceeds exceed the aggregate
amount of Notes tendered by the Holders pursuant to such Asset Sale Offer, the
Company may retain and utilize any portion of the Excess Proceeds not applied to
repurchase the Notes for any purpose consistent with the other terms of this
Indenture.
Upon an Event of Loss relating to property with a fair market value in
excess of $5 million, the Company or any Guarantor shall make an Asset Sale
Offer to repurchase at the Asset Sale Offer Price, plus accrued and unpaid
interest, that principal amount of Notes equal to the Excess Proceeds of such
Event of Loss (the "Event of Loss Amount"), unless the Company or the applicable
Guarantor applies (or enters into a binding contractual commitment to apply) the
Event of Loss Amount within 365 days after such Event of Loss, in accordance
with this Section 10.13.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any securities
exchange on which the Notes are listed, and any violation of the provisions of
this Indenture relating to such Asset Sale Offer occurring as a result of such
compliance shall not be deemed a Default.
Section 10.14. Change of Control.
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right, at such Holder's option, pursuant to an irrevocable,
unconditional offer by the Company (a "Change of Control Offer") to require the
Company to repurchase all or any portion of such Holder's Notes (provided that
the principal amount of such Notes at maturity must be $1,000 or an integral
multiple thereof) on a date (the "Change of Control Purchase Date") that is no
later
75
than 30 Business Days after the occurrence of such Change of Control, at a cash
price (the "Change of Control Purchase Price") equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to and
including the Change of Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days
following a Change of Control and must remain open for a period of at least 20
Business Days following its commencement, except to the extent that a longer
period is expressly required by applicable law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
will purchase all Notes tendered in accordance with the terms of the Indenture
in response to the Change of Control Offer. Notice of a Change in Control Offer
shall be given by the Company or, at the Company's written request, by the
Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceedings for the Change in Control Offer.
The notice of the Change of Control Offer shall state:
(a) that the Change of Control has occurred and that such Holder has
the right to require the Company to purchase all or a portion (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes at a
purchase price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase,
which shall be a Business Day, specified in such notice, that is not more
than 30 Business Days after the Change of Control Date (the "Change of
Control Purchase Date");
(b) the amount of accrued and unpaid interest, if any, as of the
Change of Control Purchase Date;
(c) that any Note not tendered for payment will continue to accrue
interest in accordance with the terms thereof;
(d) that, unless the Company defaults in the payment of the Change of
Control Purchase Price for the Notes payable pursuant to the Change of
Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the third Business Day prior to the Change of Control
Purchase Date with the "Option of Holder to Elect Purchase" included in the
change of Control Offer completed and must complete any
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form letter of transmittal proposed by the Company and be completed
correctly by such Holder and be acceptable to the Trustee and the Paying
Agent;
(f) that Holders of Notes will be entitled to withdraw their election
if the Paying Agent receives, not later than 5:00 p.m., New York City time,
on the third Business Day prior to the Change of Control Purchase 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, the Note certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(g) that Holders whose Notes are purchased only in part will be issued
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; and
(h) the instructions that Holders must follow in order to tender their
Notes.
On or before the Change of Control Purchase Date, (i) the Company will
accept for payment Notes or portions thereof properly tendered to the Company
pursuant to the Change of Control Offer; (ii) the Company will deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Change of Control Purchase
Price (including accrued and unpaid interest) of all Notes so tendered; and
(iii) the Company will deliver to the Trustee Notes so accepted together with an
Officers' Certificate listing the Notes or portions thereof being purchased by
the Company. The joint and several obligations of each of the Guarantors upon a
Change of Control extend both to the payment of principal and interest on the
Notes and to the joint and several obligations of each of the Guarantors to
honor the Change of Control repurchase obligations of the Company in the event
that a Change of Control occurs and the Company is unable to pay in full the
Change of Control Purchase Price. The Paying Agent will promptly mail to the
Holders of Notes so accepted, payment in an amount equal to the Change of
Control Purchase Price (including accrued and unpaid interest), and the Trustee
will promptly authenticate and mail or deliver to such Holders a new Note equal
to the principal amount of any unpurchased portion of the Note surrendered. Any
Notes not so accepted will be promptly mailed or delivered by the Company to the
Holder thereof.
On and after a Change of Control Purchase Date, interest will cease to
accrue on the Notes or portions thereof accepted for payment unless the Company
defaults in the payment of the purchase price therefor. The Company will
publicly announce the results of the Change of Control Offer as soon as
practicable after the Change of Control Purchase Date.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any securities
exchange on which the Notes are listed, in connection with the repurchase of
Notes pursuant to a Change of Control Offer, and any violation of the provisions
of this Indenture relating to such Change of Control Offer occurring as a result
of such compliance shall not be deemed a Default.
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Section 10.15. Limitation on Liens.
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien in or on any right, title or interest to any of their
respective properties or assets, now owned or hereafter acquired, securing any
obligation unless the Notes are secured on an equal and ratable basis with such
Lien, other than Permitted Liens.
Section 10.16. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, assume or suffer to
exist any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends, in cash or otherwise, or make other
distributions on its Capital Stock or pay Indebtedness owed to the Company or
any other Restricted Subsidiary, (ii) make any loans or advances to the Company
or any other Restricted Subsidiary or (iii) transfer any of its assets to the
Company or any other Restricted Subsidiary, except (a) restrictions imposed by
the Notes or the Indenture, or restrictions imposed by other Senior Indebtedness
which are substantially the same as (and apply only to the same persons and
property as) such restrictions; (b) restrictions imposed by applicable Gaming
Law; and (c) restrictions under any Acquired Indebtedness not incurred in
violation of the Indenture or any agreement relating to any property, asset, or
business acquired by the Company or any of the Restricted Subsidiaries, which
restrictions existed at the time of such acquisition, were not incurred in
connection with or in anticipation of such acquisition and are not applicable to
any person, other than the person acquired, or to any property, asset or
business, other than the property, assets and business so acquired.
Notwithstanding the foregoing, neither (a) reasonable and customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice; nor (b) Liens on assets
securing Senior Indebtedness not incurred in violation of the Indenture, shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such property or assets, as the
case may be.
Section 10.17. Restrictions on Sale of Capital Stock of Restricted
Subsidiaries.
The Company shall not sell, and shall not cause or permit any of the
Restricted Subsidiaries to transfer, convey, sell, lease or otherwise dispose of
any Capital Stock of any Restricted Subsidiary to any person (other than the
Company or a Guarantor), unless (a) (i) such transfer, conveyance, sale, lease
or other disposition is of all of the Capital Stock of such Restricted
Subsidiary or (ii) after giving effect to such transfer, conveyance, sale, lease
or other disposition, the Company or the applicable Guarantor remains the owner
of a majority of the Capital Stock of such Restricted Subsidiary and (b) the Net
Cash Proceeds from such transfer, conveyance, sale, lease or other disposition
are applied in accordance with Section 10.13.
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Section 10.18. Limitation on Designations of Unrestricted
Subsidiaries.
The Company may designate after the Issue Date any Subsidiary of the
Company (other than a Guarantor in existence on the Issue Date) as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") only if, at the
time of Designation:
(i) no default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(ii) the Company would be permitted to make an Investment at the
time of Designation (assuming the effectiveness of such Designation)
in an amount (the "Designation Amount") equal to the amount of the
Company's Investment in such Subsidiary on such date;
(iii) neither the Company nor any Restricted Subsidiary has any
Indebtedness with respect to which such Unrestricted Subsidiary is
also an obligor or guarantor; and
(iv) the Company would be permitted under this Indenture to incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 10.10 at the time of such Designation (assuming
the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
10.11 for all purposes of this Indenture in the Designation Amount.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time
of and after giving effect to such Revocation (unless the Revocation
cures such default); and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred
at such time, have been permitted to be incurred by the Company or its
Restricted Subsidiaries for all purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee and an Officer's Certificate
certifying compliance with the foregoing provisions.
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Section 10.19. Limitation on Other Senior Subordinated Indebtedness.
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, create, incur, assume, guarantee or in any other
manner become liable with respect to any Indebtedness (other than the Notes and
the Guarantees) that is subordinate in right of payment to any Senior
Indebtedness of the Company or of such Guarantor, as applicable, unless such
Indebtedness is either (a) pari passu in right of payment with the Notes or the
Guarantee, as applicable, or (b) subordinate in right of payment to the Notes or
the Guarantee, as applicable, in the same manner and at least to the same extent
as the Notes are subordinated to Senior Indebtedness or as such Guarantee is
subordinated to Senior Indebtedness of such Guarantor, as applicable.
Section 10.20. Limitation on Lines of Business.
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, engage in any line or lines
of business activity other than in a Related Business.
Section 10.21. Limitation on Status as Investment Company.
Neither the Company nor any Guarantor may become an "investment
company" (as such term is defined in the Investment Company Act of 1940, as
amended) or otherwise become subject to regulation under the Investment Company
Act of 1940, as amended.
As used in this section, the phrase "directly or indirectly" shall not
be construed so as to prohibit an Unrestricted Subsidiary from undertaking the
otherwise prohibited action nor shall such phrase be construed to prohibit the
stockholder of an Unrestricted Subsidiary from voting its stock in favor of such
action.
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
Optional Redemption. The Notes will be redeemable at the option of
the Company, in whole or in part, at any time on or after July 1, 2002, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the date of
redemption, if redeemed during the 12-month period beginning on July 1 of the
years indicated below:
Redemption
Year Price
---- -----------
2002........................ 104.063%
2003........................ 102.708%
2004........................ 101.354%
2005 and thereafter......... 100.000%
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Optional Redemption upon Equity Offering. On or prior to July 1, 2001,
the Company may, at its option, use the Net Proceeds of an Equity Offering to
redeem up to 35% of the originally issued aggregate principal amount of the
Notes, at a redemption price in cash equal to 108 1/8% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
redemption; provided, however, that not less than $97.5 million in aggregate
principal amount of Notes is outstanding following such redemption. Notice of
any such redemption must be given not later than 60 days after the consummation
of the Equity Offering.
As used in the preceding paragraph, an "Equity Offering" means a
public sale of common stock of the Company in a transaction registered with the
SEC.
Section 11.02. Required Regulatory Redemption.
The Notes will be redeemable, in whole or in part, at any time, at
100% of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, (i) pursuant to, and in accordance with, any order of any
Governmental Authority or (ii) 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 of, or to secure the reinstatement of,
any Gaming License, which if lost, impaired, not obtained or not reinstated
would reasonably be expected to have a material adverse effect on the Company
and its Restricted Subsidiaries, considered as a whole, or would restrict the
ability of the Company or any of its Restricted Subsidiaries to conduct business
in any Gaming Jurisdiction, in the case of each of (i) and (ii) where such
redemption or acquisition is required because the Holder or beneficial owner of
such Note is required to be found suitable, or otherwise qualify, under any
Gaming Laws and is not found suitable or so qualified (a "Required Regulatory
Redemption").
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
Section 11.03. Applicability of Article.
Redemption of Notes at the election of the Company as permitted or
required by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
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Section 11.04. Election To Redeem; Notice to Trustee.
The election of the Company to redeem any Notes pursuant to Section
11.01(a) shall be evidenced by a Board Resolution of the Company and an
Officers' Certificate. In case of any redemption at the election of the Company,
the Company shall, at least 20 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 11.05. Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes or portions thereof for redemption 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 listed on a
national securities exchange, on a pro rata basis, by lot or in such other
manner as the Trustee deems appropriate and fair; provided, however, that any
such redemption made with the Net Proceeds of an Equity Offering shall be made
on a pro rata basis or on as nearly a pro rata basis as practicable (subject to
the procedures of the DTC). The Notes may be redeemed in part in multiples of
$1,000 only. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption so long as the Company
has deposited with the paying agent for the Notes funds in satisfaction of the
applicable Redemption Price, plus accrued and unpaid interest, pursuant to this
Indenture.
Section 11.06. Notice of Redemption.
Notice of any optional or mandatory redemption shall be mailed by
first-class mail, postage prepaid, mailed at least 30 but not more than 60 days
before the Redemption Date, to each Holder of Notes to be redeemed at its
registered address.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued and unpaid
interest to be paid;
(c) if fewer than all outstanding Notes are to be redeemed, the
identification of the particular Notes to be redeemed;
(d) in the case of a Note to be redeemed in part, the principal
amount of such Note to be redeemed and that after the Redemption Date
upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be
issued;
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(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Note or portion thereof, and
that (unless the Company shall default in payment of the Redemption
Price) interest thereon shall cease to accrue on and after said date;
(g) the place or places where such Notes are to be surrendered
for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Notes; and
(i) the paragraph of the Notes pursuant to which the Notes are
being redeemed.
Notice of redemption of Notes to be redeemed shall be given by the
Company or, at the Company's written request, by the Trustee in the name and at
the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
Section 11.07. Deposit of Redemption Price.
On or prior to 10:00 a.m., New York City time, on each Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) an amount of money in same day funds sufficient to
pay the Redemption Price of, and accrued interest on, all the Notes or portions
thereof which are to be redeemed on that date.
Section 11.08. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more predecessor Notes, registered as such on the
relevant Regular Record Dates according to the terms and the provisions of
Section 3.06.
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On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and accrued interest on Notes called for redemption shall
have been made available in accordance with Section 11.06, the Notes called for
redemption will cease to accrue interest and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price of and subject to
the provision in the preceding paragraph, accrued and unpaid interest on such
Notes to the Redemption Date. If any Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal and premium, if any,
shall, until paid, bear interest from the Redemption Date at the rate then borne
by such Note.
Section 11.09. Notes Redeemed or Purchased in Part.
Any Note which is to be redeemed or purchased only in part shall be
surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 10.02 (with, if the Company, the Note Registrar or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to, the Company, the Note Registrar or the Trustee duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the portion of the principal of
the Note so surrendered that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of Indenture.
This Indenture shall be discharged and cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of Notes
herein expressly provided for) as to all outstanding Notes, and the Trustee, on
written demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all the Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust) have been delivered to
the Trustee for cancellation or
(ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company or any
Guarantor
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has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the
Notes to the date of deposit together with irrevocable instructions
from the Company directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be;
(b) the Company or any Guarantor has paid all other sums payable under
this Indenture by the Company and the Guarantors; and
(c) the Company and each of the Guarantors have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent under this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 12.01 the obligations of the Trustee under Section 12.02, shall survive.
Section 12.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03, all
money deposited with the Trustee pursuant to Section 12.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal of, premium, if
any, and interest on the Notes for whose payment such money has been deposited
with the Trustee.
ARTICLE THIRTEEN
GUARANTEE OF NOTES
Section 13.01. Guarantee.
Subject to the provisions of this Article Thirteen, each Guarantor, if
any, hereby jointly and severally and fully and unconditionally guarantees to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of (i) the validity and
enforceability of this Indenture, the Notes or the obligations of the Company or
any other Guarantors to the Holders or the Trustee hereunder or thereunder or
(ii) the absence of any action to enforce the same or any other circumstances
which might otherwise constitute a legal or equitable discharge or default of a
Guarantor, that: (a) the principal of, premium, if any, and interest on the
Notes will be duly and punctually paid in full when due, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Notes and all other
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obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including fees, expenses or other) and all other
Obligations on the Notes will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations with
respect to the Notes, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders, for whatever reason, each Guarantor will be obligated to
pay, or to perform or cause the performance of, the same immediately. An Event
of Default under this Indenture or the Notes shall constitute an event of
default under this Guarantee, and shall entitle the Holders to accelerate the
obligations of the Guarantors hereunder in the same manner and to the same
extent as the obligations of the Company.
Each of the Guarantors, if any, hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each of the Guarantors hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and this
Guarantee. If any Holder or the Trustee is required by any court or otherwise to
return to the Company or to any Guarantor, or any custodian, trustee, liquidator
or other similar official acting in relation to the Company or such Guarantor,
any amount paid by the Company or such Guarantor to the Trustee or such Holder,
this Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor further agrees that, as between it, on the
one hand, and the Holders of Notes and the Trustee, on the other hand, (a)
subject to this Article Thirteen, the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Five hereof for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby,
and (b) in the event of any acceleration of such obligations as provided in
Article Five hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Guarantee.
This Guarantee shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Company for
liquidation or reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Notes are,
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pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on the Notes, whether as a "voidable
preference," "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past,
present or future, or any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employer or incorporator.
The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Guarantee.
Notwithstanding any of the foregoing, each Guarantor's liability under
this Section 13.01 shall be limited to the maximum amount that would not result
in such Guarantor's Guarantee under this Section 13.01 constituting a fraudulent
conveyance or fraudulent transfer under applicable law.
Section 13.02. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 13.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form included in Exhibit E hereto, shall be endorsed on each Note authenticated
and delivered by the Trustee after such Guarantee is executed and executed by
either manual or facsimile signature of an Officer of each Guarantor. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Note.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 13.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Note no longer holds that office at the time the Trustee authenticates such Note
or at any time thereafter, such Guarantor's Guarantee of such Note shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
Section 13.03. Additional Guarantors.
The Company shall cause each Restricted Subsidiary formed or acquired
after the Issue Date or any Unrestricted Subsidiary that is designated a
Restricted Subsidiary after the Issue Date to (i) execute and deliver to the
Trustee a supplemental indenture in a form
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satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes on
the terms set forth in this Indenture and (ii) deliver to the Trustee an Opinion
of Counsel, subject to customary assumptions and exclusions, stating that such
supplemental indenture has been duly executed and delivered by such Restricted
Subsidiary.
Section 13.04. Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and each Holder of a Note, by its
acceptance thereof, likewise covenants and agrees, that, in accordance with the
terms of Articles Thirteen and Fourteen, all payments pursuant to the Guarantee
made by or on behalf of such Guarantor are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all amounts payable
under all existing and future Guarantor Senior Indebtedness and Senior
Indebtedness, including such Guarantor's Obligations under the Credit Agreement.
This Section 13.04 and Article Fourteen shall constitute a continuing
offer to all persons who, in reliance upon such provisions, become holders of,
or continue to hold Guarantor Senior Indebtedness or any Senior Indebtedness;
and such provisions are made for the benefit of the holders of Guarantor Senior
Indebtedness and Senior Indebtedness; and such holders (to such extent) are made
obligees hereunder and they or each of them may enforce such provisions.
Section 13.05. Release of a Guarantor.
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor or the sale of a Guarantor by
way of merger, consolidation or otherwise, (ii) a Subsidiary becoming an
Unrestricted Subsidiary pursuant to the terms of this Indenture or (iii) a sale
or other disposition of all of the Capital Stock of any Guarantor, then such
Guarantor or the corporation acquiring the property, as applicable, shall be
released and relieved of any obligations under its guarantee, provided that the
Company complies with the provisions of the covenant described in Section 10.13.
Upon the release of any Guarantor from its Guarantee pursuant to the provisions
of this Indenture, each other Guarantor not so released shall remain liable for
the full amount of principal of, and interest on, the Notes as and to the extent
provided in this Indenture.
(b) The Trustee shall deliver an appropriate instrument evidencing the
release of a Guarantor upon receipt of a request of the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
13.05. Any Guarantor not so released or the entity surviving such Guarantor, as
applicable, will remain or be liable under its Guarantee as provided in this
Article Thirteen.
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The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Notes and under this Article
Thirteen.
Except as set forth in Articles Eight and Ten and this Section 13.05,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
Section 13.06 Waiver of Subrogation.
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guarantee and this Indenture until all obligations under the Notes
have been paid in full, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Holders of the Notes, and shall, subject to the
subordination provisions of this Article Thirteen and to Article Fourteen,
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated by this
Indenture and that the waiver set forth in this Section 13.06 is knowingly made
in contemplation of such benefits.
ARTICLE FOURTEEN
SUBORDINATION OF NOTES AND GUARANTEES
Section 14.01 Notes Subordinate to Senior Indebtedness; Guarantee
Obligations Subordinated to Guarantor Senior Indebtedness.
The Company and each Guarantor covenants and agrees, and each Holder
of a Note, by his acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article Fourteen, the
Indebtedness represented by the Notes and the Guarantees are hereby expressly
made subordinate and subject in right of payment as provided in this Article to
the prior payment in full of all Senior Indebtedness and Guarantor Senior
Indebtedness, as applicable (including the indebtedness under the Credit
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Agreement). This Indenture shall not be secured by a Lien on any assets of the
Company or the Guarantors, including, without limitation, the Company's Indiana
and Illinois gaming licenses.
This Article Fourteen shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue to
hold Senior Indebtedness or Guarantor Senior Indebtedness; and such provisions
are made for the benefit of the holders of Senior Indebtedness and Guarantor
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them individually or through their representative may enforce such
provisions.
Section 14.02. Payment Over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relating to the Company or any Guarantor, or
(b) any liquidation, dissolution or other winding-up of the Company or such
Guarantor, as applicable, whether voluntary or involuntary or any assignment for
the benefit of creditors or other marshalling of assets or liabilities of the
Company or such Guarantor, as applicable, and whether or not involving
insolvency or bankruptcy, then and in any such event:
(1) the holders of all Senior Indebtedness or all Guarantor Senior
Indebtedness of such Guarantor, as applicable, shall be entitled to receive
payment in full of all Obligations due in respect of such Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, before the
Holders are entitled to receive any payment or distribution of any kind or
character (except that Holders of Notes may receive Capital Stock or any
debt securities that are subordinated to Senior Indebtedness to at least
the same extent as the Notes or the Guarantees, as applicable) on account
of the Notes or the Guarantees, as applicable, and until all Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, is paid in
full, any distribution to which Holders of the Notes or the Guarantees, as
applicable, would be entitled but for this provision shall be made to
holders of Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, as their interests may appear, except that Holders of the Notes
or the Guarantees, as applicable, may receive Capital Stock or any debt
securities that are subordinated to Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, to at least the same extent as the Notes or
the Guarantees, as applicable; and
(2) any payment or distribution of assets of the Company or of such
Guarantor, as applicable, of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to which the Holders or
the Trustee would be entitled but for the provisions of this Article shall
be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness or Guarantor
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Senior Indebtedness, as applicable, may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, held or
represented by each, to the extent necessary to make payment in full of all
Senior Indebtedness or Guarantor Senior Indebtedness, as applicable,
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section 14.02, the Trustee or the Holder of any Note or Guarantee, as
applicable, shall have received any payment or distribution of properties
or assets of the Company or any Guarantor, as applicable, of any kind or
character, whether in cash, property or securities, by set off or otherwise
in respect of the Notes or the Guarantees, as applicable, before all Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, is paid or
provided for in full, then and in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other person
making payment or distribution of assets of the Company or such Guarantor,
as applicable, for application to the payment of all Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, remaining unpaid, to the
extent necessary to pay all Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable.
The consolidation of the Company with, or the merger of the Company
with or into, another person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another person upon the terms and conditions set
forth in Article Eight hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Article if the person formed by such consolidation or the surviving entity of
such merger or the person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article Eight.
Section 14.03 Suspension of Payment When Designated Senior
Indebtedness is in Default; Suspension of Guarantee Obligations When Guarantor
Senior Indebtedness in Default.
(a) Unless Section 14.02 shall be applicable, during the continuance
of any default in the payment of any Designated Senior Indebtedness or Guarantor
Senior Indebtedness pursuant to which the maturity thereof may immediately be
accelerated beyond any applicable grace period, no payment or distribution of
any assets of the Company or of the applicable Guarantor, as applicable, of any
kind or character (except that Holders of Notes may receive Capital Stock or any
debt securities that are subordinated to Senior Indebtedness and Guarantor
Senior Indebtedness to at least the same extent as the Notes) shall be made on
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account of the principal of, premium, if any, or interest on, or the purchase,
redemption or other acquisition of, the Notes or such Guarantee, as applicable,
unless and until such default has been cured or waived or has ceased to exist or
such Designated Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, shall have been discharged or paid in full.
(b) Unless Section 14.02 shall be applicable, during the continuance
of any Non-payment Default and after receipt by the Trustee from the
representatives of any holders of Designated Senior Indebtedness or Guarantor
Senior Indebtedness, as applicable, of a written notice of such Non-payment
Default, no payment or distribution of any assets of the Company or the
applicable Guarantor, as applicable, of any kind or character (except that
Holders of Notes may receive Capital Stock or any debt securities that are
subordinated to Senior Indebtedness and Guarantor Senior Indebtedness to at
least the same extent as the Notes) may be made by the Company or such
Guarantor, as applicable, on account of the principal of, premium, if any, or
interest on, or the purchase, redemption or other acquisition of, the Notes or
the applicable Guarantee, as applicable, for a period (the "Payment Blockage
Period") commencing upon the receipt of written notice of a Non-payment Default
by the Trustee from the representatives of holders of Designated Senior
Indebtedness or such Guarantor Senior Indebtedness, as applicable, specifying an
election to effect a Payment Blockage Period and will end on the earlier to
occur of the following events: (i) 179 days shall have elapsed since the receipt
of such notice of a Non-payment Default (provided that such Designated Senior
Indebtedness or such Guarantor Senior Indebtedness, as applicable, shall not
theretofore have been accelerated), (ii) such default is cured or waived or
ceases to exist or such Designated Senior Indebtedness or such Guarantor Senior
Indebtedness, as applicable, is discharged or (iii) such Payment Blockage Period
shall have been terminated by written notice to the Company or the Trustee from
the representatives of holders of Designated Senior Indebtedness or such
Guarantor Senior Indebtedness, as applicable, initiating such Payment Blockage
Period. After the end of any Payment Blockage Period, the Company shall promptly
resume making any and all required payments in respect of the Notes, including
any missed payments, or such Guarantor shall resume making any and all required
payments in respect of its obligations under the Guarantee, as applicable.
Notwithstanding anything in the subordination provisions of this Indenture or
the Notes to the contrary, (x) in no event shall a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period, (y) there shall be a period of at least
186 consecutive days in each 365-day period when no Payment Blockage Period is
in effect and (z) not more than one Payment Blockage Period with respect to the
Notes or any Guarantee may be commenced within any period of 365 consecutive
days. A Non-payment Default with respect to Designated Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, that existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness or Guarantor Senior Indebtedness, as applicable,
initiating such Payment Blockage Period cannot be made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default has been cured or waived for a
period of not less than 90 consecutive days and subsequently recurs.
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(c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Note shall have received any payment or distribution
prohibited by the foregoing provisions of this Section 14.03, then and in such
event such payment or distribution shall be paid over and delivered forthwith to
representatives of the holders of Senior Indebtedness or such Guarantor Senior
Indebtedness, as applicable, as a court of competent jurisdiction shall direct
for application to the payment of any due and unpaid Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, to the extent necessary to pay all
such due and unpaid Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, after giving effect to any concurrent payment to or for the holders
of Senior Indebtedness or Guarantor Senior Indebtedness, as applicable.
Section 14.04 Trustee's Relation to Senior Indebtedness and Guarantor
Senior Indebtedness.
With respect to the holders of Senior Indebtedness and Guarantor
Senior Indebtedness, the Trustee undertakes to perform or to observe only such
of its covenants and obligations as are specifically set forth in this Article
Fourteen, and no implied covenants or obligations with respect to the holders of
Senior Indebtedness or Guarantor Senior Indebtedness, as applicable, shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness or Guarantor Senior
Indebtedness, and the Trustee shall not be liable to any holder of Senior
Indebtedness or Guarantor Senior Indebtedness, if it shall mistakenly pay over
or deliver to Holders, the Company, the Guarantors or any other person moneys or
assets to which any holder of Senior Indebtedness or Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Fourteen or otherwise.
Section 14.05 Subrogation.
Upon the payment in full of all Senior Indebtedness and Guarantor
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness and Guarantor Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness and Guarantor Senior Indebtedness until the principal of and
interest on the Notes and all amounts due under the Guarantees shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness or Guarantor Senior Indebtedness of any cash,
property or securities to which the Holders or the Trustee would be entitled
except for the provisions of this Article, and no payments pursuant to the
provisions of this Article to the holders of Senior Indebtedness or Guarantor
Senior Indebtedness by Holders or the Trustee shall, as among the Company, the
Guarantors, their respective creditors other than holders of Senior Indebtedness
or such Guarantor Senior Indebtedness, and the Holders, be deemed to be a
payment or distribution by the Company or any Guarantor to or on account of the
Senior Indebtedness or any Guarantor Senior Indebtedness.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Fourteen shall have
been applied, pursuant to the provisions of this Article Fourteen, to the
payment of all amounts payable under the Senior
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Indebtedness of the Company or under the Guarantor Senior Indebtedness of the
Guarantors, then and in such case the Holders shall be entitled to receive from
the holders of such Senior Indebtedness or such Guarantor Senior Indebtedness at
the time outstanding any payments or distributions received by such holders of
such Senior Indebtedness or such Guarantor Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness or such Guarantor Senior Indebtedness in full.
Section 14.06 Provisions Solely To Define Relative Rights.
The provisions of this Article Fourteen are and are intended solely
for the purpose of defining the relative rights of the Holders on the one hand
and the holders of Senior Indebtedness and Guarantor Senior Indebtedness on the
other hand. Nothing contained in this Article Fourteen or elsewhere in this
Indenture (other than a release pursuant to Section 13.05) or in the Notes is
intended to or shall (a) impair, as among the Company, each Guarantor, their
respective creditors other than holders of Senior Indebtedness or Guarantor
Senior Indebtedness and the Holders, the obligation of the Company and each
Guarantor, which is absolute and unconditional, to pay to the Holders the
principal of, premium, if any, and interest on the Notes and to make payments in
respect of obligations under the Guarantees as and when the same shall become
due and payable in accordance with their terms; or (b) affect the relative
rights against the Company or any Guarantor of the Holders and creditors of the
Company or any Guarantor other than the holders of Senior Indebtedness or
Guarantor Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Note from exercising all remedies otherwise permitted by applicable law upon a
Default or an Event of Default under this Indenture, subject to the rights, if
any, under this Article Fourteen of the holders of Senior Indebtedness or
Guarantor Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshalling of assets and liabilities of the Company or any Guarantor
referred to in Section 14.02, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or deliverable to
the Trustee or such Holder, or (2) under the conditions specified in Section
14.03, to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 14.03(c).
The failure by the Company to make a payment on the Notes or by any
Guarantor to make payment in respect of its obligations under a Guarantee by
reason of any provision of this Article Fourteen shall not be construed as
preventing the occurrence of a Default or an Event of Default hereunder.
Section 14.07 Trustee To Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article Fourteen and appoints
the Trustee his attorney-in-fact for any and all such purposes, including, in
the event of any dissolution, winding-up, liquidation or reorganization of the
Company or any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company or any Guarantor owing to such Holder in the
94
form required in such proceedings and the causing of such claim to be approved.
If the Trustee does not file such a claim prior to 30 days before the expiration
of the time to file such a claim, the holders of Senior Indebtedness or
Guarantor Senior Indebtedness, or any Senior Representative, may file such a
claim on behalf of Holders of the Notes.
Section 14.08 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness or Guarantor Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or any Guarantor or by any act or
failure to act, in good faith, by any such holder, or by any non-compliance by
the Company or any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
14.08, the holders of Senior Indebtedness or Guarantor Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Article
Fourteen or the obligations hereunder of the Holders to the holders of Senior
Indebtedness or such Guarantor Senior Indebtedness, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or such Guarantor Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness or such Guarantor Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness or such Guarantor Senior Indebtedness;
(3) release any person liable in any manner for the collection or payment of
Senior Indebtedness or such Guarantor Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against the Company or such Guarantor and any
other person; provided, however, that in no event shall any such actions limit
the right of the Holders to take any action to accelerate the maturity of the
Notes pursuant to Article Five hereof or to pursue any rights or remedies
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
Section 14.09 Notice to Trustee.
(a) The Company and each Guarantor shall give prompt written notice to
the Trustee of any fact known to the Company or such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the Notes
or any Guarantee. Notwithstanding the provisions of this Article Fourteen or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Notes or any Guarantee, unless
and until the Trustee shall have received written notice thereof from the
Company, such Guarantor or a holder of Senior Indebtedness or Guarantor Senior
Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
this Section 14.09, shall be
95
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 14.09 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose under this Indenture
(including, without limitation, the payment of the principal of or interest on
any Note), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Senior Indebtedness
or Guarantor Senior Indebtedness or any trustee, fiduciary or agent thereof, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within two
Business Days prior to such date; nor shall the Trustee be charged with
knowledge of the curing of any such default or the elimination of the act or
condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice to the Trustee by a
person representing himself to be a holder of Senior Indebtedness or Guarantor
Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish
that such notice has been given by a holder of Senior Indebtedness or Guarantor
Senior Indebtedness (or a trustee, fiduciary or agent therefor). In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any person as a holder of Senior Indebtedness or
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Fourteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness or Guarantor Senior Indebtedness held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article Fourteen, and if such evidence is not furnished, the Trustee may
defer any payment to such person pending judicial determination as to the right
of such person to receive such payment.
Section 14.10 Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company or any
Guarantor referred to in this Article Fourteen, the Trustee, subject to the
provisions of Section 6.01, and the Holders, shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding-up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the Holders of Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, and other Indebtedness of the Company or such
Guarantor, as applicable, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article; provided, however, that the foregoing shall apply only if such
court has been fully apprised of the provisions of this Article Fourteen.
96
Section 14.11 Rights of Trustee as a Holder of Senior Indebtedness or
Guarantor Senior Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Fourteen with respect to any Senior
Indebtedness or any Guarantor Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness or
Guarantor Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article Fourteen
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.07.
Section 14.12 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article Fourteen in addition to or in place of the Trustee;
provided that Section 14.11 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 14.13 No Suspension of Remedies.
Nothing contained in this Article Fourteen shall limit the right of
the Trustee or the Holders to take any action to accelerate the maturity of the
Notes pursuant to Article Five or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article Fourteen
of the Holders, from time to time, of Senior Indebtedness or any Guarantor
Senior Indebtedness.
97
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS RIVER CASINO FINANCE CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: President
EMPRESS CASINO JOLIET CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Exective Officer
HAMMOND RESIDENTIAL, L.L.C.
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
U.S. BANK TRUST NATIONAL ASSOCIATION as Trustee
By: /s/ R. Probosch
-----------------------------------------------
Name: Richard H. Probosch
Title: Assistant Vice President
EXHIBIT A
EMPRESS ENTERTAINMENT, INC.
8 1/8% SENIOR SUBORDINATED NOTE DUE 2006
CUSIP No.
No. _________________ $
EMPRESS ENTERTAINMENT, INC., a Delaware corporation (the "Company," which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to _________ or registered assigns, the
principal sum of ________ United States Dollars on July 1, 2006, at the office
or agency of the Company referred to below, and to pay interest thereon on
January 1 and July 1, in each year, commencing on January 1, 1999 (each an
"Interest Payment Date"), accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, at
the rate of 8 1/8% per annum, until the principal hereof is paid or duly
provided for. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse hereof, be paid in arrears to the person in whose name this Note (or one
or more predecessor Notes) is registered at the close of business on the
December 15 or June 15 (each a "Regular Record Date"), whether or not a Business
Day, as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this Note
will be made at the Corporate Trust office or agency of the Trustee maintained
for that purpose in The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check (which may be a check of the Company)
mailed to the address of the person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
Dated: U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Trustee
By:
Authorized Signatory
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
EMPRESS ENTERTAINMENT, INC.
By:
Name:
Title:
By:
Name:
Title:
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(REVERSE OF NOTE)
8 1/8% Senior Subordinated Note due 2006
1. Indenture. This Note is one of a duly authorized issue of Notes of
the Company designated as its 8 1/8% Senior Subordinated Notes due 2006 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $150,000,000, which may be issued under
an indenture (the "Indenture") dated as of June 18, 1998, by and among the
Company, as Issuer, the Guarantors named therein and U.S. Bank Trust National
Association, as trustee (the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders, and of the terms upon
which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, premium, if any, and interest on
this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
2. Guarantees. This Note is entitled to certain senior subordinated
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to Article Thirteen of the Indenture for terms relating to the Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full in cash of all existing and future
Senior Indebtedness (including the Indebtedness under the Credit Agreement).
Each Holder, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and subject
in right of payment upon any defeasance of this Note referred to in Paragraph 7
below.
4. Redemption.
(a) Optional Redemption. Subject to earlier redemption in the manner
described in the next two succeeding paragraphs, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time on or after July 1,
2002 at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest, if any, to the date of
redemption, if redeemed during the 12-month period beginning July 1 of the years
indicated below:
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Year Redemption Price
---- ----------------
2002 104.063%
2003 102.708%
2004 101.354%
2005 and thereafter 100.000%
On or prior to July 1, 2001, the Company may, at its option, use the net
proceeds of an Equity Offering to redeem up to 35% of the originally issued
aggregate principal amount of the Notes, at a redemption price in cash equal to
108 1/8% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided, however, that not less
than $97.5 million in aggregate principal amount of Notes is outstanding
following such redemption. Notice of any such redemption must be given not later
than 60 days after the consummation of the Equity Offering.
As used in the preceding paragraph, an "Equity Offering" means a public
sale of common stock of the Company in a transaction registered with the
Commission.
(b) Required Regulatory Redemption. The Notes will be redeemable, in whole
or in part, at any time, at 100% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, (i) pursuant to, and in accordance
with, any order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License (a "Gaming Authority"), or (ii) 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 of, or to secure the reinstatement of, any Gaming License, which if
lost, impaired, not obtained or not reinstated would reasonably be expected to
have a material adverse effect on the Company or any of its Restricted
Subsidiaries, considered as a whole, or would restrict the ability of the
Company or any of its Restricted Subsidiaries to conduct business in any Gaming
Jurisdiction, in the case of each of (i) and (ii) where such redemption or
acquisition is required because the Holder or beneficial owner of such Note is
required to be found suitable, or otherwise qualify, under any Gaming Laws and
is not found suitable or so qualified.
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
(c) Redemption Upon Change of Control. Upon the occurrence of a Change of
Control, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable, unconditional offer by the Company (a "Change of
Control Offer") to require the Company to repurchase all or any portion of such
Holder's Notes (provided that the principal amount of such Notes at maturity
must be $1,000 or an integral multiple thereof) on a date (the
A-6
"Change of Control Purchase Date") that is no later than 30 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to and including the Change of
Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days
following a Change of Control and must remain open for a period of at least 20
Business Days following its commencement, except to the extent that a longer
period is expressly required by applicable law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
will purchase all Notes tendered in accordance with the terms of the Indenture
in response to the Change of Control Offer.
(d) Sinking Fund. The Company will not be required to make any mandatory
sinking fund payments in respect of the Notes.
(e) Interest Payments. In the case of any redemption of the Notes,
interest installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Notes, or one or more predecessor
Notes, of record at the close of business on the relevant Record Date referred
to on the face hereof. Notes (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
(f) Partial Redemption. In the event of redemption of the Note in part
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.13 and 10.14 of the Indenture
provide that following certain Asset Sales (with respect to Section 10.13) and
upon the occurrence of a Change of Control (with respect to Section 10.14) and
subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall occur and be
continuing, the principal of all of the outstanding Notes, plus all accrued and
unpaid interest, if any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
7. Defeasance. The Indenture contains provisions (which provisions
apply to this Note) for defeasance at any time of (a) the entire indebtedness of
the Company on this Note and (b) certain restrictive covenants and related
Defaults and Events of Default, in each case upon compliance by the Company with
certain conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee (if a party
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
A-7
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
9. Denominations, Transfer and Exchange. The Notes are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of the authorized denomination, as requested by the
Holder surrendering the same.
The transfer of this Note is registrable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Company as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due presentment
of this Note for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this Note
is registered as the owner hereof for all purposes, whether or not this Note
shall be overdue, and neither the Company, the Trustee nor any agent shall be
affected by notice to the contrary.
11. Registration Rights. Pursuant to the Registration Rights Agreement
among the Company, the Guarantors, if any, and the Initial Purchasers for
themselves and on behalf of the Holders of the Initial Notes, the Company will
be obligated to consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for the Company's 8 1/8%
Senior Subordinated Notes due 2006, which will have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
12. No Recourse Against Others. No director, officer, employee or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Guarantees or this Indenture. Each Holder by accepting a Note waives and
releases all such liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
A-8
13. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE,
THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
A-9
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number)____________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date:_________________ Your signature: ____________________________________
(Sign exactly as your name appears
on the other side of this Note)
By:_________________________________
NOTICE: To be executed by an
executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
A-10
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the second anniversary of the Issue Date, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with and that such transfer is:
[Check One]
(1) _ to the Company or a subsidiary thereof; or
(2) _ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) _ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter can
be obtained from the Trustee); or
(4) _ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) _ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof, provided, that if box (3), (4) or (5) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such written legal opinions, certifications
(including an investment letter in the case of box (3) or (4)), and other
information as the Trustee, Note Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing boxes are checked, the Trustee or Note
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.05 of the Indenture
shall have been satisfied.
Date:______________ Your signature:_________________________________
(Sign exactly as your name
appears on the other side of this
Security)
Signature Guarantee:_____________
A-11
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date: ________________ ______________________________________________________
NOTICE: To be executed by an executive officer
A-12
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 10.13 or 10.14 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.13 or 10.14 of the Indenture, state the amount:
$__________________
Date:___________ Your signature: ___________________________
(Sign exactly as your name
appears on the other side
of this Note)
By:________________________
NOTICE: To be signed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
A-13
EXHIBIT B
EMPRESS ENTERTAINMENT, INC.
8 1/8% SENIOR SUBORDINATED NOTE DUE 2006
CUSIP No.
No. __________________ $
EMPRESS ENTERTAINMENT, INC., a Delaware corporation (the "Company," which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to _______________________, or registered
assigns, the principal sum of __________________ United States Dollars on July
1, 2006, at the office or agency of the Company referred to below, and to pay
interest thereon on January 1 and July 1 in each year, commencing on January 1,
1999 (each an "Interest Payment Date"), accruing from the Issue Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 8 1/8% per annum, until the principal hereof is
paid or duly provided for. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse hereof, be paid in arrears to the person in whose name this Note (or one
or more predecessor Notes) is registered at the close of business on the
December 15 or June 15 each a "Regular Record Date"), whether or not a Business
Day, as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this Note
will be made at the corporate trust office or agency of the Trustee maintained
for that purpose in The City of New York, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts: provided, however, that payment of interest may be
made at the option of the Company by check (which may be a check of the Company)
mailed to the address of the person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
B-1
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
EMPRESS ENTERTAINMENT, INC.
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
B-3
(REVERSE OF NOTE)
8 1/8% Senior Subordinated Note due 2006
1. Indenture. This Note is one of a duly authorized issue of Notes of
the Company designated as its 8% Senior Subordinated Notes due 2006 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $150,000,000, which may be issued under
an indenture (the "Indenture") dated as of June 18, 1998, by and among the
Company, as Issuer, the Guarantors named therein and U.S. Bank, National
Association, as trustee (the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders, and of the terms upon
which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
2. Guarantees. This Note is entitled to certain senior subordinated
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to Article Thirteen of the Indenture for terms relating to the Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full in cash of all existing and future
Senior Indebtedness (including the Indebtedness under the Credit Agreement).
Each Holder, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and subject
in right of payment upon any defeasance of this Note referred to in Paragraph 7
below.
4. Redemption.
(a) Optional Redemption. Subject to earlier redemption in the manner
described in the next two succeeding paragraphs, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time on or after July 1,
2002, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest, if any, to the date of
redemption, if redeemed during the 12-month period beginning July 1 of the years
indicated below:
B-4
Year Redemption Price
---- ----------------
2002 104.063%
2003 102.708%
2004 101.354%
2005 and thereafter 100.000%
On or prior to July 1, 2001, the Company may, at its option, use the net
proceeds of an Equity Offering to redeem up to 35% of the originally issued
aggregate principal amount of the Notes, at a redemption price in cash equal to
108 1/8% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided, however, that not less
than $97.5 million in aggregate principal amount of Notes is outstanding
following such redemption. Notice of any such redemption must be given not later
than 60 days after the consummation of the Equity Offering.
As used in the preceding paragraph, an "Equity Offering" means a public
sale of common stock of the Company in a transaction registered with the
Commission.
(b) Required Regulatory Redemption. The Notes will be redeemable, in whole
or in part, at any time, at 100% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, (i) pursuant to, and in accordance
with, any order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License (a "Gaming Authority"), or (ii) 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 of, or to secure the reinstatement of, any Gaming License, which if
lost, impaired, not obtained or not reinstated would reasonably be expected to
have a material adverse effect on the Company or any of its Restricted
Subsidiaries, considered as a whole, or would restrict the ability of the
Company or any of its Restricted Subsidiaries to conduct business in any Gaming
Jurisdiction, in the case of each of (i) and (ii) where such redemption or
acquisition is required because the Holder or beneficial owner of such Note is
required to be found suitable, or otherwise qualify, under any Gaming Laws and
is not found suitable or so qualified.
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
(c) Redemption Upon Change of Control. Upon the occurrence of a Change of
Control, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable, unconditional offer by the Company (a "Change of
Control Offer") to require the Company to repurchase all or any portion of such
Holder's Notes (provided that the principal amount of such Notes at maturity
must be $1,000 or an integral multiple thereof) on a date (the
B-5
"Change of Control Purchase Date") that is no later than 30 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to and including the Change of
Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days following
a Change of Control and must remain open for a period of at least 20 Business
Days following its commencement, except to the extent that a longer period is
expressly required by applicable law (the "Change of Control Offer Period").
Upon expiration of the Change of Control Offer Period, the Company will purchase
all Notes tendered in accordance with the terms of the Indenture in response to
the Change of Control Offer.
(d) Sinking Fund. The Company will not be required to make any mandatory
sinking fund payments in respect of the Notes.
(e) Interest Payments. In the case of any redemption of the Notes,
interest installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Notes, or one or more predecessor
Notes, of record at the close of business on the relevant Record Date referred
to on the face hereof. Notes (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
(f) Partial Redemption. In the event of redemption of the Note in part
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.13 and 10.14 of the Indenture provide
that following certain Asset Sales (with respect to Section 10.13) and upon the
occurrence of a Change of Control (with respect to Section 10.14) and subject to
further limitations contained therein, the Company shall make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall occur and be
continuing, the principal of all of the outstanding Notes, plus all accrued and
unpaid interest, if any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
7. Defeasance. The Indenture contains provisions (which provisions apply
to this Note) for defeasance at any time of (a) the entire indebtedness of the
Company on this Note and (b) certain restrictive covenants and related Defaults
and Events of Default, in each case upon compliance by the Company with certain
conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee (if a party
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
B-6
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
9. Denominations, Transfer and Exchange. The Notes are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of the authorized denomination, as requested by the
Holder surrendering the same.
The transfer of this Note is registrable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Company as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due presentment of
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Company, the Trustee nor any agent shall be affected
by notice to the contrary.
11. No Recourse Against Others. No director, officer or employee or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Guarantees or the Indenture. Each Holder of Notes by accepting a Note waives and
releases all such liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
12. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE,
THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS NOTE.
B-7
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
(Insert assignee's social security or tax ID number) ___________________________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date:__________________ Your signature:____________________________________
(Sign exactly as your name appears
on the other side of this Note)
By:_________________________________
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-8
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
10.13 or 10.14 of the Indenture, check the Box: [_]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.13 or 10.14 of the Indenture, state the amount:
$_________________
Date: ____________ Your signature:____________________________
(Sign exactly as your name
appears on the other side of
this Note)
By:_________________________
NOTICE: To be signed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-9
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with Subsequent
Transfers to Non-QIB Accredited Investors
______________, ____
Re: Empress Entertainment, Inc. (the "Company")
8 1/8% Senior Subordinated Notes due 2006 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of June 18, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that
if we should sell any Notes within two years after the original issuance of
the Notes, we will do so only (A) to the Company or any subsidiary thereof,
(B) inside the United States in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein),
(C) inside the United States to an "institutional accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you a signed letter substantially in
the form of this letter, (D) outside the United States in accordance with
Rule 904 of Regulation S under the Securities Act, (E) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein, or (F) pursuant to another available exemption from the
registration requirements of the Securities Act.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certification,
written legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and
C-1
risks of our investment in the Notes, and we and any accounts for which we
are acting are each able to bear the economic risk of our or its
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
C-2
You the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
______________, ____
Attention:
Re: Empress Entertainment, Inc. (the "Company")
8 1/8% Senior Subordinated Notes due 2006 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By: ________________________
D-2
EXHIBIT E
SENIOR SUBORDINATED GUARANTEE
For value received, the undersigned hereby unconditionally guarantees to
the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will become
effective in accordance with Article Eleven of the Indenture and its terms shall
be evidenced therein. The validity and enforceability of any Guarantee shall not
be affected by the fact that it is not affixed to any particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:_________________________________
Name:
Title:
E-1
EXHIBIT 4.53
SUPPLEMENTAL INDENTURE
Supplemental Indenture (this "Supplemental Indenture"), dated as of
December 1, 1999, among Empress Casino Hammond Corporation, Hammond Residential,
L.L.C. and Empress Casino Joliet Corporation (collectively, the "Subsidiary
Guarantors"), each a Subsidiary of Horseshoe Gaming Holding Corp., a Delaware
corporation (the "Company"), the successor to Horseshoe Gaming, L.L.C. ("LLC")
under the Indenture, dated as of June 15, 1997 (the "Indenture"), among LLC,
Robinson Property Group, Limited Partnership and U.S. Trust Company of Texas,
N.A., as trustee (the "Trustee"), providing for the issuance of 9_% Senior
Subordinated Notes due 2007 (the "Notes").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee a Supplemental Indenture, dated as of December 1, 1999, under which the
Company assumed all of LLC's obligations under the Indenture and the Notes;
WHEREAS, the Indenture provides that under certain circumstances the
Subsidiaries of the Company are required to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Subsidiaries shall unconditionally
guarantee all of the Company's obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Subsidiary Guarantors, the Company and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Subsidiary Guarantors jointly and
severally irrevocably and unconditionally guarantee to each Holder of a Note
authenticated and delivered by the Trustee and its successors and assigns,
irrespective of the validity or enforceability of the Indenture, the Notes or
the Obligations of the Company under the Indenture or the Notes, that (x) the
principal and premium (if any) of and interest and Liquidated Damages, if any,
on the Notes and related costs and expenses will be paid in full when due,
whether at the maturity or interest payment date, by acceleration, call for
redemption, upon an Offer to Purchase, or otherwise and interest on the overdue
principal and premium (if any) of and interest and Liquidated Damages, if
any, on the Notes and all other obligations of the Company to the Holders or the
Trustee under the Indenture or the Notes will be promptly paid in full or
performed all in accordance with the terms of the Indenture and the Notes; and
(y) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, they will be paid in full when due in accordance with
the terms of the extension or renewal, whether at maturity, by acceleration,
call for redemption, upon an Offer to Purchase or otherwise.
The obligations of the Subsidiary Guarantors to the Holders and to the
Trustee pursuant to this Supplemental Indenture and the Indenture are expressly
set forth in Article XII of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Supplemental Indenture.
THE TERMS OF ARTICLE XII OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
No past, present or future director, officer, employee, incorporator or
stockholder (direct or indirect) of the Guarantors (or any such successor
entity), as such, shall have any liability for any Obligations of the Guarantors
under this Supplemental Indenture or the Indenture or for any claim based on, in
respect of, or by reason of, such Obligations or their creation, except in their
capacity as an obligor or Guarantor of the Notes in accordance with the
Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Subsidiary Guarantors and their successors
and assigns until full and final payment of all of the Obligations under the
Notes and Indenture or until released in accordance with the Indenture and shall
inure to the benefit of the successors and assigns of the Trustee and the
Holders, and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges herein conferred upon that party shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions hereof. This is a guarantee of payment and
not of collectibility.
The Obligations of the Subsidiary Guarantors under this Supplemental
Indenture shall be limited to the extent necessary to ensure that they do not
constitute a fraudulent conveyance under applicable law.
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
4. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
-2-
5. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
COMPANY:
HORSESHOE GAMING HOLDING CORP.
Name: Jack B. Binion
Title: President
THE SUBSIDIARY GUARANTORS:
EMPRESS CASINO HAMMOND CORPORATION
By:
Name: Jack B. Binion
Title: President
EMPRESS CASINO JOLIET CORPORATION
By:
Name: Jack B. Binion
Title: President
HAMMOND RESIDENTIAL, L.L.C.
By: EMPRESS CASINO HAMMOND
CORPORATION,
its Managing Member
Name: Jack B. Binion
Title: President
THE TRUSTEE:
U.S. TRUST COMPANY OF TEXAS, N.A.
By:
Name:
Title:
-3-
EXHIBIT 4.54
SUPPLEMENTAL INDENTURE
Supplemental Indenture (this "Supplemental Indenture"), dated as of
December 1, 1999, among New Gaming Capital Partnership, Horseshoe Entertainment,
Horseshoe Gaming, L.L.C., Horseshoe GP, Inc., Empress Casino Hammond
Corporation, Empress Casino Joliet Corporation, Hammond Residential, L.L.C.,
Robinson Property Group, Limited Partnership and Bossier City Land Corporation
(collectively, the "Guaranteeing Subsidiaries"), each a Subsidiary of Horseshoe
Gaming Holding Corp., a Delaware corporation (the "Company"), the Company and
U.S. Trust Company, National Association, as trustee under the Indenture
referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of May 11, 1999, providing for
the issuance of 8_% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Subsidiaries of the Company are required to execute and deliver to the Trustee a
supplemental indenture pursuant to which such Subsidiaries shall unconditionally
guarantee all of the Company's obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiaries irrevocably
and unconditionally guarantee the Guarantee Obligations, which include (i) the
due and punctual payment of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the Notes, whether at maturity, by acceleration,
call for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or
otherwise, the due and punctual payment of interest on the overdue principal and
premium, if any, and (to the extent permitted by law) interest on any interest
on the Notes, and payment of expenses, and the due and punctual performance of
all other obligations of the Company, to the Holders or the Trustee all in
accordance with the terms set forth in Article X of the Indenture, (ii) in case
of any extension of time of payment or renewal of any Notes or any such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration, call for redemption, upon a Change of Control Offer,
upon an Asset Sale Offer or otherwise, and (iii) the payment of any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee in enforcing any rights under this Supplemental Indenture.
The obligations of the Guaranteeing Subsidiaries to the Holders and to
the Trustee pursuant to this Supplemental Indenture and the Indenture are
expressly set forth in Article X of the Indenture and reference is hereby made
to such Indenture for the precise terms of this Supplemental Indenture.
No past, present or future director, officer, employee, incorporator or
stockholder (direct or indirect) of the Guarantors (or any such successor
entity), as such, shall have any liability for any Obligations of the Guarantors
under this Supplemental Indenture or the Indenture or for any claim based on, in
respect of, or by reason of, such Obligations or their creation, except in their
capacity as an obligor or Guarantor of the Notes in accordance with the
Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon the Guaranteeing Subsidiaries and their
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture or until released in accordance with
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders, and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a Guarantee
of payment and not of collectibility.
The Obligations of the Guaranteeing Subsidiaries under this
Supplemental Indenture shall be limited to the extent necessary to ensure that
they do not constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE X OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
-2-
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
4. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
5. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
THE COMPANY:
HORSESHOE GAMING HOLDING CORP.
By:
Name: Jack B. Binion
Title: President
THE GUARANTEEING SUBSIDIARIES:
HORSESHOE GP, INC.
By:
Name: Jack B. Binion
Title: President
NEW GAMING CAPITAL PARTNERSHIP
By: HORSESHOE GP, INC.,
its General Partner
Name: Jack B. Binion
Title: President
-4-
HORSESHOE ENTERTAINMENT
By: NEW GAMING CAPITAL PARTNERSHIP,
its General Partner
By: HORSESHOE GP, INC.,
its General Partner
Name: Jack B. Binion
Title: President
HORSESHOE GAMING, L.L.C.
By: HORSESHOE GAMING HOLDING CORP.,
its Managing Member
Name: Jack B. Binion
Title: President
EMPRESS CASINO HAMMOND CORPORATION
By:
Name: Jack B. Binion
Title: President
EMPRESS CASINO JOLIET CORPORATION
By:_________________________________
Name: Jack B. Binion
Title: President
-5-
HAMMOND RESIDENTIAL, L.L.C.
By: EMPRESS CASINO HAMMOND
CORPORATION,
its Managing Member
Name: Jack B. Binion
Title: President
ROBINSON PROPERTY GROUP LIMITED PARTNERSHIP
By: HORSESHOE GP, INC.,
its General Partner
Name: Jack B. Binion
Title: President
BOSSIER CITY LAND CORPORATION
By:
Name: Jack B. Binion
Title: President
TRUSTEE:
U.S. TRUST COMPANY,
NATIONAL ASSOCIATION
By:
Name:
Title:
-6-
EXHIBIT 4.55
SUPPLEMENTAL INDENTURE
Supplemental Indenture (this "Supplemental Indenture"), dated as of
December 1, 1999, between Horseshoe Gaming Holding Corp., a Delaware corporation
(the "Company"), the successor of Horseshoe Gaming, L.L.C. ("LLC"), to the
Indenture referred to below, and U.S. Trust Company of Texas, N.A. (the
"Trustee").
W I T N E S S E T H
WHEREAS, LLC has heretofore executed and delivered to the Trustee an
indenture (the "Indenture"), dated as of June 15, 1997, among LLC, Robinson
Property Group, Limited Partnership and the Trustee providing for the issuance
of 9_% Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, LLC and the Company entered into an Agreement of Merger (the
"Merger"), dated as of December 1, 1999, which provides, among other things, for
the merger of LLC with and into the Company;
WHEREAS, the Indenture permits the Merger to occur if certain
conditions are met and if the Company and the Trustee enter into this
Supplemental Indenture to which the Company expressly assumes from LLC all of
the Obligations of LLC with respect to the Notes and the Indenture.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company and the Trustee mutually covenant and agree as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Assumption and Discharge. As of the date hereof, the Company
expressly assumes all of the Obligations of LLC with respect to the Notes and
the Indenture, and the parties release LLC from its obligations under the
Indenture and the Notes except as to any obligations that arise from or result
from the Merger.
THE TERMS OF ARTICLE V OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.
3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
4. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
5. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
THE COMPANY:
HORSESHOE GAMING HOLDING CORP.
By:
Name: Jack B. Binion
Title: President
TRUSTEE:
U.S. TRUST COMPANY OF TEXAS, N.A.
By:
Name:
Title:
-2-
EXHIBIT 4.56
HORSESHOE GAMING HOLDING CORP.
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of
November 18, 1999 and entered into by and among HORSESHOE GAMING HOLDING CORP, a
Delaware corporation ("COMPANY"), the financial institutions listed on the
signature pages hereof ("LENDERS"), DLJ CAPITAL FUNDING, INC., as Syndication
Agent (the "Syndication Agent") and CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent (the "Administrative Agent"), and is made with reference to
that certain Credit Agreement dated as of June 30, 1999 (the "CREDIT
AGREEMENT"), by and among Company, Lender, Syndication Agent and Administrative
Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
amend the definition of "Subsidiary Guarantor";
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS
Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "Subsidiary Guarantor" therefrom in its entirety and
substituting the following therefor:
A. "SUBSIDIARY GUARANTOR" means any Domestic Subsidiary of Company that
executes and delivers a counterpart of the Subsidiary Guaranty on the Initial
Funding Date or from time to time thereafter pursuant to subsection 6.8;
provided that any Domestic Subsidiary having both (a) assets valued at less than
one percent (1%) of the value of the
aggregate consolidated assets of Company and its Subsidiaries and (b) revenues
accounting for less than one percent (1%) of the aggregate consolidated revenues
of Company and its Subsidiaries for the most recently ended four consecutive
Fiscal Quarters shall not be required to be a Subsidiary Guarantor.
1.2 AMENDMENTS TO SECTION 6: COMPANY'S AFFIRMATIVE COVENANTS
Subsection 6.8A of the Credit Agreement is hereby amended by adding the
following proviso to the end of such subsection: "provided that any Domestic
Subsidiary not satisfying the definition of "Subsidiary Guarantor" shall not be
subject to this subsection; provided, further that any Domestic Subsidiary that
is no longer excluded from the definition of "Subsidiary Guarantor" shall be
subject to this subsection as any new Domestic Subsidiary would be."
SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
D. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
E. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
2
SECTION 3. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the effective date hereof, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.
B. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
C. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
D. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of a
counterpart hereof by Company and Requisite Lenders and receipt by Company and
Agent of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HORSESHOE GAMING HOLDING CORP.
By:
Name:
Title:
DLJ CAPITAL FUNDING, INC.,
INDIVIDUALLY AND AS SYNDICATION AGENT
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
INDIVIDUALLY AND AS ADMINISTRATIVE
AGENT
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, INDIVIDUALLY AND AS
DOCUMENTATION AGENT
By:
Name:
Title:
------------------------------------,
AS A LENDER
By:
Name:
Title:
4
EXHIBIT 4.57
HORSESHOE GAMING HOLDING CORP.
SECOND AMENDMENT
TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of
November 30, 1999 and entered into by and among HORSESHOE GAMING HOLDING CORP, a
Delaware corporation ("COMPANY"), the financial institutions listed on the
signature pages hereof ("LENDERS"), DLJ CAPITAL FUNDING, INC., as Syndication
Agent (the "Syndication Agent") and CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent (the "Administrative Agent"), and is made with reference to
that certain Credit Agreement dated as of June 30, 1999 (as amended by the First
Amendment described below, the "CREDIT AGREEMENT"), by and among Company,
Lender, Syndication Agent and Administrative Agent, as amended by that certain
First Amendment to Credit Agreement dated as of November 18, 1999. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
amend the negative covenant in the Credit Agreement relating to Indebtedness;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENT TO SECTION 7: COMPANY'S NEGATIVE COVENANTS
Subsection 7.1(vi) of the Credit Agreement is hereby amended to read in
its entirety as follows:
"(vi) After the Signing Date but prior to the earlier of the Empress
Joliet Acquisition Date and the date on which the Tranche B Term Loans must be
paid in full pursuant to subsection 2.4A, Company and its Subsidiaries may
become liable for up to $35,000,000 on terms acceptable to Agents in
Indebtedness relating to the repurchase of Company's capital stock from its
shareholders and membership interests in Horseshoe from
Horseshoe's members (including no more than $3,000,000 to the Majority
Shareholders), and Company and its Subsidiaries may remain liable for such
Indebtedness;"
SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
D. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
E. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
SECTION 3. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the effective date hereof, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.
2
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.
B. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
C. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
D. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of a
counterpart hereof by Company and Requisite Lenders and receipt by Company and
Agent of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HORSESHOE GAMING HOLDING CORP.
By:
Name:
Title:
DLJ CAPITAL FUNDING, INC.,
INDIVIDUALLY AND AS SYNDICATION AGENT
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
INDIVIDUALLY AND AS ADMINISTRATIVE
AGENT
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, INDIVIDUALLY AND AS
DOCUMENTATION AGENT
By:
Name:
Title:
------------------------------------,
AS A LENDER
By:
Name:
Title:
4
EXHIBIT 4.58
HORSESHOE GAMING HOLDING CORP.
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of
January 20, 2000 and entered into by and among HORSESHOE GAMING HOLDING CORP, a
Delaware corporation ("COMPANY"), the financial institutions listed on the
signature pages hereof ("LENDERS"), DLJ CAPITAL FUNDING, INC., as Syndication
Agent (the "Syndication Agent") and CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent (the "Administrative Agent"), and is made with reference to
that certain Credit Agreement dated as of June 30, 1999 (as amended by the First
Amendment and the Second Amendment described below, the "CREDIT AGREEMENT"), by
and among Company, Lender, Syndication Agent and Administrative Agent, as
amended by that certain First Amendment to Credit Agreement dated as of November
18, 1999 and that certain Second Amendment to Credit Agreement dated as of
November 30, 1999. Capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
amend the definition of "Ships";
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS
Subsection 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "Ships" therefrom in their entirety and substituting the
following therefor:
A. "SHIPS" means, collectively, King of the Red (U.S. Coast Guard
Official Number D1061968), Empress (U.S. Coast Guard Official Number 984286),
Empress II (U.S. Coast Guard Official Number 998517), Empress III (U.S. Coast
Guard Official Number 1035754) and the barge located at the Horseshoe Casino and
Hotel, Tunica, all together with
any and all present and future engines, boilers, machinery, components, masts,
boats, anchors, cables, chains, rigging, tackle, apparel, furniture, capstans,
outfit, tools, pumps, gear, furnishings, appliances, fittings, spare and
replacement parts, and any and all appurtenances thereto or belonging to such
ship, whether now or hereafter acquired, and whether on board or not on board,
together with any and all present and future additions, improvements and
replacements therefore, made in or to such ship, or any part or parts thereof;
and all accounts, earned hire, charter payments, freight, earnings, revenues,
income and profits therefrom and additionally all log books, manuals, trip
records, maintenance records, inspection records, seaworthiness certificates and
other historical records or information relating to such ship.
SECTION 2. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
D. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
E. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
2
SECTION 3. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the effective date hereof, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words
of like import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect and
are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.
B. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
C. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
D. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment shall become effective upon the execution of a
counterpart hereof by Company and Requisite Lenders and receipt by Company and
Agent of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
HORSESHOE GAMING HOLDING CORP.
By:
Name:
Title:
DLJ CAPITAL FUNDING, INC.,
INDIVIDUALLY AND AS SYNDICATION AGENT
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
INDIVIDUALLY AND AS ADMINISTRATIVE
AGENT
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, INDIVIDUALLY AND AS
DOCUMENTATION AGENT
By:
Name:
Title:
------------------------------------,
AS A LENDER
By:
Name:
Title:
4
EXHIBIT 10.39
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Employment Agreement")
entered into as of March ___, 2000, by and between Empress Casino Hammond
Corporation ("Employer"), and Ricky S. Mazer ("Employee").
RECITALS
WHEREAS, Employer is the owner and operator of a casino and hotel
facility in Hammond Indiana (the "Hammond Facility") and
WHEREAS, Employee is currently employed by Employer pursuant to a
written contract (the "Original Employment Agreement") which is set to expire on
____________ (the "Original Termination Date");
WHEREAS, Employer desires to employ Employee, and Employee desires to
accept such employment, pursuant to the terms of this Employment Agreement and
in furtherance of such desires Employer and Employee wish to amend and restate
the Original Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and in consideration of the mutual
covenants, promises and agreements herein contained, the parties hereto agree as
follows:
AGREEMENT
1. Definitions. All capitalized words referenced or used in this
Employment Agreement and not specifically defined herein shall have the meaning
set forth on Exhibit A, which is attached hereto and by this reference made a
part hereof.
2. Term. This Employment Agreement shall become effective on the date
first above written (the "Commencement Date") and shall continue in effect for a
period terminating ______________ unless terminated sooner by Employer or
Employee pursuant to the terms set forth herein.
3. Position to be Held by Employee. Employee is hereby employed and
hired by Employer to serve and act as the General Manager and shall perform each
and all of the duties and shall have all of the responsibilities described
herein. Employee shall at all times report directly to and take directives from
the Chief Operating Officer, Chief Executive Officer and President of Employer.
1. Duties and Responsibilities.
A. Duties. In his capacity as General Manager of Employer,
Employee shall devote his best efforts and his full business time and attention
to the performance at the
Hammond Facility of the duties customarily incident to the position of General
Manager and to such other duties of a senior officer as may be reasonably
requested by the President of the Employer in a manner so as to maximize, to the
best of his ability, the profitability of the Hammond Facility, for and on
behalf of the Employer in accordance with all applicable laws and regulations.
The authority of Employee to bind Employer shall be as broad or as limited as
may be determined from time to time by the Supervisor or the Board of Directors
of Employer (the "Board"). Employee acknowledges and agrees that in connection
with his employment he may be required to travel on behalf of Employer.
B. Fiduciary Duty. In every instance, Employee shall carry out
his various duties and responsibilities in a fiduciary capacity on behalf of
Employer, in an effort to maximize the profitability of Employer. In no event
whatsoever shall Employee enter into any commitments or obligations, written or
verbal, or take or omit to take any other action, the result of which would be
to create a conflict of interest between Employer and Employee, or the result of
which would (directly or indirectly) benefit Employee, any person or entity
associated with or affiliated with Employee, or any person or entity in any
manner involved in the gaming industry to the detriment of Employer. In all
instances, Employee shall perform his services and oversee his department(s) in
a thorough, competent, efficient and professional manner.
C. Full-Time Effort. Employee acknowledges and agrees that the
duties and responsibilities to be discharged by Employee require a full-time
effort on the part of Employee, and accordingly, Employee agrees to devote his
full-time effort and resources for and on behalf of Employer, and agrees that he
will not, during the term hereof, enter into (directly or indirectly) any other
business activities or ventures, other than investments which are passive in
nature provided no such investment may exceed 5% of the equity securities of any
entity without the prior approval of the Board.
D. Directives from the Supervisor. In all instances, Employee
agrees to carry out all of his duties and responsibilities as set forth herein
pursuant to the guidance, directives and instructions of the Supervisor and
agrees that at all times his authority shall be subordinate to such Supervisor.
The wishes and directives of the Supervisor shall prevail in all matters and
decisions as to which there is a disagreement between Employee and the
Supervisor, and Employee shall carry out any and all lawful directives from the
Supervisor to the best of his ability.
1. Compensation. As compensation for the services to be rendered by
Employee pursuant to the terms of this Employment Agreement, Employee shall be
entitled to receive the following:
A. a base salary of _______________________________________
($________) per year, which may be adjusted annually by a merit increase based
upon Employer's existing policy and an annual performance appraisal of Employee
and Employer (the "Base Compensation") which appraisals shall be performed in a
manner suitable to Employer in all respects, and which shall be payable in equal
semi-monthly installments;
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B. a discretionary bonus in an amount determined in accordance
with Employer's bonus plan, as may be amended from time to time by Employer in
Employer's sole discretion, (the "Bonus"); and
C. the right to participate in any employee stock option or
stock purchase plan that may be adopted by Employer for its executive level
employees (and, at Employer's sole discretion, for executive level employees of
other gaming operations principally owned or controlled by Jack B. Binion), such
participation to be at a level commensurate with that of other executives
performing similar duties and at a similar compensation level as that of
Employee.
6. Fringe Benefits. It is understood and agreed that the Base
Compensation to be received by Employee is to be all-inclusive of other typical
fringe benefits provided to executives in a similar position as Employee;
provided, however, that Employee shall be entitled to the following benefits:
A. reimbursement, on an on-going basis, for all reasonable
entertainment, traveling and other similar expenses incurred in the performance
of his duties and responsibilities hereunder, such expenses to be subject to
budgets established for such purpose and the Employer's reimbursement
procedures;
B. participation in any Employer's health coverage plan,
policies, and practices for Employee and all members of his immediate family
which Employer may offer, to it Employees and Executives in Employer's sole
discretion, from time to time;
C. participation in such pension plans as Employer shall adopt
for all of the employees of Employer; it being understood and agreed that the
only pension plan that Employer has adopted at this time is a Section 401(k)
form of pension plan;
D. participation in such deferred compensation plan as
Employer may adopt for all of the executive level employees of the Employer; it
being understood that a deferred compensation plan exists at the time of the
execution of this Agreement;
E. occasional use of a company vehicle as and when needed in
connection with the performance of Employee's duties and responsibilities;
F. participation in Employer's "Paid Days Off/Vacation"
policy;
G. participation in any agreement, which Employer may adopt in
its sole discretion allowing for payment to general managers of other facilities
owned or controlled by Horseshoe Gaming Holding Corp. as a result of a change of
control; and
H. use of an Employer-owned automobile currently provided to
Employee pursuant to the Original Employment Agreement until such time as the
lease of that automobile expires and after expiration, the sum of $850 per month
as an allowance for an automobile.
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7. Gaming License. Employer and Employee understand that it shall be
necessary for Employee to maintain in full force and effect at all times, gaming
licenses required by each of the various jurisdictions in which subsidiaries or
affiliates are conducting gaming operations for persons serving in a similar
capacity as Employee. Accordingly, during the course of his employment, Employee
agrees to use his best efforts to obtain and maintain such licenses, to fully
cooperate in the investigation or investigations to be conducted in connection
therewith and otherwise to fully comply with all requirements of applicable
Gaming Authorities and Governmental Authorities.
8. Termination
A. Termination With Cause. Employer may terminate Employee for
"cause" as provided in this Section 8. For purposes of this Employment Agreement
"cause" means the occurrence of one or more of the following events:
i. the revocation, suspension or failure to renew for
a period in excess of ninety (90) days, of any such gaming license due to an act
or omission of Employee (or such alleged act or omission) upon which the Gaming
Authorities or Governmental Authorities have based their determination to
revoke, suspend or fail to renew any gaming license;
ii. failure or refusal by Employee to observe or
perform any of the material provisions of this Employment Agreement or any other
written agreement with Employer, or to perform in a reasonably satisfactory
manner all of the material duties required of Employee under this Employment
Agreement or any other written agreement with Employer;
iii. commission of fraud, misappropriation,
embezzlement or other acts of dishonesty, or conviction for any crime punishable
as a felony or a gross misdemeanor involving dishonesty or moral turpitude or
the use of illegal drugs while on duty for Employer or on premises of any
Facility;
iv. unreasonable refusal or failure to comply with
the proper and lawful directives of and/or procedures established by the Chief
Executive Officer, Chief Operating Officer or Board of Directors of the Employee
(or persons of comparable or senior position); and/or
v. the death of Employee or the mental or physical
disability of Employee to such a degree that Employee, in the reasonable
judgment of a licensed physician retained by Employer, is unable to carry out
all of his obligations, duties and responsibilities set forth herein for a
period in excess of sixty (60) days.
Termination of Employee's employment for cause under Subsections
8(A)(i), 8(A)(iii) or 8(A)(v) above shall be effective immediately upon notice
thereof by Employer to Employee. Termination of Employee's employment for cause
under Subsections 8(A)(ii) or 8(A)(iv) above shall be effective upon fourteen
(14) days' prior notice thereof by Employer to Employee. The factual basis for
termination for cause shall be included within any such notice of termination.
-4-
B. Termination for Cause, Resignation, or Expiration of Term.
Upon termination of Employee's employment with Employer (i) by Employer for
cause or (ii) upon the resignation of Employee or all compensation as defined by
Section 5 herein and all Fringe Benefits as defined by Section 6 hereof will
cease at the date of termination. In the event that this Agreement expires and
Employee is not retained by Employer in a position of similar or increased
compensation and prestige, Employee shall receive Base Compensation and health
insurance for six (6) months from the date of expiration.
C. Termination Without Cause. Employer in its discretion may
terminate Employee at any time without cause. If Employee is terminated by
Employer without cause, Employee shall continue to receive, for a period of time
equal to the greater of (i) one year or (ii)the remaining term of this
Agreement, (a) Base Compensation, (b) health insurance and(c) a bonus equal to
the last annual bonus Employee received prorated for that portion of the year
Employee is employed by Employer. The Base Compensation shall be paid by
continuing to pay Employee on the regular pay days of the Employer for that
period of time that Base Compensation would continue; provided, however, the
payment of such Base Compensation shall be reduced by 50% from and after the
time that the Employee accepts employment of any kind or nature including but
not limited to self employment. Other than health insurance, all Fringe Benefits
as described herein, or otherwise provided to Employee, including life and
disability insurance ,shall terminate immediately upon the termination of the
Employee.
9. Survival of Certain Covenants. The covenants not to compete, solicit
or hire and the confidentiality agreements set forth in Sections 10 and 11
herein below shall continue to apply beyond termination in the manner and to the
extent set forth herein.
10. Covenants Not to Compete, Solicit or Hire.
A. Covenant Not to Compete. Upon termination of Employee
without cause, Employee shall not, for a period of time equal to the greater of
(i) the balance of the term of this contract if it had expired by its term
without early termination or (ii) one year, directly or indirectly, whether as
principal, manager, agent, consultant, officer, director, stockholder, partner,
investor, lender or employee, or in any other capacity, carry on, be engaged in
or employed by or be a consultant to or to have any financial interest in any
other casino or gaming operation of any kind conducting business within one
hundred (100) miles of any gaming facility principally owned or controlled by
Jack B. Binion, Employer, or Employer's subsidiaries or related companies,
unless such gaming facility is located in Las Vegas, Reno, Lake Tahoe or
Atlantic City. Employer and Employee agree that such covenant not to compete is
a condition of Employee's employment and that the covenant not to compete has
been given by Employee to Employer for full and adequate consideration. If
Employee ceases to be employed by Employer, because Employer terminates Employee
with cause or because this Agreement expires by its terms, Employee shall not,
for a period of time equal to six months, directly or indirectly, whether as
principal, manager, agent, consultant, officer, director, stockholder, partner,
investor, lender or employee, or in any other capacity, carry on, be engaged in
or employed by or be a consultant to or to have any financial interest in any
other casino or gaming operation of any kind conducting business within one
hundred (100) miles of any gaming facility principally owned or
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controlled by Jack B. Binion, Employer, or Employer's subsidiaries or related
companies, unless such gaming facility is located in Las Vegas, Reno, Lake Tahoe
or Atlantic City. Employer and Employee agree that such covenant not to compete
is a condition of Employee's employment and that the covenant not to compete has
been given by Employee to Employer for full and adequate consideration. Nothing
contained herein shall prohibit Employee from owning or holding stock in casino
or gaming operation wherever located, provided that such the entity or entities
operating and/or owning said gaming or casino operation is publically traded and
the stock owned or held by the Employee does not constitute more than one
percent (1%) of the outstanding equity interest of said gaming or casino
operation.
B. Covenant Not to Solicit or Hire. For a period of time equal
to the greater of (i) the balance of the term of this contract if it had expired
by its term without early termination or (ii) one year, Employee agrees that he
will not, directly or indirectly, hire, retain or solicit, or cause any other
employer of his or any other person who has retained Employee as a consultant or
independent contractor to hire, retain or solicit, as an employee, consultant,
independent contractor in a supervisory capacity or otherwise any person who was
at any time during the period commencing on the date three (3) months prior to
the Commencement Date and ending on the date of the termination of Employee's
employment hereunder, an employee of or consultant or independent contractor in
a supervisory capacity to Employer, or any other gaming operations principally
owned or controlled by Jack B. Binion, Employer, or Employer's subsidiaries or
related companies.
11. Nondisclosure of Confidential Information.
A. Definition of Confidential Information. For purposes of
this Employment Agreement, "Confidential Information" means any information that
is not generally known to the public that relates to the existing or reasonably
foreseeable business of Employer. Confidential Information includes, but is not
limited to, information contained in or relating to the customer lists, account
lists, price lists, product designs, marketing plans or proposals, acquisition
or growth plans or proposals, customer information, merchandising, selling,
accounting, finances, knowhow, trademarks, trade names, trade practices, trade
secrets and other proprietary information of Employer.
B. Employee Shall Not Disclose Confidential Information.
Employee will not, during the term of Employee's employment and following the
termination of this Employment Agreement, until such time as the confidential
information becomes generally known to or readily ascertainable by proper means
by, the public, use, show, display, release, discuss, communicate, divulge or
otherwise disclose Confidential Information to any unauthorized person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
without the prior written consent or authorization of Employer. Nothing
contained herein shall be interpreted or construed as restraining or preventing
Employee from using Confidential Information in the proper conduct of services
to be rendered by Employee on behalf of Employer pursuant to this Employment
Agreement. Mistake or lack of knowledge as to the status of information wrongly
disclosed or used by Employer shall not serve as a defense to this
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Employment Agreement. During the Term of this Agreement and thereafter, Employee
shall not produce for publication, circulation or production any movies or
writing of any kind including but not limited to articles, books, manuscripts
and playwrights about, concerning, discussing, or mentioning Jack Binion, or any
person related to Jack Binion by blood or marriage whether such related person
is now or at a later date is deceased. Further, Employee shall not disclose and
information to any party, or consult with any person or entity engaged in or
making any efforts to publish, circulate or produce any writing, movie or
television program of any kind whatsoever including but not limited to an
article, book, manuscript, or playwright concerning Jack Binion, or any person
related to Jack Binion by blood or marriage whether such related person is now
or at a later date deceased.
C. Scope. Employee's covenant in Subsection 11(B) above not to
disclose Confidential Information shall not apply to information which, at the
time of such disclosure, may be obtained from sources other than from Employer,
or its agents, lawyers or accountants, provided however, that such information
received is not received from sources which received the information in an
improper manner or against the wishes of Employer.
D. Title. All documents and other tangible or intangible
property relating in any way to the business of Employer which are conceived or
generated by Employee or come into Employee's possession during the employment
period shall be and remain the exclusive property of Employer, and Employee
agrees to return immediately to Employer, upon its request, all such documents
and tangible and intangible property, including, but not limited to, all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, magnetic tapes, computer disks, calculations
or copies thereof, which are the property of Employer and which relate in anyway
to the business, customers, products, practices or techniques of Employer, as
well as all other property of Employer, including but not limited to, all
documents which in whole or in part contain any Confidential Information of
Employer which in any of these cases are in Employee's possession or under
Employee's control.
E. Compelled Disclosure. In the event a third party seeks to
compel disclosure of Confidential Information by Employee by judicial or
administrative process, Employee shall promptly notify Employer of such
occurrence and furnish to Employer a copy of the demand, summons, subpoena or
other process served upon Employee to compel such disclosure, and will permit
Employer to assume, at its expense, but with Employee's cooperation, defense of
such disclosure demand. In the event that Employer refuses to contest such a
third party disclosure demand under judicial or administrative process, or a
final judicial judgment is issued compelling Employee to disclose Confidential
Information, Employee shall be entitled to disclose such information in
compliance with the terms of such administrative or judicial process or order.
12. Reasonableness of Terms. The Employer and the Employee stipulate
and agree that the terms and covenants contained in Section 10 and Section 11
herein are fair and reasonable in all respects, including the time period and
geographical coverage in Section 10, that these restrictions are designed for
the reasonable protection of the Employer's business and Employer's legitimate
interests therein, do not stifle the inherent skills or
-7-
experience of Employee and would not operate as a bar to Employee's sole means
of earning wages. In the event that these restrictions are found to be overly
broad or unreasonable, the Employer and the Employee agree that such
restrictions shall be severable and enforceable on such modified terms as may be
deemed reasonable and enforceable by a court of competent jurisdiction.
13. Representations and Warranties.
Employee hereby represents and warrants to Employer, and its
affiliated or related entities that:
A. the execution, delivery and performance by Employee of this
Employment Agreement will not conflict with, violate the terms of or create a
default under any other agreement by which Employee is bound, including without
limitation Employee's present employment or similar agreements, whether oral or
written;
B. no Gaming Authority or other Governmental Authority has
ever denied or otherwise declined to issue any gaming license or related
authorization applied for by Employee;
C. Employee is not aware of any facts which, if known to any
Gaming Authority or other Governmental Authority, would cause the refusal of his
application for, or renewal of, any gaming licenses required to be obtained by
Employee pursuant to Section 7;
D. Employee is not aware of any mental, physical or emotional
condition which currently affects Employee, and which might result in Employee's
being unable to carry out all of his duties, obligations and responsibilities
set forth herein;
E. Employee understands and agrees that Employer is entering
into this Employment Agreement in strict reliance upon the representations and
warranties of Employee set forth herein, and that a breach of any of said
representations and warranties by Employee would constitute a default hereunder;
and
F. Employee has received and reviewed Employer's "Paid Days
Off/Vacation" policy and understands and agrees to its terms.
14. Entire Agreement. This Employment Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter set forth
herein, and supersedes any and all previous oral or written agreements,
understandings or discussions between the parties hereto with respect to the
subject matter set forth herein with respect to the employment of Employee.
15. All Amendments in Writing. This Employment Agreement may be amended
only pursuant to a written instrument executed by Employer and Employee. It
shall not be reasonable for either Employer or Employee to rely on any oral
statements or representations by the other party that are in conflict with the
terms of this Employment Agreement.
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16. Arbitration. In the event of any dispute or controversy between
Employer and Employee with respect to any of the matters set forth herein, both
Employer and Employee agree to submit such dispute or controversy to binding
arbitration, to be conducted in Las Vegas, Nevada pursuant to the then
prevailing rules and regulations of the American Arbitration Association. In
such arbitration, the prevailing party shall be entitled, in addition to any
award made in such proceeding, to recover all of its costs and expenses incurred
in connection therewith, including, without limitation, attorneys' fees. This
provision does not in any way affect Section 23 of this Employment Agreement.
17. Governing Law. This Employment Agreement shall be governed and
construed in accordance with the internal laws of the State of Indiana. The
terms of this Employment Agreement are intended to supplement but not displace,
the parties respective rights under the Nevada Uniform Trade Secrets Act, Nev.
Rev. Stat. Ann. 600A.010 et seq., as amended, and any similar laws adopted in
Indiana, Illinois, Mississippi or Louisiana.
18. Notices. All notices required or desired to be given under this
Employment Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is to be given, (ii) on the date of receipt by the party to whom notice
is to be given if transmitted to such party by telefax, provided a copy is
mailed as set forth below on the date of transmission, or (iii) on the third day
after mailing if mailed to the party to whom notice is to be given by registered
or certified mail, return receipt requested, postage prepaid, to at the
following addresses, or to such other address as may be provided from time to
time by one party to the other:
If to Employer: Horseshoe Gaming Holding Corp.
2300 Empress Drive
Joliet, IL 60436
Attn: President
If to Employee: Mr. Ricky S. Mazer
19. Assignment. This Employment Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, administrators and assigns. Notwithstanding the foregoing, Employee
understands and agrees that the nature of this Employment Agreement is a
personal services agreement, and that Employer is entering into this Employment
Agreement based upon the specific services to be rendered personally by Employee
hereunder; and accordingly, Employee shall not assign, transfer or delegate in
any manner any of his duties, responsibilities or obligations hereunder.
20. No Third Party Beneficiaries. This Employment Agreement is solely
for the benefit of Employee, Employer, Employer's affiliated or related
companies and Employee's majority owner Jack Binion and his heirs, and in no
event shall any other person or entity by
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deemed or construed as a third party beneficiary of any of the provisions or
conditions set forth herein.
21. Waiver. No waiver of any term, condition or covenant of this
Employment Agreement by a party shall be deemed to be a waiver of any subsequent
breaches of the same or other terms, covenants or conditions hereof by such
party.
22. Construction. Whenever possible, each provision of this Employment
Agreement shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Employment Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Employment Agreement. Without limiting the generality of the foregoing, if any
court determines that the term or the business or geographic scope of the
covenants contained in Subsections 10(A) or 10(B) is impermissible due to the
extent thereof, said covenant shall be modified to reduce its term and/or
business or geographic scope, as the case may be, to the extent necessary to
make such covenant valid, and said covenant shall be enforced as modified.
23. Withholding. Employer shall withhold from any payments due to
Employee hereunder, all taxes, FICA or other amounts required to be withheld
pursuant to any applicable law.
24. Injunctive Relief. Employee and Employer each acknowledge that the
provisions of Sections 10 and 11 are reasonable and necessary, that the damages
that would be suffered as a result of a breach or threatened breach by Employee
of Sections 10 and/or 11 may not be calculable, and that the award of a money
judgment to Employer for such a breach or threatened breach thereof by Employee
would be an inadequate remedy. Consequently, Employee agrees that in addition to
any other remedy to which Employer may be entitled in law or in equity, the
provisions of Sections 10 and 11 may be enforced by Employer by injunctive or
other equitable relief, including a temporary and/or permanent injunction
(without proving a breach therefor), and Employer shall not be obligated to post
bond or other security in seeking such relief. Employee hereby waives any and
all objections he may have and consents to the jurisdiction of any state or
federal court located in the States of Nevada, Mississippi, Illinois, Indiana or
Louisiana and hereby waives any and all objections to venue.
25. Indemnification. The Employee shall have, during the term of this
Agreement and for a period of not less than two years after the termination of
this Agreement, the benefit of the current indemnification provisions as
provided under applicable law and the Bylaws of the Employer. The Employer shall
cause the Employee to be covered by any policies of directors and officer
liability insurance of the Employer now in force or hereafter obtained.
25. Counterparts. This Employment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute a single instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the day and year first above written.
"EMPLOYER" EMPRESS CASINO HAMMOND CORPORATION
an Indiana corporation
By:
-------------------------------------
Joseph Canfora, President
"EMPLOYEE" -------------------------------------
Ricky S. Mazer
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EXHIBIT A
DEFINITIONS
All capitalized terms referenced or used in this Employment Agreement
and not specifically defined therein shall have the meaning set forth below in
this Exhibit A, which is attached to and made a part of this Employment
Agreement for all purposes.
Gaming Authorities. The term "Gaming Authorities" shall mean all
agencies, authorities and instrumentalities of any state, nation (including
Native American nations) or other governmental entity or any subdivision
thereof, regulating gaming or related activities in the United States or any
state or political subdivision thereof, including, without limitation, the
Mississippi and Louisiana Gaming Commissions.
Governmental Authority. The term "Governmental Authority" means the
governments of (i) the United States of America, (ii)the State of Mississippi,
(iii) Tunica County, (iv) the State of Louisiana, (v) Bossier City, Louisiana
and (vi) any other political subdivision of any state of the United States in
which a casino Facility is located, and any court or political subdivision,
agency, commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over Employer or a
Facility, and including, without limitation, any Gaming Authority.
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EXHIBIT 10.40
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Employment Agreement")
entered into as of January 6, 2000, by and between Empress Casino Joliet
Corporation ("Employer"), and David Fendrick ("Employee").
RECITALS
WHEREAS, Employer is the owner and operator of a casino and hotel
facility in Joliet, Illinois (the "Joliet Facility") and
WHEREAS, Employee is currently employed by Employer pursuant to a
written contract (the "Original Employment Agreement") which is set to expire on
July 31, 2000 (the "Original Termination Date");
WHEREAS, Employer desires to employ Employee, and Employee desires to
accept such employment, pursuant to the terms of this Employment Agreement and
in furtherance of such desires Employer and Employee wish to amend and restate
the Original Employment Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, and in consideration of the mutual
covenants, promises and agreements herein contained, the parties hereto agree as
follows:
AGREEMENT
1. Definitions. All capitalized words referenced or used in this
Employment Agreement and not specifically defined herein shall have the meaning
set forth on Exhibit A, which is attached hereto and by this reference made a
part hereof.
2. Term. This Employment Agreement shall become effective on the date
first above written (the "Commencement Date") and shall continue in effect for a
period terminating July 31, 2003, unless terminated sooner by Employer or
Employee pursuant to the terms set forth herein.
3. Position to be Held by Employee. Employee is hereby employed and
hired by Employer to serve and act as the General Manager and shall perform each
and all of the duties and shall have all of the responsibilities described
herein. Employee shall at all times report directly to and take directives from
the Chief Operating Officer, Chief Executive Officer and President of Employer.
1. Duties and Responsibilities.
A. Duties. In his capacity as General Manager of Employer,
Employee shall
devote his best efforts and his full business time and attention to the
performance at 2300 Empress Drive, Joliet, Illinois 60436 of the duties
customarily incident to the position of General Manager and to such other duties
of a senior officer as may be reasonably requested by the President of the
Employer in a manner so as to maximize, to the best of his ability, the
profitability of each Facility, for and on behalf of the Employer in accordance
with all applicable laws and regulations. The authority of Employee to bind
Employer shall be as broad or as limited as may be determined from time to time
by the Supervisor or the Board of Directors of Employer (the "Board"). Employee
acknowledges and agrees that in connection with his employment he may be
required to travel on behalf of Employer.
B. Fiduciary Duty. In every instance, Employee shall carry out
his various duties and responsibilities in a fiduciary capacity on behalf of
Employer, in an effort to maximize the profitability of Employer. In no event
whatsoever shall Employee enter into any commitments or obligations, written or
verbal, or take or omit to take any other action, the result of which would be
to create a conflict of interest between Employer and Employee, or the result of
which would (directly or indirectly) benefit Employee, any person or entity
associated with or affiliated with Employee, or any person or entity in any
manner involved in the gaming industry to the detriment of Employer. In all
instances, Employee shall perform his services and oversee his department(s) in
a thorough, competent, efficient and professional manner.
C. Full-Time Effort. Employee acknowledges and agrees that the
duties and responsibilities to be discharged by Employee require a full-time
effort on the part of Employee, and accordingly, Employee agrees to devote his
full-time effort and resources for and on behalf of Employer, and agrees that he
will not, during the term hereof, enter into (directly or indirectly) any other
business activities or ventures, other than investments which are passive in
nature provided no such investment may exceed 5% of the equity securities of any
entity without the prior approval of the Board.
D. Directives from the Supervisor. In all instances, Employee
agrees to carry out all of his duties and responsibilities as set forth herein
pursuant to the guidance, directives and instructions of the Supervisor and
agrees that at all times his authority shall be subordinate to such Supervisor.
The wishes and directives of the Supervisor shall prevail in all matters and
decisions as to which there is a disagreement between Employee and the
Supervisor, and Employee shall carry out any and all lawful directives from the
Supervisor to the best of his ability.
1. Compensation. As compensation for the services to be rendered by
Employee pursuant to the terms of this Employment Agreement, Employee shall be
entitled to receive the following:
A. a base salary of Two Hundred Thousand Dollars ($200,000)
per year, which may be adjusted annually by a merit increase based upon
Employer's existing policy and an annual performance appraisal of Employee and
Employer (the "Base Compensation") which appraisals shall be performed in a
manner suitable to Employer in all respects, and which shall be payable in equal
semi-monthly installments;
2
B. a discretionary bonus in an amount determined in accordance
with Employer's bonus plan, as may be amended from time to time by Employer in
Employer's sole discretion, (the "Bonus"), which shall not exceed 50% of
Employee's Base Compensation at the time such Bonus is awarded; and
C. the right to participate in any employee stock option or
stock purchase plan that may be adopted by Employer for its executive level
employees (and, at Employer's sole discretion, for executive level employees of
other gaming operations principally owned or controlled by Jack B. Binion), such
participation to be at a level commensurate with that of other executives
performing similar duties and at a similar compensation level as that of
Employee.
1. Fringe Benefits. It is understood and agreed that the Base
Compensation to be received by Employee is to be all-inclusive of other typical
fringe benefits provided to executives in a similar position as Employee;
provided, however, that Employee shall be entitled to the following benefits:
A. reimbursement, on an on-going basis, for all reasonable
entertainment, traveling and other similar expenses incurred in the performance
of his duties and responsibilities hereunder, such expenses to be subject to
budgets established for such purpose and the Employer's reimbursement
procedures;
B. participation in Employer's health coverage plan for
Employee and all members of his immediate family, with such plan and the terms
of Employee's participation in such plan to be on terms and conditions
determined solely by Employer; and
C. participation in such pension plans as Employer shall adopt
for all of the employees of Employer; it being understood and agreed that the
only pension plan that Employer has adopted at this time is a Section 401(k)
form of pension plan; and
D. occasional use of a company vehicle as and when needed in
connection with the performance of Employee's duties and responsibilities; and
E. participation in Employer's "Paid Days Off/Vacation"
policy; and **
F. use of an Employer-owned automobile currently provided to
Employee pursuant to the Original Employment Agreement until such time as the
lease of that automobile expires.
7. Gaming License. Employer and Employee understand that it shall be
necessary for Employee to maintain in full force and effect at all times, gaming
licenses required by each of the various jurisdictions in which subsidiaries or
affiliates are conducting gaming operations for persons serving in a similar
capacity as Employee. Accordingly, during the course of his
3
employment, Employee agrees to use his best efforts to obtain and maintain such
licenses, to fully cooperate in the investigation or investigations to be
conducted in connection therewith and otherwise to fully comply with all
requirements of applicable Gaming Authorities and Governmental Authorities.
8. Termination
A. Termination With Cause. Employer may terminate Employee for
"cause" as provided in this Section 8. For purposes of this Employment Agreement
"cause" means the occurrence of one or more of the following events:
i. the revocation, suspension or failure to renew for
a period in excess of ninety (90) days, of any such gaming license due to an act
or omission of Employee (or such alleged act or omission) upon which the Gaming
Authorities or Governmental Authorities have based their determination to
revoke, suspend or fail to renew any gaming license;
ii. failure or refusal by Employee to observe or
perform any of the material provisions of this Employment Agreement or any other
written agreement with Employer, or to perform in a reasonably satisfactory
manner all of the material duties required of Employee under this Employment
Agreement or any other written agreement with Employer;
iii. commission of fraud, misappropriation,
embezzlement or other acts of dishonesty, or conviction for any crime punishable
as a felony or a gross misdemeanor involving dishonesty or moral turpitude or
the use of illegal drugs while on duty for Employer or on premises of any
Facility;
iv. unreasonable refusal or failure to comply with
the proper and lawful directives of and/or procedures established by the Chief
Financial Officer, Chief Executive Officer, Chief Operating Officer or Board of
Directors of the Employee (or persons of comparable or senior position); and/or
v. the death of Employee or the mental or physical
disability of Employee to such a degree that Employee, in the reasonable
judgment of a licensed physician retained by Employer, is unable to carry out
all of his obligations, duties and responsibilities set forth herein for a
period in excess of sixty (60) days.
Termination of Employee's employment for cause under Subsections
8(A)(i), 8(A)(iii) or 8(A)(v) above shall be effective immediately upon notice
thereof by Employer to Employee. Termination of Employee's employment for cause
under Subsections 8(A)(ii) or 8(A)(iv) above shall be effective upon fourteen
(14) days' prior notice thereof by Employer to Employee. The factual basis for
termination for cause shall be included within any such notice of termination.
4
B. Termination for Cause, Resignation, or Expiration of Term.
Upon termination of Employee's employment with Employer (i) by Employer for
cause (ii) upon the resignation of Employee or (iii) upon the expiration of the
term of this Employment Agreement, all compensation as defined by Section 5
herein and all Fringe Benefits as defined by Section 6 hereof will cease at the
date of termination.
C. Termination Without Cause. Employer in its discretion may
terminate Employee at any time without cause. If Employee is terminated by
Employer without cause, Employee shall continue to receive the Base Compensation
for a period of time equal to six (6) months immediately following the date of
termination (payable as provided in Subsection 5(A)); provided, however, all
Fringe Benefits as described herein, or otherwise provided to Employee shall
terminate immediately and Employee shall not be entitled to a Bonus.
Notwithstanding anything contained herein to the contrary, in the event Employer
terminates Employee without cause prior to July 31, 2000, Employee shall
continue to receive Base Compensation through February 1, 2001, however, all
Fringe Benefits either defined herein or provided by Employer shall terminate
immediately upon termination of employment.
9. Survival of Certain Covenants. The covenants not to compete, solicit
or hire and the confidentiality agreements set forth in Sections 10 and 11
herein below shall continue to apply beyond termination in the manner and to the
extent set forth herein.
10. Covenants Not to Compete, Solicit or Hire.
A. Covenant Not to Compete. For so long as the Employee is
receiving Base Compensation and for a period of six (6) months from and after
the last date on which any amount constituting Base Compensation is paid to
Employee, Employee agrees that he will not directly or indirectly, whether as
principal, manager, agent, consultant, officer, director, stockholder, partner,
investor, lender or employee, or in any other capacity, carry on, be engaged in
or employed by or be a consultant to or to have any financial interest in any
other casino operation conducting business within one hundred (100) miles of any
other gaming facility principally owned or controlled by Jack B. Binion,
Employer, or Employer's subsidiaries or related companies, including, but not
limited to, the Existing Facilities or the To Be Acquired Facilities, unless
such gaming facility is located in Las Vegas, Reno, Lake Tahoe or Atlantic City.
Employer and Employee agree that such covenant not to compete is a condition of
Employee's employment and that the covenant not to compete has been given by
Employee to Employer for full and adequate consideration.
B. Covenant Not to Solicit or Hire. For so long as the
Employer is receiving Base Compensation and for a period of one (1) year from
and after the last date on which any amount constituting Base Compensation is
paid to Employee, Employee agrees that he will not, directly or indirectly,
hire, retain or solicit, or cause any other employer of his or any other person
who has retained Employee as a consultant or independent contractor to hire,
retain or solicit, as an employee, consultant, independent contractor in a
supervisory capacity or otherwise any person who was at any time during the
period commencing on the date three (3) months
5
prior to the Commencement Date and ending on the date of the termination of
Employee's employment hereunder, an employee of or consultant or independent
contractor in a supervisory capacity to Employer, or any other gaming operations
principally owned or controlled by Jack B. Binion, Employer, or Employer's
subsidiaries or related companies, including, but not limited to, the Existing
Facilities or the To Be Acquired Facilities.
11. Nondisclosure of Confidential Information.
A. Definition of Confidential Information. For purposes of
this Employment Agreement, "Confidential Information" means any information that
is not generally known to the public that relates to the existing or reasonably
foreseeable business of Employer. Confidential Information includes, but is not
limited to, information contained in or relating to the customer lists, account
lists, price lists, product designs, marketing plans or proposals, acquisition
or growth plans or proposals, customer information, merchandising, selling,
accounting, finances, knowhow, trademarks, trade names, trade practices, trade
secrets and other proprietary information of Employer.
B. Employee Shall Not Disclose Confidential Information.
Employee will not, during the term of Employee's employment and following the
termination of this Employment Agreement, until such time as the confidential
information becomes generally known to or readily ascertainable by proper means
by, the public, use, show, display, release, discuss, communicate, divulge or
otherwise disclose Confidential Information to any unauthorized person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
without the prior written consent or authorization of Employer. Nothing
contained herein shall be interpreted or construed as restraining or preventing
Employee from using Confidential Information in the proper conduct of services
to be rendered by Employee on behalf of Employer pursuant to this Employment
Agreement. Mistake or lack of knowledge as to the status of information wrongly
disclosed or used by Employer shall not serve as a defense to this Employment
Agreement.
C. Scope. Employee's covenant in Subsection 11(B) above not to
disclose Confidential Information shall not apply to information which, at
the time of such disclosure, may be obtained from sources other than from
Employer, or its agents, lawyers or accountants, provided however, that such
information received is not received from sources which received the information
in an improper manner or against the wishes of Employer.
D. Title. All documents and other tangible or intangible
property relating in any way to the business of Employer which are conceived or
generated by Employee or come into Employee's possession during the employment
period shall be and remain the exclusive property of Employer, and Employee
agrees to return immediately to Employer, upon its request, all such documents
and tangible and intangible property, including, but not limited to, all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, magnetic tapes, computer disks, calculations
or copies thereof, which are the
6
property of Employer and which relate in anyway to the business, customers,
products, practices or techniques of Employer, as well as all other property of
Employer, including but not limited to, all documents which in whole or in part
contain any Confidential Information of Employer which in any of these cases are
in Employee's possession or under Employee's control.
E. Compelled Disclosure. In the event a third party seeks to
compel disclosure of Confidential Information by Employee by judicial or
administrative process, Employee shall promptly notify Employer of such
occurrence and furnish to Employer a copy of the demand, summons, subpoena or
other process served upon Employee to compel such disclosure, and will permit
Employer to assume, at its expense, but with Employee's cooperation, defense of
such disclosure demand. In the event that Employer refuses to contest such a
third party disclosure demand under judicial or administrative process, or a
final judicial judgment is issued compelling Employee to disclose Confidential
Information, Employee shall be entitled to disclose such information in
compliance with the terms of such administrative or judicial process or order.
12. Reasonableness of Terms. The Employer and the Employee stipulate
and agree that the terms and covenants contained in Section 10 and Section 11
herein are fair and reasonable in all respects, including the time period and
geographical coverage in Section 10, and that these restrictions are designed
for the reasonable protection of the Employer's business and Employer's
legitimate interests therein. In the event that these restrictions are found to
be overly broad or unreasonable, the Employer and the Employee agree that such
restrictions shall be severable and enforceable on such modified terms as may be
deemed reasonable and enforceable by a court of competent jurisdiction.
13. Representations and Warranties.
Employee hereby represents and warrants to Employer, and its affiliated
or related entities that:
A. the execution, delivery and performance by Employee of this
Employment Agreement will not conflict with, violate the terms of or create a
default under any other agreement by which Employee is bound, including without
limitation Employee's present employment or similar agreements, whether oral or
written;
B. no Gaming Authority or other Governmental Authority has
ever denied or otherwise declined to issue any gaming license or related
authorization applied for by Employee;
C. Employee is not aware of any facts which, if known to any
Gaming Authority or other Governmental Authority, would cause the refusal of his
application for, or renewal of, any gaming licenses required to be obtained by
Employee pursuant to Section 7;
7
D. Employee is not aware of any mental, physical or emotional
condition which currently affects Employee, and which might result in Employee's
being unable to carry out all of his duties, obligations and responsibilities
set forth herein;
E. Employee understands and agrees that Employer is entering
into this Employment Agreement in strict reliance upon the representations and
warranties of Employee set forth herein, and that a breach of any of said
representations and warranties by Employee would constitute a default hereunder;
and
F. Employee has received and reviewed Employer's "Paid Days
Off/Vacation" policy and understands and agrees to its terms.
14. Entire Agreement. This Employment Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter set forth
herein, and supersedes any and all previous oral or written agreements,
understandings or discussions between the parties hereto with respect to the
subject matter set forth herein with respect to the employment of Employee.
15. All Amendments in Writing. This Employment Agreement may be amended
only pursuant to a written instrument executed by Employer and Employee. It
shall not be reasonable for either Employer or Employee to rely on any oral
statements or representations by the other party that are in conflict with the
terms of this Employment Agreement.
16. Arbitration. In the event of any dispute or controversy between
Employer and Employee with respect to any of the matters set forth herein, both
Employer and Employee agree to submit such dispute or controversy to binding
arbitration, to be conducted in Las Vegas, Nevada pursuant to the then
prevailing rules and regulations of the American Arbitration Association. In
such arbitration, the prevailing party shall be entitled, in addition to any
award made in such proceeding, to recover all of its costs and expenses incurred
in connection therewith, including, without limitation, attorneys' fees. This
provision does not in any way affect Section 23 of this Employment Agreement.
17. Governing Law. This Employment Agreement shall be governed and
construed in accordance with the internal laws of the State of Nevada. The terms
of this Employment Agreement are intended to supplement but not displace, the
parties respective rights under the Nevada Uniform Trade Secrets Act, Nev. Rev.
Stat. Ann. 600A.010 et seq., as amended, and any similar laws adopted in
Indiana, Illinois, Mississippi or Louisiana.
8
18. Notices. All notices required or desired to be given under this
Employment Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is to be given, (ii) on the date of receipt by the party to whom notice
is to be given if transmitted to such party by telefax, provided a copy is
mailed as set forth below on the date of transmission, or (iii) on the third day
after mailing if mailed to the party to whom notice is to be given by registered
or certified mail, return receipt requested, postage prepaid, to at the
following addresses, or to such other address as may be provided from time to
time by one party to the other:
**
If to Employer: Horseshoe Gaming Holding Corp.
2300 Empress Drive Joliet,
IL 6089101
Attn: President
If to Employee: Mr. David Fendrick
9
19. Assignment. This Employment Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors, administrators and assigns. Notwithstanding the foregoing, Employee
understands and agrees that the nature of this Employment Agreement is a
personal services agreement, and that Employer is entering into this Employment
Agreement based upon the specific services to be rendered personally by Employee
hereunder; and accordingly, Employee shall not assign, transfer or delegate in
any manner any of his duties, responsibilities or obligations hereunder.
20. No Third Party Beneficiaries. This Employment Agreement is solely
for the benefit of Employer and Employee, and in no event shall any other person
or entity by deemed or construed as a third party beneficiary of any of the
provisions or conditions set forth herein.
21. Waiver. No waiver of any term, condition or covenant of this
Employment Agreement by a party shall be deemed to be a waiver of any subsequent
breaches of the same or other terms, covenants or conditions hereof by such
party.
22. Construction. Whenever possible, each provision of this Employment
Agreement shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Employment Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Employment Agreement. Without limiting the generality of the foregoing, if any
court determines that the term or the business or geographic scope of the
covenants contained in Subsections 10(A) or 10(B) is impermissible due to the
extent thereof, said covenant shall be modified to reduce its term and/or
business or geographic scope, as the case may be, to the extent necessary to
make such covenant valid, and said covenant shall be enforced as modified.
23. Withholding. Employer shall withhold from any payments due to
Employee hereunder, all taxes, FICA or other amounts required to be
withheld pursuant to any applicable law.
24. Injunctive Relief. Employee and Employer each acknowledge that the
provisions of Sections 10 and 11 are reasonable and necessary, that the damages
that would be suffered as a result of a breach or threatened breach by Employee
of Sections 10 and/or 11 may not be calculable, and that the award of a money
judgment to Employer for such a breach or threatened breach thereof by Employee
would be an inadequate remedy. Consequently, Employee agrees that in addition to
any other remedy to which Employer may be entitled in law or in equity, the
provisions of Sections 10 and 11 may be enforced by Employer by injunctive or
other equitable relief, including a temporary and/or permanent injunction
(without proving a breach therefor),
10
and Employer shall not be obligated to post bond or other security in seeking
such relief. Employee hereby waives any and all objections he may have and
consents to the jurisdiction of any state or federal court located in the State
of Nevada or Mississippi and hereby waives any and all objections to venue.
25. Counterparts. This Employment Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute a single instrument.
IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the day and year first above written.
"EMPLOYER" EMPRESS CASINO JOLIET CORPORATION
an Illinois corporation
By:
---------------------------------------
Kirk Saylor, Chief Financial Officer
"EMPLOYEE" -------------------------------------------
David Fendrick
11
EXHIBIT A
DEFINITIONS
All capitalized terms referenced or used in this Employment Agreement
and not specifically defined therein shall have the meaning set forth below in
this Exhibit A, which is attached to and made a part of this Employment
Agreement for all purposes.
Gaming Authorities. The term "Gaming Authorities" shall mean all
agencies, authorities and instrumentalities of any state, nation (including
Native American nations) or other governmental entity or any subdivision
thereof, regulating gaming or related activities in the United States or any
state or political subdivision thereof, including, without limitation, the
Mississippi and Louisiana Gaming Commissions.
Governmental Authority. The term "Governmental Authority" means the
governments of (i) the United States of America, (ii)the State of Mississippi,
(iii) Tunica County, (iv) the State of Louisiana, (v) Bossier City, Louisiana
and (vi) any other political subdivision of any state of the United States in
which a casino Facility is located, and any court or political subdivision,
agency, commission, board or instrumentality or officer thereof, whether
federal, state or local, having or exercising jurisdiction over Employer or a
Facility, and including, without limitation, any Gaming Authority.
12
EXHIBIT 10.41
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (the "Agreement") is made and entered into by
and between Larry Lepinski ("Lepinski") and Horseshoe Gaming, L.L.C. (the
"Company"). All capitalized terms used but not defined herein shall have the
meanings set forth in the Unit Option Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the parties entered into a Unit Option Agreement dated
February 1, 1997 ("Unit Option Agreement") whereby the Company granted Lepinski
an Option to purchase 252,490 units of the Company (the "Units") at a price of
$3.47 per Unit, or .268668% of the Company at a purchase price of $940,338;
WHEREAS, pursuant to paragraph 13 of the Unit Option Agreement Lepinski
has the right to require the Company to purchase back his Units in the Company
(the "Put Right"); and
WHEREAS, the Company is party to an agreement pursuant to which it may
acquire (the "Acquisition") Empress Casino Hammond Corporation, an Indiana
corporation ("Empress Hammond"), and Empress Casino Joliet Corporation, an
Illinois corporation ("Empress Joliet"), both of which are subsidiaries of
Empress Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and the consideration of the monies paid and other
representations made in conjunction herewith, the parties to this Agreement
agree as follows:
1. Lepinski hereby exercises his option to purchase all of the Units
pursuant to the Unit Option Agreement.
2. Simultaneously with Lepinski's exercise of the Option, Lepinski
hereby exercises his Put Right pursuant to paragraph 13 of the Unit Option
Agreement. The Company hereby waives any requirements of written notice set
forth in the Unit Option Agreement, and further waives the condition that the
Put Right can be exercised only in the event of termination of Lepinski's
employment.
3. The Company shall purchase the Units owned by Lepinski for an amount
determined as follows:
Percentage interest is .268668%
Fair market value of Company $470 m multiplied by .268668% = $1,262,739.60
Less initial minimum value $350 m multiplied by .268668% = $ (940,338.00)
---- -------------
$ 322,402.00
Such fair market value of the Company has been fully negotiated between the
parties and which price the parties agree constitutes the Fair Market Value of
the Units (all as set forth in and required by Paragraph 13 of the Unit Option
Plan).
4. Lepinski hereby unconditionally releases and discharges the Company
from any and all claims, known or unknown, directly or indirectly related to or
in any way connected with (i) the Unit Option Agreement, (ii) Lepinski's
exercise of the Option; (iii) Lepinski's exercise of the Put Right, (iv)
Lepinski's ownership of the Units, and (v) this Agreement and all of the
agreements, documents and instruments to be executed and delivered in connection
with this Agreement. Lepinski acknowledges and agrees that following the
consummation of the transaction contemplated by this Agreement, he shall have no
rights of any kind to acquire units in the Company or any of its affiliates or
subsidiaries; provided however, that Lepinski shall have the rights, if any,
afforded to him under the Company's option plan to be first effective on or
after January 1, 1999.
5. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), the Company shall pay Lepinski
in addition to the Purchase Price an amount equal to $80,600 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii) the
Company renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) the Company combines with another party such that the Acquisition is
consummated with the Company obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) the Company consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Company
is combined with only one; or (v) the Company sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount
shall be paid, together with the final payment, within forty-five (45) days of
Acquisition Closing Date.
6. This Agreement shall be construed under and governed by the laws of
the State of Delaware without regard to the conflict of law provisions thereof.
7. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of July, 1999.
"LEPINSKI"
Larry Lepinski
2
"COMPANY"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc.,
its Manager
By:
Kirk Saylor, Chief Financial
Officer
3
EXHIBIT 10.42
RELEASE AGREEMENT
THIS RELEASE AGREEMENT (the "Agreement") is made and entered into by
and between Glenn Buxton ("Buxton") and Horseshoe Gaming, L.L.C. (the
"Company"). All capitalized terms used but not defined herein shall have the
meanings set forth in the Unit Option Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the parties entered into a Unit Option Agreement dated
February 1, 1997 ("Unit Option Agreement") whereby the Company granted Buxton an
Option to purchase 126,245 units of the Company (the "Units") at a price of
$3.47 per Unit, or .134334% of the Company at a purchase price of $470,169;
WHEREAS, pursuant to paragraph 13 of the Unit Option Agreement Buxton
has the right to require the Company to purchase back his Units in the Company
(the "Put Right"); and
WHEREAS, the Company is party to an agreement pursuant to which it may
acquire (the "Acquisition") Empress Casino Hammond Corporation, an Indiana
corporation ("Empress Hammond"), and Empress Casino Joliet Corporation, an
Illinois corporation ("Empress Joliet"), both of which are subsidiaries of
Empress Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and the consideration of the monies paid and other
representations made in conjunction herewith, the parties to this Agreement
agree as follows:
1. Buxton hereby exercises his option to purchase all of the Units
pursuant to the Unit Option Agreement.
2. Simultaneously with Buxton's exercise of the Option, Buxton hereby
exercises his Put Right pursuant to paragraph 13 of the Unit Option Agreement.
The Company hereby waives any requirements of written notice set forth in the
Unit Option Agreement, and further waives the condition that the Put Right can
be exercised only in the event of termination of Buxton's employment.
3. The Company shall purchase the Units owned by Buxton for an amount
determined as follows:
Percentage interest is .134334%
Fair market value of Company $470 m multiplied by .134334% = $ 631,370.00
Less initial minimum value $350 m multiplied by .134334% = $(470,169.00)
---- ------------
$ 161,201.00
Such fair market value of the Company has been fully negotiated between the
parties and which price the parties agree constitutes the Fair Market Value of
the Units (all as set forth in and required by Paragraph 13 of the Unit Option
Plan).
4. Buxton hereby unconditionally releases and discharges the Company
from any and all claims, known or unknown, directly or indirectly related to or
in any way connected with (i) the Unit Option Agreement, (ii) Buxton's exercise
of the Option; (iii) Buxton's exercise of the Put Right, (iv) Buxton's ownership
of the Units, and (v) this Agreement and all of the agreements, documents and
instruments to be executed and delivered in connection with this Agreement.
Buxton acknowledges and agrees that following the consummation of the
transaction contemplated by this Agreement, he shall have no rights of any kind
to acquire units in the Company or any of its affiliates or subsidiaries;
provided however, that Buxton shall have the rights, if any, afforded to him
under the Company's option plan to be first effective on or after January 1,
1999.
5. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), the Company shall pay Buxton in
addition to the Purchase Price an amount equal to $40,300 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii) the
Company renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) the Company combines with another party such that the Acquisition is
consummated with the Company obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) the Company consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Company
is combined with only one; or (v) the Company sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount
shall be paid, together with the final payment, within forty-five (45) days of
Acquisition Closing Date.
6. This Agreement shall be construed under and governed by the laws of
the State of Delaware without regard to the conflict of law provisions thereof.
7. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of July, 1999.
"BUXTON"
Glenn Buxton
"COMPANY"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming, Inc.,
its Manager
By:
Kirk Saylor, Chief Financial
Officer
2
EXHIBIT 10.43
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the 1st day of July, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and RICK COOK ("Cook").
RECITALS:
A. Horseshoe is a casino owner/operator with its principal office in
Las Vegas, Nevada.
B. Cook is the current owner of a .139922% interest in Horseshoe and an
employee of Horseshoe by virtue of an Amended and Restated Employment Contract
dated February 1, 1999 by and between Horseshoe and Cook ("Employment
Contract").
C. Pursuant to his Employment Contract, Cook has certain put rights
with respect to his ownership ("Put Rights"). Cook has provided notice of his
intent to exercise his Put Rights and Horseshoe believes it is in its best
interest to acquire from Cook his .139922% ownership interest.
D. Horseshoe and Cook have agreed that the fair market value of the
.139922% interest in Horseshoe is $657,633 and that the value of his capital
account at June 30, 1999 was $82,664.
E. Pursuant to his Employment Contract with Horseshoe, Cook has
borrowed certain sums from Horseshoe and as of June 30, 1999, Cook is indebted
to Horseshoe in the principal amount of $52,000 plus interest of $10,320, for a
total due, as of June 30, 1999, of $62,320 (the "Cook Debt").
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Cook hereby exercises his Put Right. Horseshoe hereby waives any
requirements of written notice and further waives the condition that the Put
Right can be exercised only in the event of termination of Cook's employment.
2. Concurrently with the execution of this Agreement, Cook has sold to
Horseshoe, and Horseshoe has purchased from Cook, Cook's .139922% interest in
Horseshoe at the price of $657,633, plus a return of capital of $82,664, for a
total purchase price of $740,297 ("Purchase Price"). In full and complete
satisfaction of the Cook Debt, the Purchase Price shall be reduced by the amount
of the Cook Debt. Cook hereby acknowledges the receipt of the Purchase Price
less the Cook Debt.
3. Cook hereby unconditionally releases and discharges the Horseshoe
from any and all claims, known or unknown, directly or indirectly related to or
in any way connected with (i) Cook's exercise of the Put Right, (ii) Cook's
ownership of Horseshoe, and (iii) this Agreement and all of the agreements,
documents and instruments to be executed and delivered in connection with this
Agreement. Cook acknowledges and agrees that following the consummation of the
transaction contemplated by this Agreement, he shall have no equity ownership in
the Horseshoe nor will he have rights of any kind to acquire an ownership
interest in Horseshoe or any of its affiliates or subsidiaries; provided
however, that Cook shall have the rights, if any, afforded to him under
Horseshoe's option plan to be first effective on or after January 1, 1999.
4. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Cook in
addition to the Purchase Price an amount equal to $41,976.60 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount
shall be paid, together with the final payment, within forty-five (45) days of
Acquisition Closing Date.
5. Cook represents and warrants that he is the lawful record and
beneficial owner of the .139922% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
6. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
7. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
8. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
9. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
2
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of July, 1999.
"COOK"
Rick Cook
"COMPANY"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp.,
its Manager
By:
Kirk Saylor, Chief Financial Officer
3
EXHIBIT 10.44
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the ____ day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and ROBERT MCQUEEN ("McQueen").
RECITALS:
A. Horseshoe is a casino owner/operator with its principal office in
Las Vegas, Nevada.
B. McQueen is the current owner of a .154144% interest in Horseshoe and
an employee of Horseshoe by virtue of an Amended and Restated Employment
Agreement dated October 15, 1998 by and between Horseshoe and McQueen
("Employment Contract").
C. Pursuant to his Employment Contract, McQueen has certain put rights
with respect to his ownership ("Put Rights"). McQueen has provided notice of his
intent to exercise his Put Rights and Horseshoe believes it is in its best
interest to acquire from McQueen his .154144% ownership interest.
D. Horseshoe and McQueen have agreed that the fair market value of the
.154144% interest in Horseshoe is $724,477 and that the value of his capital
account at July 31, 1999 was $100,820.
E. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. McQueen hereby exercises his Put Right. Horseshoe hereby waives any
requirements of written notice and further waives the condition that the Put
Right can be exercised only in the event of termination of McQueen's employment.
2. Concurrently with the execution of this Agreement, McQueen has sold
to Horseshoe, and Horseshoe has purchased from McQueen, McQueen's .154144%
interest in Horseshoe at the price of $724,477, plus a return of capital of
$100,820, for a total purchase price of $825,297 ("Purchase Price"). The
Purchase price shall be paid as follows: (i) 25% of the Purchase Price at the
time of the execution of this Agreement and (ii) 25% of the Purchase Price on
August 1 during each of the next 3 years. All sums due under this Agreement
shall bear interest at a rate of 8% per annum.
3. McQueen hereby unconditionally releases and discharges the Horseshoe
from any and all claims, known or unknown, directly or indirectly related to or
in any way connected with (i) McQueen's exercise of the Put Right, (ii)
McQueen's ownership of Horseshoe, and (iii) this Agreement and all of
the agreements, documents and instruments to be executed and delivered in
connection with this Agreement. McQueen acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, he shall
have no equity ownership in the Horseshoe nor will he have rights of any kind to
acquire an ownership interest in Horseshoe or any of its affiliates or
subsidiaries; provided however, that McQueen shall have the rights, if any,
afforded to him under Horseshoe's option plan to be first effective on or after
January 1, 1999.
4. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay McQueen in
addition to the Purchase Price an amount equal to $46,243.20 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, in equal installments with the remaining installment
payments of the Purchase Price. If the Purchase Price has been paid in full at
the time of the Acquisition Closing Date, then the Additional Amounts shall be
paid within 45 days of the Acquisition Closing Date.
5. McQueen represents and warrants that he is the lawful record and
beneficial owner of the .154144% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
6. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
7. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
8. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
9. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
2
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of August, 1999.
"MCQUEEN"
Robert McQueen
"HORSESHOE"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp.,
its Manager
By:
Kirk Saylor, Chief Financial
Officer
3
EXHIBIT 10.45
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the _____ day of August, 1999, between HORSESHOE GAMING, L.L.C.
("Horseshoe"), and GARY BORDER ("Border").
RECITALS:
A. Horseshoe is a casino owner/operator with its principal office in
Las Vegas, Nevada.
B. Border is the current owner of a .535232% interest in Horseshoe and
an employee of Horseshoe by virtue of an Amended and Restated Employment
Agreement dated November 23, 1998, by and between Horseshoe and Border
("Employment Contract").
C. Pursuant to his Employment Contract, Border has certain put rights
with respect to his ownership ("Put Rights"). Border has provided notice of his
intent to exercise his Put Rights and Horseshoe believes it is in its best
interest to acquire from Border his .535232% ownership interest.
D. Horseshoe and Border have agreed that the fair market value of the
.535232% interest in Horseshoe is $2,515,590 and that the value of his capital
account at July 31, 1999 was $185,230.
E. Pursuant to his Employment Contract, Border has borrowed certain
sums from Horseshoe and as of July 31, 1999, Border is indebted to Horseshoe in
the principal amount of $150,000 plus interest of $3,873.97, thus Border is
indebted to Horseshoe as of July 31, 1999, in the total amount of $153,873.97
(the "Border Debt").
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Border hereby exercises his Put Right. Horseshoe hereby waives any
requirements of written notice and further waives the condition that the Put
Right can be exercised only in the event of termination of Border's employment.
2. The Company shall purchase Border's ownership interest for an amount
determined as follows:
Percentage interest is .535232%
Fair market value of Company $470 m multiplied by .535232% = $ 2,515,590
Less initial minimum value $350 m multiplied by .535232% = $(1,873,312)
---- -----------
$ 642,278
Such fair market value of the Company has been fully negotiated between the
parties and which price the parties agree constitutes the Fair Market Value of
Border's ownership interest.
3. Concurrently with the execution of this Agreement, Border has sold
to Horseshoe, and Horseshoe has purchased from Border, Border's .535232%
interest in Horseshoe at the price of $642,278, plus a return of capital of
$185,230, for a total purchase price of $827,508 ("Purchase Price"). In full and
complete satisfaction of the Border Debt, the Purchase Price shall be reduced by
the amount of the Border Debt (the Purchase Price less the Border Debt being
referred to herein as the "Net Purchase Price.") The Net Purchase price shall be
paid as follows: (i) 33% of the Net Purchase Price at the time of the execution
of this Agreement, (ii) 33% of the Net Purchase Price on January 30, 2000, and
(iii) the balance on July 1, 2000. All sums due under this Agreement shall bear
interest at a rate of 8% per annum.
4. Border hereby unconditionally releases and discharges the Horseshoe
from any and all claims, known or unknown, directly or indirectly related to or
in any way connected with (i) Border's exercise of the Put Right, (ii) Border's
ownership of Horseshoe, and (iii) this Agreement and all of the agreements,
documents and instruments to be executed and delivered in connection with this
Agreement. Border acknowledges and agrees that following the consummation of the
transaction contemplated by this Agreement, he shall have no equity ownership in
the Horseshoe nor will he have rights of any kind to acquire an ownership
interest in Horseshoe or any of its affiliates or subsidiaries; provided
however, that Border shall have the rights, if any, afforded to him under
Horseshoe's option plan to be first effective on or after January 1, 1999.
5. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Border in
addition to the Purchase Price an amount equal to $160,569.60 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, in equal installments with the remaining installment
payments of the Purchase Price. If the Purchase Price has been paid in full at
the time of the Acquisition Closing Date, then the Additional Amounts shall be
paid within 45 days of the Acquisition Closing Date.
6. Border represents and warrants that he is the lawful record and
beneficial owner of the .535232% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
2
7. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
8. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
9. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
10. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of August, 1999.
"BORDER"
Gary Border
"HORSESHOE"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp.,
its Manager
By:
Kirk Saylor, Chief Financial Officer
3
EXHIBIT 10.46
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the ____ day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and GARY ANDERSON ("Anderson").
RECITALS:
A. Horseshoe is a casino owner/operator with its principal office in
Las Vegas, Nevada.
B. Anderson is the current owner of a .462431% interest in Horseshoe
and an employee of Horseshoe by virtue of an Employment Agreement dated November
1, 1998, by and between Horseshoe and Anderson ("Employment Contract").
C. Pursuant to his Employment Contract, Anderson has certain put rights
with respect to his ownership ("Put Rights"). Anderson has provided notice of
his intent to exercise his Put Rights and Horseshoe believes it is in its best
interest to acquire from Anderson his .462431% ownership interest.
D. Horseshoe and Anderson have agreed that the fair market value of the
.462431% interest in Horseshoe is $2,173,426 and that the value of his capital
account at July 31, 1999 was $297,458.
E. Pursuant to his Employment Contract, Anderson has borrowed certain
sums from Horseshoe and as of July 31, 1999, Anderson is indebted to Horseshoe
in the principal amount of $130,000 plus interest of $11,994, thus Anderson is
indebted to Horseshoe as of July 31, 1999, in the total amount of $141,994 (the
"Anderson Debt").
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Anderson hereby exercises his Put Right. Horseshoe hereby waives any
requirements of written notice and further waives the condition that the Put
Right can be exercised only in the event of termination of Anderson's
employment.
2. Concurrently with the execution of this Agreement, Anderson has sold
to Horseshoe, and Horseshoe has purchased from Anderson, Anderson's .462431%
interest in Horseshoe at the price of $2,173,426, plus a return of capital of
$297,458, for a total purchase price of $2,470,884 ("Purchase Price"). In full
and complete satisfaction of the Anderson Debt, the Purchase Price shall be
reduced by the amount of the Anderson Debt (the Purchase Price less the Anderson
Debt being referred to herein as
the "Net Purchase Price.") The Net Purchase price shall be paid as follows: (i)
25% of the Net Purchase Price at the time of the execution of this Agreement and
(ii) 25% of the Net Purchase Price on August 1 during each of the next 3 years.
All sums due under this Agreement shall bear interest at a rate of 8% per annum.
3. Anderson hereby unconditionally releases and discharges the
Horseshoe from any and all claims, known or unknown, directly or indirectly
related to or in any way connected with (i) Anderson's exercise of the Put
Right, (ii) Anderson's ownership of Horseshoe, and (iii) this Agreement and all
of the agreements, documents and instruments to be executed and delivered in
connection with this Agreement. Anderson acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, he shall
have no equity ownership in the Horseshoe nor will he have rights of any kind to
acquire an ownership interest in Horseshoe or any of its affiliates or
subsidiaries; provided however, that Anderson shall have the rights, if any,
afforded to him under Horseshoe's option plan to be first effective on or after
January 1, 1999.
4. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Anderson in
addition to the Purchase Price an amount equal to $138,729.30 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, in equal installments with the remaining installment
payments of the Purchase Price. If the Purchase Price has been paid in full at
the time of the Acquisition Closing Date, then the Additional Amounts shall be
paid within 45 days of the Acquisition Closing Date.
5. Anderson represents and warrants that he is the lawful record and
beneficial owner of the .462431% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
6. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
7. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
8. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
2
9. This Agreement may be executed in counterparts, each of which shall
be deemed an original and both of which together shall be deemed one Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of this
_____ day of August, 1999.
"ANDERSON"
Gary Anderson
"HORSESHOE"
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp.,
its Manager
By:
Kirk Saylor, Chief Financial
Officer
3
EXHIBIT 10.47
HORSESHOE GAMING HOLDING CORP.
EQUITY INCENTIVE PLAN
Section 1. PURPOSE OF THE PLAN
The purpose of the Horseshoe Gaming Holding Corp. Equity Incentive Plan
(the "Plan") is to further the interests of Horseshoe Gaming Holding Corp. (the
"Corporation") and its shareholders by providing long-term performance
incentives to those key employees of the Corporation and its Subsidiaries who
are largely responsible for the management, growth and protection of the
business of the Corporation and its Subsidiaries.
Section 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined
as set forth below:
(a) "Affiliate" means (i) any Person directly or indirectly
controlling or controlled by or under direct or indirect
common control with the Company or any of its Subsidiaries,
including, without limitation, Jack Binion, Peri Cope Howard
and Phyllis Cope, (ii) any spouse, immediate family member or
relative of any person described in clause (i) above, (iii)
any trust in which any person described in clause (i) or (ii)
above has a beneficial interest, and (iv) any trust
established by any person described in clause (i) or (ii)
above, whether or not such person has a beneficial interest in
such trust. For purposes of this definition, the term
"control" means (a) the power to direct the management and
policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting
securities, by contract, or otherwise or (b) the beneficial
ownership of 10% or more of any class of Voting Equity
Interests of a person.
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Common Stock, Common Stock granted as a bonus or in
lieu of other awards, other Common Stock-Based Award, Tax
Bonus or other cash payments granted to a Participant under
the Plan.
(c) "Award Agreement" shall mean the written agreement, instrument
or document evidencing an Award.
(d) "Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness that is not itself
otherwise capital stock), warrants, options, participations or
other equivalents of or interests (however designated) in
stock issued by that corporation.
(e) "Change of Control" means and includes each of the following
occurring after the effective date of this Plan:
(i) prior to the completion of an Initial Public Offering by
the Corporation, the failure at any time of Excluded Persons
as a group to own and control at least 40% of the issued and
outstanding Equity Interests of the Company;
(ii) after the completion of an Initial Public Offering by the
Corporation, the acquisition, in one or more transactions, of
beneficial ownership by (i) any person or entity (other than
an Excluded Person) or (ii) any group of persons or entities
(excluding any group in which Excluded Persons beneficially
own in the aggregate at least 75% of the equity and voting
interests beneficially owned by the group) who constitute a
group (within the meaning of Section 13(d)(3) of the Exchange
Act), in either case, of Equity Interests of the Corporation
such that, as a result of such acquisition, such person,
entity or group beneficially owns (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, 30% or
more of the voting power of Equity Interests of the
Corporation entitled to vote in the election of directors of
the Company then outstanding; provided, however, that no
Change of Control shall be deemed to have occurred if (x)
Excluded Persons beneficially own, in the aggregate, at such
time, a greater percentage of the total voting power of Equity
Interests of the Corporation entitled to vote in the election
of directors of the Corporation than such other person, entity
or group or (y) at the time of such acquisition, Excluded
Persons (or any of them) possess the ability (by contract or
otherwise) to elect, or cause the election of, a majority of
the members of the Board of Directors of the Corporation;
(iii) any merger or consolidation of the Corporation with or
into any person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all assets
of the Corporation, on a consolidated basis, in one
transaction or a series of related transactions, if
immediately after giving effect to such transaction or
transactions, any person or group (excluding any group in
which Excluded Persons beneficially own in the aggregate at
least 75% of the equity and voting interests beneficially
owned by the group) is or becomes the beneficial owner,
directly or indirectly, of 30% or more of the total voting
power of Equity Interests of the surviving or transferee
person; provided, however, that no Change of Control shall be
deemed to have occurred if (A) Excluded Persons beneficially
own, in the aggregate, at such time, (x) 40% or more of the
total voting power of Equity Interests of the surviving or
transferee person and (y) a greater percentage of the total
voting power of Equity Interests of the surviving or
transferee Person than such other person or group or (B) after
giving effect to such transaction, Excluded Persons (or any of
them) possess the ability (by contract or otherwise) to elect,
or cause the election of, a majority of the members of the
Board of Directors of the Company;
2
(iv) during any period of 12 consecutive months after the
effective date of the Plan, 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
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
(v) the Company adopts a plan of liquidation.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Equity Interest" of any person means any shares, interests,
participations or other equivalents (however designated) in
such person's equity, and shall in any event include any
Capital Stock issued by, or partnership, participation or
membership interests in, such Person.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Excluded Person" means (a) Jack Binion, (b) Phyllis Cope, (c)
Peri Cope Howard, or (d) any Affiliate (where the
determination of Affiliate is made without reference to clause
(b) of the definition of such term) of the persons described
in clause (a), (b) or (c) above.
(j) "Fair Market Value" means, with respect to Common Stock,
Awards, or other property, the fair market value of such
Common Stock, Awards, or other property determined by such
methods or procedures as shall be established from time to
time by the Board in good faith and in accordance with
applicable law. Unless and until determined otherwise by the
Board, the Fair Market Value of Common Stock shall be
determined pursuant to the methodology and procedures set
forth on Exhibit A to this Plan.
(k) "Initial Public Offering" or "IPO" means a bona fide
underwritten initial public offering of Capital Stock of the
Company for cash pursuant to an effective registration under
the Securities Act.
3
(l) "Limited SAR" means an SAR exercisable only for cash upon a
Change of Control or other event, as specified by the Board.
(m) "Option" means a right granted to a Participant pursuant to
Section 6(b) to purchase Common Stock at a specified price
during specified time periods.
(n) "Restricted Common Stock" means Common Stock awarded to a
Participant pursuant to Section 6(c) that may be subject to
certain restrictions and to a risk of forfeiture.
(o) "SAR" or "Common Stock Appreciation Right" means the right
granted to a Participant pursuant to Section 6(d) to be paid
an amount measured by the appreciation in the Fair Market
Value of Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash, Common
Stock or as specified in the Award, as determined by the
Board.
(p) "Subsidiary" shall mean any corporation, partnership, joint
venture or other business entity of which 50% or more of the
outstanding voting power is beneficially owned, directly or
indirectly, by the Corporation.
(q) "Tax Bonus" means a payment in cash in the year in which an
amount is included in the gross income of a Participant in
respect of an Award of an amount equal to the federal,
foreign, if any, and applicable state and local income and
employment tax liabilities payable by the Participant as a
result of (i) the amount included in gross income in respect
of the Award and (ii) the payment of the amount in this clause
(ii). For purposes of determining the amount to be paid to the
Participant pursuant to the preceding sentence, the
Participant shall be deemed to pay federal, foreign, if any,
and state and local income taxes at the highest marginal rate
of tax imposed upon ordinary income for the year in which an
amount in respect of the Award is included in gross income,
after giving effect to any deductions therefrom or credits
available with respect to the payment of any such taxes.
Section 3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the
Corporation (the "Board"). Any action of the Board in administering the Plan
shall be final, conclusive and binding on all persons, including the
Corporation, its Subsidiaries, employees, Participants, persons claiming rights
from or through Participants and members of the Corporation.
Subject to the provisions of the Plan, the Board shall have full and
final authority in its discretion: (a) to select the key employees who will
receive Awards pursuant to the Plan ("Participants"); (b) to determine the type
or types of Awards to be granted to each Participant; (c) to determine the
number of shares of Common Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not limited to,
restrictions as to
4
transferability or forfeiture, exercisability or settlement of an Award and
waivers or accelerations thereof, and waivers of or modifications to performance
conditions relating to an Award, based in each case on such considerations as
the Board shall determine) and all other matters to be determined in connection
with an Award; (d) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award may be
paid, in cash, Common Stock, other Awards or other property, or an Award may be
canceled, forfeited, or surrendered; (e) to determine whether, and to certify
that, performance goals to which the settlement of an Award is subject are
satisfied; (f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan, and to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of the
Plan; and (g) to make all other determinations as it may deem necessary or
advisable for the administration of the Plan.
Section 4. PARTICIPATION IN THE PLAN
Participants in the Plan shall be selected by the Board from among the
key employees of the Corporation and its Subsidiaries.
Section 5. PLAN LIMITATIONS; COMMON STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 8(a) hereof, the aggregate number
of shares of the Class A Common Stock, $0.01 par value, of the Corporation (the
"Common Stock") available for issuance as Awards under the Plan shall not exceed
2,500 shares of Common Stock.
No Award may be granted if the number of shares of Common Stock to
which such Award relates, when added to the number of shares of Common Stock
previously issued under the Plan and the number of shares of shares of Common
Stock which may then be acquired pursuant to other outstanding, unexercised
Awards, exceeds the number of shares of Common Stock available for issuance
pursuant to the Plan. If any shares of Common Stock subject to an Award are
forfeited or such Award is settled in cash or otherwise terminates for any
reason whatsoever without an actual distribution of shares of Common Stock to
the Participant, any shares of Common Stock counted against the number of shares
of Common Stock available for issuance pursuant to the Plan with respect to such
Award shall, to the extent of any such forfeiture, settlement, or termination,
again be available for Awards under the Plan; provided, however, that the Board
may adopt procedures for the counting of shares of Common Stock relating to any
Award to ensure appropriate counting, avoid double counting, and provide for
adjustments in any case in which the number of shares of Common Stock actually
distributed differs from the number of shares of Common Stock previously counted
in connection with such Award.
Section 6. AWARDS
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Board may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 8(a)),
such additional terms and conditions, not inconsistent with the
5
provisions of the Plan, as the Board shall determine, including terms requiring
forfeiture of Awards in the event of termination of employment by the
Participant; provided, however, that the Board shall retain full power to
accelerate or waive any such additional term or condition as it may have
previously imposed. All Awards shall be evidenced by an Award Agreement.
(b) Options. The Board may grant Options to Participants on the
following terms and conditions:
(i) Exercise Price. The exercise price of each Option shall be
determined by the Board at the time the Option is granted, but (except as
provided in Section 7(a)) the exercise price of any Option shall not be less
than the Fair Market Value of the Common Stock covered thereby at the time the
Option is granted.
(ii) Time and Method of Exercise. The Board shall determine the
time or times at which an Option may be exercised in whole or in part, whether
the exercise price shall be paid in cash or by the surrender at Fair Market
Value of Common Stock, or by any combination of cash and Common Stock,
including, without limitation, cash, Common Stock, other Awards, or other
property (including notes or other contractual obligations of Participants to
make payment on a deferred basis, such as through "cashless exercise"
arrangements, to the extent permitted by applicable law), and the methods by
which Common Stock will be delivered or deemed to be delivered to Participants.
(c) Restricted Common Stock. The Board is authorized to grant
Restricted Common Stock to Participants on the following terms and conditions:
(i) Restricted Period. Restricted Common Stock awarded to a
Participant shall be subject to such restrictions on transferability and other
restrictions for such periods as shall be established by the Board, in its
discretion, at the time of such Award, which restrictions may lapse separately
or in combination at such times, under such circumstances, or otherwise, as the
Board may determine.
(ii) Forfeiture. Restricted Common Stock shall be forfeitable to
the Corporation upon termination of employment during the applicable restricted
periods. The Board, in its discretion, whether in an Award Agreement or anytime
after an Award is made, may accelerate the time at which restrictions or
forfeiture conditions will lapse or remove any such restrictions, including upon
death, disability or retirement, whenever the Board determines that such action
is in the best interests of the Corporation.
(iii) Certificates for Common Stock. Restricted Common Stock
granted under the Plan may be evidenced in such manner as the Board shall
determine. If certificates representing Restricted Common Stock are registered
in the name of the Participant, such certificates may bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Common Stock.
6
(iv) Rights as a Common Stockholder. Subject to the terms and
conditions of the Award Agreement, the Participant shall have all the rights of
a Common Stockholder of the Corporation with respect to Restricted Common Stock
awarded to him or her, including, without limitation, the right to vote such
Common Stock and the right to receive all dividends or other distributions made
with respect to such Common Stock. If any such dividends or distributions are
paid in Common Stock, the Common Stock shall be subject to restrictions and a
risk of forfeiture to the same extent as the Restricted Common Stock with
respect to which the Common Stock has been distributed.
(d) Common Stock Appreciation Rights. The Board is authorized to grant
SARs to Participants on the following terms and conditions:
(i) Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess of (A)
the Fair Market Value of one share of Common Stock on the date of exercise over
(B) the grant price of the SAR as determined by the Board as of the date of
grant of the SAR, which grant price (except as provided in Section 7(a)) shall
not be less than the Fair Market Value of one share of Common Stock on the date
of grant.
(ii) Other Terms. The Board shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method by
which Common Stock will be delivered or deemed to be delivered to Participants,
whether or not an SAR shall be in tandem with any other Award, and any other
terms and conditions of any SAR. Limited SARs may be granted on such terms, not
inconsistent with this Section 6(d), as the Board may determine. Limited SARs
may be either freestanding or in tandem with other Awards.
(e) Other Common Stock-Based Awards. The Board is authorized, subject
to limitations under applicable law, to grant to Participants such other Common
Stock-Based Awards in addition to those provided in Sections 6(b), (c) and (d)
hereof, as deemed by the Board to be consistent with the purposes of the Plan.
The Board shall determine the terms and conditions of such Awards. Common Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(e) shall be purchased for such consideration and paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Common Stock, other Awards, or other property, as the Board shall determine.
(f) Cash Payments. The Board is authorized, subject to limitations
under applicable law, to grant to Participants Tax Bonuses and other cash
payments, whether awarded separately or as a supplement to any Common
Stock-Based Award. The Board shall determine the terms and conditions of such
Awards.
7
Section 7. ADDITIONAL PROVISIONS APPLICABLE TO AWARDS
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Board, be granted either
alone or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan or any award granted under any other plan of the
Corporation or any Subsidiary, or any business entity acquired by the
Corporation or any Subsidiary, or any other right of a Participant to receive
payment from the Corporation or any Subsidiary. If an Award is granted in
substitution for another Award or award, the Board shall require the surrender
of such other Award or award in consideration for the grant of the new Award.
Awards granted in addition to, or in tandem with other Awards or awards may be
granted either as of the same time as, or a different time from, the grant of
such other Awards or awards. The per share exercise price of any Option, grant
price of any SAR, or purchase price of any other Award conferring a right to
purchase Common Stock:
(i) granted in substitution for an outstanding Award or award
(including, without limiting the generality of the foregoing, options and other
awards previously made to any employee of Horseshoe Gaming LLC, a Subsidiary),
shall be not less than the lesser of (A) the Fair Market Value of a share of
Common Stock at the date such substitute Award is granted or (B) such Fair
Market Value at that date, reduced to reflect the Fair Market Value at that date
of the Award or award required to be surrendered by the Participant as a
condition to receipt of the substitute Award; or
(ii) retroactively granted in tandem with an outstanding Award or
award, shall not be less than the lesser of the Fair Market Value of a share of
Common Stock at the date of grant of the later Award or at the date of grant of
the earlier Award or award.
(b) Exchange and Buy Out Provisions. The Board may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Common
Stock, other Awards (subject to Section 7(a)), or other property based on such
terms and conditions as the Board shall determine and communicate to a
Participant at the time that such offer is made.
(c) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Board.
(d) Term of Awards. The term of each Award shall, except as provided
herein, be for such period as may be determined by the Board.
(e) Form of Payment. Subject to the terms of the Plan and any
applicable Award Agreement, payments or transfers to be made by the Corporation
or a Subsidiary upon the grant or exercise of an Award may be made in such forms
as the Board shall determine, including, without limitation, cash, Common Stock,
other Awards, or other property (and may be made in a single payment or
transfer, in installments, or on a deferred basis), in each case determined in
accordance with rules adopted by, and at the discretion of, the Board. (Such
payments may include, without
8
limitation, provisions for the payment or crediting of reasonable interest on
installments or deferred payments.) The Board, in its discretion, may accelerate
any payment or transfer upon a change in control as defined by the Board. The
Board may also authorize payment upon the exercise of an Option by net issuance
or other cashless exercise methods.
(f) Loan Provisions. With the consent of the Board, and subject at all
times to laws and regulations and other binding obligations or provisions
applicable to the Corporation, the Corporation may make, guarantee, or arrange
for a loan or loans to a Participant with respect to the exercise of any Option
or other payment in connection with any Award, including the payment by a
Participant of any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the Board shall have
full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and the conditions, if any, under which
the loan or loans may be forgiven.
(g) Change of Control. In the event of a Change of Control of the
Corporation, all Awards granted under the Plan that are still outstanding and
not yet vested or exercisable or which are subject to restrictions shall become
immediately 100% vested in each Participant or shall be free of any
restrictions, as of the first date that the definition of Change of Control has
been fulfilled, and shall be exercisable for the remaining duration of the
Award. All Awards that are exercisable as of the effective date of the Change of
Control will remain exercisable for the remaining duration of the Award.
Section 8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; ACCELERATION IN
CERTAIN EVENTS
(a) In the event that the Board shall determine that any dividend,
recapitalization, forward split or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange, or other
similar corporate transaction or event, affects the Common Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Board shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of Common
Stock which may thereafter be issued in connection with Awards, (ii) the number
and kind of Common Stock issuable in respect of outstanding Awards, (iii) the
aggregate number and kind of Common Stock available under the Plan, and (iv) the
exercise price, grant price, or purchase price relating to any Award or, if
deemed appropriate, make provision for a cash payment with respect to any
outstanding Award.
(b) In addition, the Board is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, events described
in the preceding paragraph) affecting the Corporation or any Subsidiary, or in
response to changes in applicable laws, regulations, or accounting principles.
9
Section 9. GENERAL PROVISIONS
(a) Changes to the Plan and Awards. The Board of Directors of the
Corporation may amend, alter, suspend, discontinue, or terminate the Plan or the
Board's authority to grant Awards under the Plan without the consent of the
Corporation's shareholders or Participants; provided, however, that without the
consent of an affected Participant, no amendment, alteration, suspension,
discontinuation, or termination of the Plan may materially and adversely affect
the rights of such Participant under any Award theretofore granted and any Award
Agreement relating thereto; and provided , further, that without the approval of
shareholders holding a majority of the voting power of all classes of the common
stock of the Corporation then issued and outstanding, no amendment will: (i)
change the class of persons eligible to receive Awards; (ii) materially increase
the benefits accruing to Participants under the Plan, or (iii) increase the
number of shares of Common Stock subject to the Plan. The Board may waive any
conditions or rights under, or amend, alter, suspend, discontinue, or terminate,
any Award theretofore granted and any Award Agreement relating thereto;
provided, however, that without the consent of an affected Participant, no such
amendment, alteration, suspension, discontinuation, or termination of any Award
may materially and adversely affect the rights of such Participant under such
Award.
The foregoing notwithstanding, any performance condition specified in
connection with an Award shall not be deemed a fixed contractual term, but shall
remain subject to adjustment by the Board, in its discretion at any time in view
of the Board's assessment of the Corporation's strategy, performance of
comparable companies, and other circumstances.
(b) No Right to Award or Employment. No employee or other person shall
have any claim or right to receive an Award under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Corporation or any Subsidiary.
(c) Taxes. The Corporation or any Subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Common Stock or any payroll or other payment to
a Participant, amounts of withholding and other taxes due in connection with any
transaction involving an Award, and to take such other action as the Board may
deem advisable to enable the Corporation and Participants to satisfy obligations
for the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Common
Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant's tax obligations.
(d) Limits on Transferability; Beneficiaries. No Award or other right
or interest of a Participant under the Plan shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or
liability of such Participants to, any party, other than the Corporation or any
Subsidiary, or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution, and such Awards and rights shall
be exercisable during the lifetime of the Participant only by the Participant or
his or her guardian or legal representative.
10
Notwithstanding the foregoing, the Board may, in its discretion, provide that
Awards or other rights or interests of a Participant granted pursuant to the
Plan be transferable, without consideration, to immediate family members (i.e.,
children, grandchildren or spouse), to trusts for the benefit of such immediate
family members and to partnerships in which such family members are the only
partners. The Board may attach to such transferability feature such terms and
conditions as it deems advisable. In addition, a Participant may, in the manner
established by the Board, designate a beneficiary (which may be a person or a
trust) to exercise the rights of the Participant, and to receive any
distribution, with respect to any Award upon the death of the Participant. A
beneficiary, guardian, legal representative or other person claiming any rights
under the Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award Agreement applicable to such Participant,
except as otherwise determined by the Board, and to any additional restrictions
deemed necessary or appropriate by the Board.
(e) No Rights to Awards; No Rights as a Common Stockholder. No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants. No Award
shall confer on any Participant any of the rights of a Common Stockholder of the
Corporation unless and until Common Stock is duly issued or transferred to the
Participant in accordance with the terms of the Award.
(f) Discretion. In exercising, or declining to exercise, any grant of
authority or discretion hereunder, the Board may consider or ignore such factors
or circumstances and may accord such weight to such factors and circumstances as
the Board alone and in its sole judgment deems appropriate and without regard to
the affect such exercise, or declining to exercise such grant of authority or
discretion, would have upon the affected Participant, any other Participant, any
employee, the Corporation, any Subsidiary, any member or any other person.
(g) Effective Date. The effective date of the Plan is January 1, 1999.
11
EXHIBIT A
VALUATION METHODOLOGY:
1. Compute the Enterprise Value of comparable gaming companies as follows:
o Compute market value by multiplying trading value of common
stock as quoted by the applicable stock exchange at the end of
applicable quarter by the total actual outstanding shares.
o Add carrying value of any preferred stock, if any
o Add total long-term debt
o Sum equals "Enterprise Value"
2. Compute EBITDA for the four (4) preceding fiscal quarters of these
comparable gaming companies by adding depreciation and amortization to
Operating Income.
3. Compute the EBITDA multiple for these comparable gaming companies by
dividing Enterprise Value by EBITDA.
4. Determine the MEDIAN multiple of these same comparable gaming
companies.
5. Apply the MEDIAN multiple to Horseshoe's preceding four (4) fiscal
quarters EBITDA, as calculated above, to determine Enterprise Value.
6. Subtract total long-term debt and the balance in the undistributed
capital of all current owners to determine total Fair Market Value.
7. Total Fair Market Value is then divided by total existing outstanding
shares plus total issued stock options (whether or not vested) to
determine option price.
8. The comparable gaming companies (including, but not limited to) are:
o Argosy
o Aztar
o Hollywood Park
o Park Place
o MGM
o Mirage
o Players
o Harrah's
o Boyd
o Station Casinos
o Trump
o Mandalay Bay
12
EXHIBIT 10.48
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
HORSESHOE GAMING, L.L.C.
PROMISSORY NOTE DUE JANUARY 2, 2004
$844,583.00 November 30, 1999
New York, New York
FOR VALUE RECEIVED, HORSESHOE GAMING, L.L.C., a Delaware limited
liability company (the "Company"), subject to Section 3 hereof, promises to pay,
on or before January 4, 2004 (the "Maturity Date"), to the order of Alpine
Associates (the "Holder"), at the Company's offices at 4024 South Industrial
Road, Las Vegas, Nevada 89013, or in accordance with such other instructions as
the Holder (or any other entity entitled to payment hereunder) may hereafter
designate from time to time in writing, the principal sum of EIGHT HUNDRED
FORTY-FOUR THOUSAND FIVE HUNDRED EIGHTY-THREE DOLLARS ($844,583.00) in lawful
money of the United States, with interest on the unpaid principal amount from
the date of this Promissory Note (together with all supplements, amendments or
modifications hereto and replacements or renewals hereof, this "Note") to and
including the date of payment, calculated as provided below.
1. Purchase Agreement. This Note is issued pursuant to the terms and
conditions of a Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), between the Company and the Holder, as consideration for the
repurchase by the Company of the Holder's ownership interest in the Company (the
"Ownership Interest"), made in connection with the proposed acquisition by the
Company of Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
2. Interest. The Company promises to pay simple interest on the
outstanding principal amount of this Note at a rate equal to 10% per annum (the
"Interest Rate") from November 30, 1999 until the maturity date of this Note or
the earlier acceleration of this Note pursuant to Section 6 of this Note, when
all accrued interest shall be immediately due and payable. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Subject to the
terms of (i) the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), among Horseshoe Gaming Holding Corp. ("HGHC"), as Borrower, the
lenders listed therein, DLJ Capital Funding, Inc., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Administrative Agent and Wells Fargo
Bank, National Association, as Documentation Agent; (ii) the Indenture dated as
of June 15, 1997 (the "9_% Indenture"), as the same shall have been amended to
date, for the Company's 9_% Senior Subordinated Notes due 2007, among the
Company, Robinson Property Group, Limited Partnership, New Gaming Capital
Partnership, Horseshoe Entertainment, Horseshoe GP, Inc., Bossier City Land
Corporation and Texas Trustee; (iii) the Indenture dated as of May 11, 1999 (the
"8_% Indenture"), for HGHC's 8_% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes"), by and between HGHC and U.S. Trust Company, National
Association, as trustee; (iv) the Indenture dated as of June 18, 1998 (the
"Empress Indenture"), for Empress Entertainment, Inc.'s 8_% Senior Subordinated
Notes due 2006, among Empress Entertainment, Inc., Empress River Casino Finance
Corporation, Empress Joliet, Empress Casino Hammond Corporation, Hammond
Residential and U.S. Bank Trust National Association (the documents described in
(i), (ii), (iii) and (iv) above being referred to as the "Financing Documents");
and (v) the various agreements entered into prior to the date hereof to
repurchase the interests of various former employees and members of the Company
which, among other things, do not permit the Company to make principal payments
on the repurchase of the Ownership Interest prior to the repayment in full of
amounts due under the Repurchase Agreements), the Company shall pay accrued
interest semiannually on June 30 and December 31 of each year, beginning on June
30, 2000. To the extent that the Company is not permitted to make interest
payments under the Financing Documents or the Repurchase Agreements, interest
shall accrue and be compounded at the Interest Rate until the earlier of the
date such interest is paid, the maturity date of this Note or the earlier
acceleration of this Note pursuant to Section 6 of this Note.
2
3. Payment of Principal. If the Company is not permitted under the
terms of the Financing Documents or the Repurchase Agreements to pay the
principal of this Note in full on the Maturity Date, then the payment of the
portion of the principal on this Note which may not be paid may be delayed until
such date as such principal payments are permitted under the terms of the
Financing Documents and the Repurchase Agreements. However, the portion of this
Note which may be paid on the Maturity Date shall be paid on the Maturity Date
and the balance shall be paid promptly thereafter as permitted by the Financing
Documents and the Repurchase Agreements
4. Optional Prepayment. The Company, at its option, may prepay all or
any portion of this Note, at any time, by paying an amount equal to the
outstanding principal amount of this Note, or a portion thereof, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium.
5. Application of Payments. All mandatory payments under Section 3 of
this Note and all optional prepayments under Section 4 of this Note shall
include payment of accrued interest on the principal amount so paid or prepaid
and all other amounts due under this Note and shall be applied, first to all
reasonable costs, fees, and expenses incurred by the Holder in the exercise of
the Holder's rights hereunder, second to payment of other accrued interest, and
thereafter to principal.
6. Acceleration. This Note shall accelerate and the outstanding
principal of and all accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, if a Change in Control (as defined
in the 8_% Indenture) or an Event of Default (as defined in the 8_% Indenture)
occurs, which Change of Control or Event of Default results in the acceleration
and repayment of all of the Senior Subordinated Notes.
7. Replacement Note. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory to the Company from the Holder and
upon reimbursement to the Company of all reasonable expenses incident thereto,
and upon surrender or cancellation of this Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed or mutilated Note.
3
8. Pari Passu Payments. All payments on this Note will be made pari
passu with payment to holders of similar notes issued on the date hereof in
respect of the repurchase of membership interests in the Company.
9. Amendment. Any amendment, supplement or modification of or to any
provision of this Note shall be effective only with the express written consent
of the Company and the Holder.
10. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company or the Holder shall bind its successors and assigns, whether so
expressed or not.
11. Governing Law. This Note and the rights and obligations of the
Company and the Holder hereunder shall be governed by, and shall be construed
and enforced in accordance with, the internal laws of the State of New York
(including Section 5-1401 of the General Obligations Law of the State of New
York), without regard to conflicts of laws principles.
12. Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
13. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
PURCHASE AGREEMENT dated and effective as of the 30th day of November,
1999 (this "Agreement"), between Horseshoe Gaming, L.L.C., a Delaware limited
liability company ("Horseshoe"), and Alpine Associates ("Seller").
RECITALS:
Horseshoe is a casino owner/operator with its principal office in Las
Vegas, Nevada.
Seller is the current owner of a .112611% interest in Horseshoe (the
"Ownership Interest").
Horseshoe is the party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
and Empress Casino Joliet Corporation, an Illinois corporation, both of which
are subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
In connection with the Acquisition, Seller desires to sell and
Horseshoe believes it is in its best interest to acquire from Seller the
Ownership Interest.
Horseshoe and Seller have agreed that the fair market value of the
Ownership Interest is EIGHT HUNDRED FORTY-FOUR THOUSAND FIVE HUNDRED
EIGHTY-THREE DOLLARS ($844,583.00).
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Subject to the terms and conditions set forth herein, Seller agrees
to sell, transfer, convey, assign and deliver to Horseshoe, and Horseshoe agrees
to purchase, acquire and accept from Seller, the Ownership Interest, at the
price of $844,583.00 (the "Purchase Price"), payable by a promissory note of
Horseshoe, which is attached hereto (the "Promissory Note").
2. Seller hereby unconditionally releases and discharges Horseshoe from
any and all claims, known or unknown, directly or indirectly related to or in
any way connected with Seller's ownership of Horseshoe and any and all
agreements in any way connected with or related thereto other than this
Agreement and the Promissory Note. Seller acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, Seller shall
have no equity ownership or any other interest in Horseshoe or any of its
affiliates or subsidiaries nor will Seller have rights of any kind to acquire an
ownership interest in Horseshoe or any of its affiliates or subsidiaries; the
only rights Seller shall have will be to enforce the terms of the Promissory
Note.
5
3. Seller represents and warrants that Seller is the lawful record and
beneficial owner of the Ownership Interest, free and clear of any liens, claims,
encumbrances, marital property rights, security agreements, equities, options,
charges or restrictions of any kind.
4. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
5. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
6. This Agreement and the rights and obligations of the Company and the
Seller hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York), without regard
to conflicts of laws principles.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
8. Horseshoe, on the one hand, and Seller, on the other hand, shall pay
their respective fees and expenses incurred by them in connection with the
transaction contemplated herein.
9. Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms and provisions of
this Agreement in any other jurisdiction.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
HORSESHOE GAMING, L.L.C.
PROMISSORY NOTE DUE JANUARY 2, 2004
$760,125.00 November 30, 1999
New York, New York
FOR VALUE RECEIVED, HORSESHOE GAMING, L.L.C., a Delaware
limited liability company (the "Company"), subject to Section 3 hereof, promises
to pay, on or before January 4, 2004 (the "Maturity Date"), to the order of Bear
Stearns F/A/O #2000 (the "Holder"), at the Company's offices at 4024 South
Industrial Road, Las Vegas, Nevada 89013, or in accordance with such other
instructions as the Holder (or any other entity entitled to payment hereunder)
may hereafter designate from time to time in writing, the principal sum of SEVEN
HUNDRED SIXTY THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($760,125.00) in lawful
money of the United States, with interest on the unpaid principal amount from
the date of this Promissory Note (together with all supplements, amendments or
modifications hereto and replacements or renewals hereof, this "Note") to and
including the date of payment, calculated as provided below.
1. Purchase Agreement. This Note is issued pursuant to the terms and
conditions of a Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), between the Company and the Holder, as consideration for the
repurchase by the Company of the Holder's ownership interest in the Company (the
"Ownership Interest"), made in connection with the proposed acquisition by the
Company of Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
2. Interest. The Company promises to pay simple interest on the
outstanding principal amount of this Note at a rate equal to 10% per annum (the
"Interest Rate") from November 30, 1999 until the maturity date of this Note or
the earlier acceleration of this Note pursuant to Section 6 of this Note, when
all accrued interest shall be immediately due and payable. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Subject to the
terms of (i) the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), among Horseshoe Gaming Holding Corp. ("HGHC"), as Borrower, the
lenders listed therein, DLJ Capital Funding, Inc., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Administrative Agent and Wells Fargo
Bank, National Association, as Documentation Agent; (ii) the Indenture dated as
of June 15, 1997 (the "9_% Indenture"), as the same shall have been amended to
date, for the Company's 9_% Senior Subordinated Notes due 2007, among the
Company, Robinson Property Group, Limited Partnership, New Gaming Capital
Partnership, Horseshoe Entertainment, Horseshoe GP, Inc., Bossier City Land
Corporation and Texas Trustee; (iii) the Indenture dated as of May 11, 1999 (the
"8_% Indenture"), for HGHC's 8_% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes"), by and between HGHC and U.S. Trust Company, National
Association, as trustee; (iv) the Indenture dated as of June 18, 1998 (the
"Empress Indenture"), for Empress Entertainment, Inc.'s 8_% Senior Subordinated
Notes due 2006, among Empress Entertainment, Inc., Empress River Casino Finance
Corporation, Empress Joliet, Empress Casino Hammond Corporation, Hammond
Residential and U.S. Bank Trust National Association (the documents described in
(i), (ii), (iii) and (iv) above being referred to as the "Financing Documents");
and (v) the various agreements entered into prior to the date hereof to
repurchase the interests of various former employees and members of the Company
which, among other things, do not permit the Company to make principal payments
on the repurchase of the Ownership Interest prior to the repayment in full of
amounts due under the Repurchase Agreements), the Company shall pay accrued
interest semiannually on June 30 and December 31 of each year, beginning on June
30, 2000. To the extent that the Company is not permitted to make interest
payments under the Financing Documents or the Repurchase Agreements, interest
shall accrue and be compounded at the Interest Rate until the earlier of the
date such interest is paid, the maturity date of this Note or the earlier
acceleration of this Note pursuant to Section 6 of this Note.
2
3. Payment of Principal. If the Company is not permitted under the
terms of the Financing Documents or the Repurchase Agreements to pay the
principal of this Note in full on the Maturity Date, then the payment of the
portion of the principal on this Note which may not be paid may be delayed until
such date as such principal payments are permitted under the terms of the
Financing Documents and the Repurchase Agreements. However, the portion of this
Note which may be paid on the Maturity Date shall be paid on the Maturity Date
and the balance shall be paid promptly thereafter as permitted by the Financing
Documents and the Repurchase Agreements
4. Optional Prepayment. The Company, at its option, may prepay all or
any portion of this Note, at any time, by paying an amount equal to the
outstanding principal amount of this Note, or a portion thereof, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium.
5. Application of Payments. All mandatory payments under Section 3 of
this Note and all optional prepayments under Section 4 of this Note shall
include payment of accrued interest on the principal amount so paid or prepaid
and all other amounts due under this Note and shall be applied, first to all
reasonable costs, fees, and expenses incurred by the Holder in the exercise of
the Holder's rights hereunder, second to payment of other accrued interest, and
thereafter to principal.
6. Acceleration. This Note shall accelerate and the outstanding
principal of and all accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, if a Change in Control (as defined
in the 8_% Indenture) or an Event of Default (as defined in the 8_% Indenture)
occurs, which Change of Control or Event of Default results in the acceleration
and repayment of all of the Senior Subordinated Notes.
7. Replacement Note. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory to the Company from the Holder and
upon reimbursement to the Company of all reasonable expenses incident thereto,
and upon surrender or cancellation of this Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed or mutilated Note.
3
8. Pari Passu Payments. All payments on this Note will be made pari
passu with payment to holders of similar notes issued on the date hereof in
respect of the repurchase of membership interests in the Company.
9. Amendment. Any amendment, supplement or modification of or to any
provision of this Note shall be effective only with the express written consent
of the Company and the Holder.
10. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company or the Holder shall bind its successors and assigns, whether so
expressed or not.
11. Governing Law. This Note and the rights and obligations of the
Company and the Holder hereunder shall be governed by, and shall be construed
and enforced in accordance with, the internal laws of the State of New York
(including Section 5-1401 of the General Obligations Law of the State of New
York), without regard to conflicts of laws principles.
12. Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
13. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
PURCHASE AGREEMENT dated and effective as of the 30th day of November,
1999 (this "Agreement"), between Horseshoe Gaming, L.L.C., a Delaware limited
liability company ("Horseshoe"), and Bear Stearns F/A/O #2000 ("Seller").
RECITALS:
Horseshoe is a casino owner/operator with its principal office in Las
Vegas, Nevada.
Seller is the current owner of a .101350% interest in Horseshoe (the
"Ownership Interest").
Horseshoe is the party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
and Empress Casino Joliet Corporation, an Illinois corporation, both of which
are subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
In connection with the Acquisition, Seller desires to sell and
Horseshoe believes it is in its best interest to acquire from Seller the
Ownership Interest.
Horseshoe and Seller have agreed that the fair market value of the
Ownership Interest is SEVEN HUNDRED SIXTY THOUSAND ONE HUNDRED TWENTY-FIVE
DOLLARS ($760,125.00).
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Subject to the terms and conditions set forth herein, Seller agrees
to sell, transfer, convey, assign and deliver to Horseshoe, and Horseshoe agrees
to purchase, acquire and accept from Seller, the Ownership Interest, at the
price of $760,125.00 (the "Purchase Price"), payable by a promissory note of
Horseshoe, which is attached hereto (the "Promissory Note").
2. Seller hereby unconditionally releases and discharges Horseshoe from
any and all claims, known or unknown, directly or indirectly related to or in
any way connected with Seller's ownership of Horseshoe and any and all
agreements in any way connected with or related thereto other than this
Agreement and the Promissory Note. Seller acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, Seller shall
have no equity ownership or any other interest in Horseshoe or any of its
affiliates or subsidiaries nor will Seller have rights of any kind to acquire an
ownership interest in Horseshoe or any of its affiliates or subsidiaries; the
only rights Seller shall have will be to enforce the terms of the Promissory
Note.
5
3. Seller represents and warrants that Seller is the lawful record and
beneficial owner of the Ownership Interest, free and clear of any liens, claims,
encumbrances, marital property rights, security agreements, equities, options,
charges or restrictions of any kind.
4. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
5. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
6. This Agreement and the rights and obligations of the Company and the
Seller hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York), without regard
to conflicts of laws principles.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
8. Horseshoe, on the one hand, and Seller, on the other hand, shall pay
their respective fees and expenses incurred by them in connection with the
transaction contemplated herein.
9. Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms and provisions of
this Agreement in any other jurisdiction.
6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
HORSESHOE GAMING, L.L.C.
PROMISSORY NOTE DUE JANUARY 2, 2004
$253,373.00 November 30, 1999
New York, New York
FOR VALUE RECEIVED, HORSESHOE GAMING, L.L.C., a Delaware
limited liability company (the "Company"), subject to Section 3 hereof, promises
to pay, on or before January 4, 2004 (the "Maturity Date"), to the order of
Matthewson CRUT (the "Holder"), at the Company's offices at 4024 South
Industrial Road, Las Vegas, Nevada 89013, or in accordance with such other
instructions as the Holder (or any other entity entitled to payment hereunder)
may hereafter designate from time to time in writing, the principal sum of TWO
HUNDRED FIFTY-THREE THOUSAND THREE HUNDRED SEVENTY-THREE DOLLARS ($253,373.00)
in lawful money of the United States, with interest on the unpaid principal
amount from the date of this Promissory Note (together with all supplements,
amendments or modifications hereto and replacements or renewals hereof, this
"Note") to and including the date of payment, calculated as provided below.
1. Purchase Agreement. This Note is issued pursuant to the terms and
conditions of a Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), between the Company and the Holder, as consideration for the
repurchase by the Company of the Holder's ownership interest in the Company (the
"Ownership Interest"), made in connection with the proposed acquisition by the
Company of Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
2. Interest. The Company promises to pay simple interest on the
outstanding principal amount of this Note at a rate equal to 10% per annum (the
"Interest Rate") from November 30, 1999 until the maturity date of this Note or
the earlier acceleration of this Note pursuant to Section 6 of this Note, when
all accrued interest shall be immediately due and payable. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Subject to the
terms of (i) the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), among Horseshoe Gaming Holding Corp. ("HGHC"), as Borrower, the
lenders listed therein, DLJ Capital Funding, Inc., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Administrative Agent and Wells Fargo
Bank, National Association, as Documentation Agent; (ii) the Indenture dated as
of June 15, 1997 (the "9_% Indenture"), as the same shall have been amended to
date, for the Company's 9_% Senior Subordinated Notes due 2007, among the
Company, Robinson Property Group, Limited Partnership, New Gaming Capital
Partnership, Horseshoe Entertainment, Horseshoe GP, Inc., Bossier City Land
Corporation and Texas Trustee; (iii) the Indenture dated as of May 11, 1999 (the
"8_% Indenture"), for HGHC's 8_% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes"), by and between HGHC and U.S. Trust Company, National
Association, as trustee; (iv) the Indenture dated as of June 18, 1998 (the
"Empress Indenture"), for Empress Entertainment, Inc.'s 8_% Senior Subordinated
Notes due 2006, among Empress Entertainment, Inc., Empress River Casino Finance
Corporation, Empress Joliet, Empress Casino Hammond Corporation, Hammond
Residential and U.S. Bank Trust National Association (the documents described in
(i), (ii), (iii) and (iv) above being referred to as the "Financing Documents");
and (v) the various agreements entered into prior to the date hereof to
repurchase the interests of various former employees and members of the Company
which, among other things, do not permit the Company to make principal payments
on the repurchase of the Ownership Interest prior to the repayment in full of
amounts due under the Repurchase Agreements), the Company shall pay accrued
interest semiannually on June 30 and December 31 of each year, beginning on June
30, 2000. To the extent that the Company is not permitted to make interest
payments under the Financing Documents or the Repurchase Agreements, interest
shall accrue and be compounded at the Interest Rate until the earlier of the
date such interest is paid, the maturity date of this Note or the earlier
acceleration of this Note pursuant to Section 6 of this Note.
2
3. Payment of Principal. If the Company is not permitted under the
terms of the Financing Documents or the Repurchase Agreements to pay the
principal of this Note in full on the Maturity Date, then the payment of the
portion of the principal on this Note which may not be paid may be delayed until
such date as such principal payments are permitted under the terms of the
Financing Documents and the Repurchase Agreements. However, the portion of this
Note which may be paid on the Maturity Date shall be paid on the Maturity Date
and the balance shall be paid promptly thereafter as permitted by the Financing
Documents and the Repurchase Agreements
4. Optional Prepayment. The Company, at its option, may prepay all or
any portion of this Note, at any time, by paying an amount equal to the
outstanding principal amount of this Note, or a portion thereof, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium.
5. Application of Payments. All mandatory payments under Section 3 of
this Note and all optional prepayments under Section 4 of this Note shall
include payment of accrued interest on the principal amount so paid or prepaid
and all other amounts due under this Note and shall be applied, first to all
reasonable costs, fees, and expenses incurred by the Holder in the exercise of
the Holder's rights hereunder, second to payment of other accrued interest, and
thereafter to principal.
6. Acceleration. This Note shall accelerate and the outstanding
principal of and all accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, if a Change in Control (as defined
in the 8_% Indenture) or an Event of Default (as defined in the 8_% Indenture)
occurs, which Change of Control or Event of Default results in the acceleration
and repayment of all of the Senior Subordinated Notes.
7. Replacement Note. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory to the Company from the Holder and
upon reimbursement to the Company of all reasonable expenses incident thereto,
and upon surrender or cancellation of this Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed or mutilated Note.
3
8. Pari Passu Payments. All payments on this Note will be made pari
passu with payment to holders of similar notes issued on the date hereof in
respect of the repurchase of membership interests in the Company.
9. Amendment. Any amendment, supplement or modification of or to any
provision of this Note shall be effective only with the express written consent
of the Company and the Holder.
10. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company or the Holder shall bind its successors and assigns, whether so
expressed or not.
11. Governing Law. This Note and the rights and obligations of the
Company and the Holder hereunder shall be governed by, and shall be construed
and enforced in accordance with, the internal laws of the State of New York
(including Section 5-1401 of the General Obligations Law of the State of New
York), without regard to conflicts of laws principles.
12. Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
13. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp., Manager
By:
Kirk Saylor, Chief Financial Officer
4
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated and effective as of the 30th day of November,
1999 (this "Agreement"), between Horseshoe Gaming, L.L.C., a Delaware limited
liability company ("Horseshoe"), and Mattewson CRUT ("Seller").
RECITALS:
Horseshoe is a casino owner/operator with its principal office in Las
Vegas, Nevada.
Seller is the current owner of a .033783% interest in Horseshoe (the
"Ownership Interest").
Horseshoe is the party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
and Empress Casino Joliet Corporation, an Illinois corporation, both of which
are subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
In connection with the Acquisition, Seller desires to sell and
Horseshoe believes it is in its best interest to acquire from Seller the
Ownership Interest.
Horseshoe and Seller have agreed that the fair market value of the
Ownership Interest is TWO HUNDRED FIFTY-THREE THOUSAND THREE HUNDRED
SEVENTY-THREE DOLLARS (253,373.00).
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Subject to the terms and conditions set forth herein, Seller agrees
to sell, transfer, convey, assign and deliver to Horseshoe, and Horseshoe agrees
to purchase, acquire and accept from Seller, the Ownership Interest, at the
price of $253,373.00 (the "Purchase Price"), payable by a promissory note of
Horseshoe, which is attached hereto (the "Promissory Note").
2. Seller hereby unconditionally releases and discharges Horseshoe from
any and all claims, known or unknown, directly or indirectly related to or in
any way connected with Seller's ownership of Horseshoe and any and all
agreements in any way connected with or related thereto other than this
Agreement and the Promissory Note. Seller acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, Seller shall
have no equity ownership or any other interest in Horseshoe or any of its
affiliates or subsidiaries nor will Seller have rights of any kind to acquire an
ownership interest in Horseshoe or any of its affiliates or subsidiaries; the
only rights Seller shall have will be to enforce the terms of the Promissory
Note.
5
3. Seller represents and warrants that Seller is the lawful record and
beneficial owner of the Ownership Interest, free and clear of any liens, claims,
encumbrances, marital property rights, security agreements, equities, options,
charges or restrictions of any kind.
4. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
5. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
6. This Agreement and the rights and obligations of the Company and the
Seller hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York), without regard
to conflicts of laws principles.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
8. Horseshoe, on the one hand, and Seller, on the other hand, shall pay
their respective fees and expenses incurred by them in connection with the
transaction contemplated herein.
9. Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms and provisions of
this Agreement in any other jurisdiction.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH LAWS.
HORSESHOE GAMING, L.L.C.
PROMISSORY NOTE DUE JANUARY 2, 2004
$422,295.00 November 30, 1999
New York, New York
FOR VALUE RECEIVED, HORSESHOE GAMING, L.L.C., a Delaware
limited liability company (the "Company"), subject to Section 3 hereof, promises
to pay, on or before January 4, 2004 (the "Maturity Date"), to the order of
Nobutaka Motaguchi (the "Holder"), at the Company's offices at 4024 South
Industrial Road, Las Vegas, Nevada 89013, or in accordance with such other
instructions as the Holder (or any other entity entitled to payment hereunder)
may hereafter designate from time to time in writing, the principal sum of FOUR
HUNDRED TWENTY-TWO THOUSAND TWO HUNDRED NINTY-FIVE DOLLARS ($422,295.00) in
lawful money of the United States, with interest on the unpaid principal amount
from the date of this Promissory Note (together with all supplements, amendments
or modifications hereto and replacements or renewals hereof, this "Note") to and
including the date of payment, calculated as provided below.
I. Purchase Agreement. This Note is issued pursuant to the terms and
conditions of a Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), between the Company and the Holder, as consideration for the
repurchase by the Company of the Holder's ownership interest in the Company (the
"Ownership Interest"), made in connection with the proposed acquisition by the
Company of Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
II. Interest. The Company promises to pay simple interest on the
outstanding principal amount of this Note at a rate equal to 10% per annum (the
"Interest Rate") from November 30, 1999 until the maturity date of this Note or
the earlier acceleration of this Note pursuant to Section 6 of this Note, when
all accrued interest shall be immediately due and payable. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Subject to the
terms of (i) the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), among Horseshoe Gaming Holding Corp. ("HGHC"), as Borrower, the
lenders listed therein, DLJ Capital Funding, Inc., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Administrative Agent and Wells Fargo
Bank, National Association, as Documentation Agent; (ii) the Indenture dated as
of June 15, 1997 (the "9_% Indenture"), as the same shall have been amended to
date, for the Company's 9_% Senior Subordinated Notes due 2007, among the
Company, Robinson Property Group, Limited Partnership, New Gaming Capital
Partnership, Horseshoe Entertainment, Horseshoe GP, Inc., Bossier City Land
Corporation and Texas Trustee; (iii) the Indenture dated as of May 11, 1999 (the
"8_% Indenture"), for HGHC's 8_% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes"), by and between HGHC and U.S. Trust Company, National
Association, as trustee; (iv) the Indenture dated as of June 18, 1998 (the
"Empress Indenture"), for Empress Entertainment, Inc.'s 8_% Senior Subordinated
Notes due 2006, among Empress Entertainment, Inc., Empress River Casino Finance
Corporation, Empress Joliet, Empress Casino Hammond Corporation, Hammond
Residential and U.S. Bank Trust National Association (the documents described in
(i), (ii), (iii) and (iv) above being referred to as the "Financing Documents");
and (v) the various agreements entered into prior to the date hereof to
repurchase the interests of various former employees and members of the Company
which, among other things, do not permit the Company to make principal payments
on the repurchase of the Ownership Interest prior to the repayment in full of
amounts due under the Repurchase Agreements), the Company shall pay accrued
interest semiannually on June 30 and December 31 of each year, beginning on June
30, 2000. To the extent that the Company is not permitted to make interest
payments under the Financing Documents or the Repurchase Agreements, interest
shall accrue and be compounded at the Interest Rate until the earlier of the
date such interest is paid, the maturity date of this Note or the earlier
acceleration of this Note pursuant to Section 6 of this Note.
III. Payment of Principal. If the Company is not permitted under the
terms of the Financing Documents or the Repurchase Agreements to pay the
principal of this Note in full on the Maturity Date, then the payment of the
portion of the principal on this Note which may not be paid may be delayed until
such date as such principal payments are permitted under the terms of the
Financing Documents and the Repurchase Agreements. However, the portion of this
Note which may be paid on the Maturity Date shall be paid on the Maturity Date
and the balance shall be paid promptly thereafter as permitted by the Financing
Documents and the Repurchase Agreements
IV. Optional Prepayment. The Company, at its option, may prepay all or
any portion of this Note, at any time, by paying an amount equal to the
outstanding principal amount of this Note, or a portion thereof, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium.
V. Application of Payments. All mandatory payments under Section 3 of
this Note and all optional prepayments under Section 4 of this Note shall
include payment of accrued interest on the principal amount so paid or prepaid
and all other amounts due under this Note and shall be applied, first to all
reasonable costs, fees, and expenses incurred by the Holder in the exercise of
the Holder's rights hereunder, second to payment of other accrued interest, and
thereafter to principal.
2
VI. Acceleration. This Note shall accelerate and the outstanding
principal of and all accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, if a Change in Control (as defined
in the 8_% Indenture) or an Event of Default (as defined in the 8_% Indenture)
occurs, which Change of Control or Event of Default results in the acceleration
and repayment of all of the Senior Subordinated Notes.
VII. Replacement Note. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory to the Company from the Holder and
upon reimbursement to the Company of all reasonable expenses incident thereto,
and upon surrender or cancellation of this Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed or mutilated Note.
VIII. Pari Passu Payments. All payments on this Note will be made pari
passu with payment to holders of similar notes issued on the date hereof in
respect of the repurchase of membership interests in the Company.
IX. Amendment. Any amendment, supplement or modification of or to any
provision of this Note shall be effective only with the express written consent
of the Company and the Holder.
X. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company or the Holder shall bind its successors and assigns, whether so
expressed or not.
XI. Governing Law. This Note and the rights and obligations of the
Company and the Holder hereunder shall be governed by, and shall be construed
and enforced in accordance with, the internal laws of the State of New York
(including Section 5-1401 of the General Obligations Law of the State of New
York), without regard to conflicts of laws principles.
XII. Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
3
XIII. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
HORSESHOE GAMING, L.L.C.
By: Horseshoe Gaming Holding Corp., Manager
By:
Kirk Saylor, Chief Financial Officer
4
PURCHASE AGREEMENT
PURCHASE AGREEMENT dated and effective as of the 30th day of November,
1999 (this "Agreement"), between Horseshoe Gaming, L.L.C., a Delaware limited
liability company ("Horseshoe"), and Nobutaka Mutaguchi ("Seller").
RECITALS:
Horseshoe is a casino owner/operator with its principal office in Las Vegas,
Nevada.
Seller is the current owner of a .056306% interest in Horseshoe (the "Ownership
Interest").
Horseshoe is the party to an agreement pursuant to which it may acquire (the
"Acquisition") Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
In connection with the Acquisition, Seller desires to sell and Horseshoe
believes it is in its best interest to acquire from Seller the Ownership
Interest.
Horseshoe and Seller have agreed that the fair market value of the Ownership
Interest is FOUR HUNDRED TWENTY-TWO-THOUSAND TWO HUNDRED NINETY-FIVE DOLLARS
($422,295.00).
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
Subject to the terms and conditions set forth herein, Seller agrees to sell,
transfer, convey, assign and deliver to Horseshoe, and Horseshoe agrees to
purchase, acquire and accept from Seller, the Ownership Interest, at the price
of $422,295.00 (the "Purchase Price"), payable by a promissory note of
Horseshoe, which is attached hereto (the "Promissory Note").
Seller hereby unconditionally releases and discharges Horseshoe from any and all
claims, known or unknown, directly or indirectly related to or in any way
connected with Seller's ownership of Horseshoe and any and all agreements in any
way connected with or related thereto other than this Agreement and the
Promissory Note. Seller acknowledges and agrees that following the consummation
of the transaction contemplated by this Agreement, Seller shall have no equity
ownership or any other interest in Horseshoe or any of its affiliates or
subsidiaries nor will Seller have rights of any kind to acquire an ownership
interest in Horseshoe or any of its affiliates or subsidiaries; the only rights
Seller shall have will be to enforce the terms of the Promissory Note.
5
Seller represents and warrants that Seller is the lawful record and beneficial
owner of the Ownership Interest, free and clear of any liens, claims,
encumbrances, marital property rights, security agreements, equities, options,
charges or restrictions of any kind.
This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof and may be amended only by a writing signed by each party
hereto.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
This Agreement and the rights and obligations of the Company and the Seller
hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York), without regard
to conflicts of laws principles.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same agreement.
Horseshoe, on the one hand, and Seller, on the other hand, shall pay their
respective fees and expenses incurred by them in connection with the transaction
contemplated herein.
Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms and provisions of this Agreement in any
other jurisdiction.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
HORSESHOE GAMING, L.L.C.
PROMISSORY NOTE DUE JANUARY 2, 2004
$3,040,515.00 November 30, 1999
New York, New York
FOR VALUE RECEIVED, HORSESHOE GAMING, L.L.C., a Delaware limited
liability company (the "Company"), subject to Section 3 hereof, promises to pay,
on or before January 4, 2004 (the "Maturity Date"), to the order of Post
Balanced Fund (the "Holder"), at the Company's offices at 4024 South Industrial
Road, Las Vegas, Nevada 89013, or in accordance with such other instructions as
the Holder (or any other entity entitled to payment hereunder) may hereafter
designate from time to time in writing, the principal sum of THREE MILLION FORTY
THOUSAND FIVE HUNDRED FIFTEEN DOLLARS ($3,040,515.00) in lawful money of the
United States, with interest on the unpaid principal amount from the date of
this Promissory Note (together with all supplements, amendments or modifications
hereto and replacements or renewals hereof, this "Note") to and including the
date of payment, calculated as provided below.
1. Purchase Agreement. This Note is issued pursuant to the terms and
conditions of a Purchase Agreement dated as of the date hereof (the "Purchase
Agreement"), between the Company and the Holder, as consideration for the
repurchase by the Company of the Holder's ownership interest in the Company (the
"Ownership Interest"), made in connection with the proposed acquisition by the
Company of Empress Casino Hammond Corporation, an Indiana corporation and
Empress Casino Joliet Corporation, an Illinois corporation, both of which are
subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
2. Interest. The Company promises to pay simple interest on the
outstanding principal amount of this Note at a rate equal to 10% per annum (the
"Interest Rate") from November 30, 1999 until the maturity date of this Note or
the earlier acceleration of this Note pursuant to Section 6 of this Note, when
all accrued interest shall be immediately due and payable. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Subject to the
terms of (i) the Credit Agreement dated as of June 30, 1999 (the "Credit
Agreement"), among Horseshoe Gaming Holding Corp. ("HGHC"), as Borrower, the
lenders listed therein, DLJ Capital Funding, Inc., as Syndication Agent,
Canadian Imperial Bank of Commerce, as Administrative Agent and Wells Fargo
Bank, National Association, as Documentation Agent; (ii) the Indenture dated as
of June 15, 1997 (the "9_% Indenture"), as the same shall have been amended to
date, for the Company's 9_% Senior Subordinated Notes due 2007, among the
Company, Robinson Property Group, Limited Partnership, New Gaming Capital
Partnership, Horseshoe Entertainment, Horseshoe GP, Inc., Bossier City Land
Corporation and Texas Trustee; (iii) the Indenture dated as of May 11, 1999 (the
"8_% Indenture"), for HGHC's 8_% Senior Subordinated Notes due 2009 (the "Senior
Subordinated Notes"), by and between HGHC and U.S. Trust Company, National
Association, as trustee; (iv) the Indenture dated as of June 18, 1998 (the
"Empress Indenture"), for Empress Entertainment, Inc.'s 8_% Senior Subordinated
Notes due 2006, among Empress Entertainment, Inc., Empress River Casino Finance
Corporation, Empress Joliet, Empress Casino Hammond Corporation, Hammond
Residential and U.S. Bank Trust National Association (the documents described in
(i), (ii), (iii) and (iv) above being referred to as the "Financing Documents");
and (v) the various agreements entered into prior to the date hereof to
repurchase the interests of various former employees and members of the Company
which, among other things, do not permit the Company to make principal payments
on the repurchase of the Ownership Interest prior to the repayment in full of
amounts due under the Repurchase Agreements), the Company shall pay accrued
interest semiannually on June 30 and December 31 of each year, beginning on June
30, 2000. To the extent that the Company is not permitted to make interest
payments under the Financing Documents or the Repurchase Agreements, interest
shall accrue and be compounded at the Interest Rate until the earlier of the
date such interest is paid, the maturity date of this Note or the earlier
acceleration of this Note pursuant to Section 6 of this Note.
2
3. Payment of Principal. If the Company is not permitted under the
terms of the Financing Documents or the Repurchase Agreements to pay the
principal of this Note in full on the Maturity Date, then the payment of the
portion of the principal on this Note which may not be paid may be delayed until
such date as such principal payments are permitted under the terms of the
Financing Documents and the Repurchase Agreements. However, the portion of this
Note which may be paid on the Maturity Date shall be paid on the Maturity Date
and the balance shall be paid promptly thereafter as permitted by the Financing
Documents and the Repurchase Agreements
4. Optional Prepayment. The Company, at its option, may prepay all or
any portion of this Note, at any time, by paying an amount equal to the
outstanding principal amount of this Note, or a portion thereof, together with
interest accrued and unpaid thereon to the date of prepayment and any other
amounts due under this Note, without penalty or premium.
5. Application of Payments. All mandatory payments under Section 3 of
this Note and all optional prepayments under Section 4 of this Note shall
include payment of accrued interest on the principal amount so paid or prepaid
and all other amounts due under this Note and shall be applied, first to all
reasonable costs, fees, and expenses incurred by the Holder in the exercise of
the Holder's rights hereunder, second to payment of other accrued interest, and
thereafter to principal.
6. Acceleration. This Note shall accelerate and the outstanding
principal of and all accrued interest on this Note shall automatically become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are expressly waived, if a Change in Control (as defined
in the 8_% Indenture) or an Event of Default (as defined in the 8_% Indenture)
occurs, which Change of Control or Event of Default results in the acceleration
and repayment of all of the Senior Subordinated Notes.
7. Replacement Note. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Note and of
a letter of indemnity reasonably satisfactory to the Company from the Holder and
upon reimbursement to the Company of all reasonable expenses incident thereto,
and upon surrender or cancellation of this Note, if mutilated, the Company will
make and deliver a new Note of like tenor in lieu of such lost, stolen,
destroyed or mutilated Note.
3
8. Pari Passu Payments. All payments on this Note will be made pari
passu with payment to holders of similar notes issued on the date hereof in
respect of the repurchase of membership interests in the Company.
9. Amendment. Any amendment, supplement or modification of or to any
provision of this Note shall be effective only with the express written consent
of the Company and the Holder.
10. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company or the Holder shall bind its successors and assigns, whether so
expressed or not.
11. Governing Law. This Note and the rights and obligations of the
Company and the Holder hereunder shall be governed by, and shall be construed
and enforced in accordance with, the internal laws of the State of New York
(including Section 5-1401 of the General Obligations Law of the State of New
York), without regard to conflicts of laws principles.
12. Variation in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
13. Headings. The headings in this Note are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof
PURCHASE AGREEMENT dated and effective as of the 30th day of November,
1999 (this "Agreement"), between Horseshoe Gaming, L.L.C., a Delaware limited
liability company ("Horseshoe"), and Post Balanced Fund ("Seller").
RECITALS:
Horseshoe is a casino owner/operator with its principal office in Las
Vegas, Nevada.
Seller is the current owner of a .405402% interest in Horseshoe (the
"Ownership Interest").
Horseshoe is the party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
and Empress Casino Joliet Corporation, an Illinois corporation, both of which
are subsidiaries of Empress Entertainment, Inc., a Delaware corporation.
In connection with the Acquisition, Seller desires to sell and
Horseshoe believes it is in its best interest to acquire from Seller the
Ownership Interest.
Horseshoe and Seller have agreed that the fair market value of the
Ownership Interest is THREE MILLION FORTY THOUSAND FIVE HUNDRED FIFTEEN DOLLARS
($3,040,515.00).
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Subject to the terms and conditions set forth herein, Seller agrees
to sell, transfer, convey, assign and deliver to Horseshoe, and Horseshoe agrees
to purchase, acquire and accept from Seller, the Ownership Interest, at the
price of $3,040,515.00 (the "Purchase Price"), payable by a promissory note of
Horseshoe, which is attached hereto (the "Promissory Note").
2. Seller hereby unconditionally releases and discharges Horseshoe from
any and all claims, known or unknown, directly or indirectly related to or in
any way connected with Seller's ownership of Horseshoe and any and all
agreements in any way connected with or related thereto other than this
Agreement and the Promissory Note. Seller acknowledges and agrees that following
the consummation of the transaction contemplated by this Agreement, Seller shall
have no equity ownership or any other interest in Horseshoe or any of its
affiliates or subsidiaries nor will Seller have rights of any kind to acquire an
ownership interest in Horseshoe or any of its affiliates or subsidiaries; the
only rights Seller shall have will be to enforce the terms of the Promissory
Note.
5
3. Seller represents and warrants that Seller is the lawful record and
beneficial owner of the Ownership Interest, free and clear of any liens, claims,
encumbrances, marital property rights, security agreements, equities, options,
charges or restrictions of any kind.
4. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
5. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
6. This Agreement and the rights and obligations of the Company and the
Seller hereunder shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York), without regard
to conflicts of laws principles.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
8. Horseshoe, on the one hand, and Seller, on the other hand, shall pay
their respective fees and expenses incurred by them in connection with the
transaction contemplated herein.
9. Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms and provisions of
this Agreement in any other jurisdiction.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the 1st day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and BOBBY FECHSER ("Fechser").
RECITALS:
A. Horseshoe is a holding company which holds ownership interests in
various companies which own and operate casinos. Horseshoe's principal office is
located in Las Vegas, Nevada.
B. Fechser is the current owner of a .220958% interest in Horseshoe.
C. Horseshoe believes it is in its best interest to acquire from
Fechser his .220958% interest.
D. Horseshoe and Fechser have agreed that the fair market value of the
.220958% interest in Horseshoe is $945,278.
E. Horseshoe will also return to Fechser, as part of this Agreement, an
amount equal to the current value of his capital account at July 31, 1999 which
was $140,053.
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Concurrently with the execution of this Agreement, Fechser has sold
to Horseshoe, and Horseshoe has purchased from Fechser, Fechser's .220958%
interest in Horseshoe at the price of $945,278 plus a return of capital of
$140,053, for a total purchase price of $1,085,331 ("Purchase Price"). The
Purchase Price shall be paid as follows:
a. The sum of $112,500 shall be paid in cash concurrently with
the purchase of Fechser's interest by Horseshoe, at the
execution of this Agreement.
b. The principal sum of $112,500 on or before October 15, 2000,
plus accumulated interest as provided herein.
c. The balance shall be paid on or before April 15, 2003. The
outstanding balance of the Purchase Price shall bear interest
at a rate of 12% per annum. After making the payment as
required in Section 1(b) hereof, Horseshoe shall pay
outstanding interest, if any, to Fechser on or before April
15th of each year
2. If, prior to Horseshoe making all payments to Fechser due under this
Agreement, Jack Binion, his family members or trusts for his benefit or for the
benefit of his family members (collectively, the "Binion Seller") transfers or
sell for cash (an "Actual Cash Sale") an ownership stake in Horseshoe equal to
or greater than 60% of the outstanding equity interest in Horseshoe, then
Horseshoe shall, in lieu of making the remainder of the payments set forth
hereunder, pay to Fechser a lump sum equal to .220958% of the Value of
Horseshoe, less all amounts (including capital payments, interest and principal)
paid by Horseshoe to Fechser prior to the date of the Actual Cash Sale. For
purposes of this Agreement, the "Value" of Horseshoe shall be the price which
would have been received by the Binion Seller upon a sale for cash of 100% of
the outstanding equity interest of Horseshoe (the "Hypothetical Sale") assuming
(a) the Binion Seller owned 100% of the outstanding equity interest of Horseshoe
and (b) the per unit purchase price paid for each unit in the Hypothetical Sale
would be equal to the purchase price per unit paid to the Binion Seller in the
Actual Cash Sale.
3. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Fechser in
addition to the Purchase Price an amount equal to $60,337 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, with the final installment payment of the Purchase Price on
or before April 15, 2003, including interest at 12% from the Acquisition Closing
Date. If the Purchase Price has been paid in full at the time of the Acquisition
Closing Date, then the Additional Amounts shall be paid within 45 days of the
Acquisition Closing Date.
4. Fechser represents and warrants that he is the lawful record and
beneficial owner of the .220958% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
2
5. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
7. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of
the date and year first written above.
"HORSESHOE"
HORSESHOE GAMING, L.L.C.
By:
Jack B. Binion, President
"FECHSER"
Bobby Fechser
3
EXHIBIT 10.54
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the 1st day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and DOYLE BRUNSON ("Brunson").
RECITALS:
A. Horseshoe is a holding company which holds ownership interests in
various companies which own and operate casinos. Horseshoe's principal office is
located in Las Vegas, Nevada.
B. Brunson is the current owner of a .614885% interest in Horseshoe.
C. Horseshoe believes it is in its best interest to acquire from
Brunson his .614885% interest.
D. Horseshoe and Brunson have agreed that the fair market value of the
.614885% interest in Horseshoe is $2,630,543.
E. Horseshoe will also return to Brunson, as part of this Agreement, an
amount equal to the value of his capital account at July 31, 1999 which was
$391,617.
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Concurrently with the execution of this Agreement, Brunson has sold
to Horseshoe, and Horseshoe has purchased from Brunson, Brunson's .614885%
interest in Horseshoe at the price of $2,630,543, plus a return of capital of
$391,617, for a total purchase price of $3,022,160 ("Purchase Price"). The
Purchase Price shall be paid as follows:
a. The sum of $312,500 shall be paid in cash concurrently with the
purchase of Brunson's interest by Horseshoe, at the time of the
execution of this Agreement.
b. The principal sum of $312,500 on or before October 15, 2000,
plus accumulated interest as provided herein.
c. The balance shall be paid on or before April 15, 2003. The
outstanding balance of the Purchase Price shall bear interest
at a rate of 12% per annum. After making the payment as
required in Section 1(b) hereof, Horseshoe shall pay
outstanding interest, if any, to Brunson or before April 15th
of each year.
2. If, prior to Horseshoe making all payments to Brunson due under this
Agreement, Jack Binion, his family members or trusts for his benefit or for the
benefit of his family members (collectively, the "Binion Seller") transfers or
sell for cash (an "Actual Cash Sale") an ownership stake in Horseshoe equal to
or greater than 60% of the outstanding equity interest in Horseshoe, then
Horseshoe shall, in lieu of making the remainder of the payments set forth
hereunder, pay to Brunson a lump sum equal to .614885% of the Value of
Horseshoe, less all amounts (including capital payments, interest and principal)
paid by Horseshoe to Brunson prior to the date of the Actual Cash Sale. For
purposes of this Agreement, the "Value" of Horseshoe shall be the price which
would have been received by the Binion Seller upon a sale for cash of 100% of
the outstanding equity interest of Horseshoe (the "Hypothetical Sale") assuming
(a) the Binion Seller owned 100% of the outstanding equity interest of Horseshoe
and (b) the per unit purchase price paid for each unit in the Hypothetical Sale
would be equal to the purchase price per unit paid to the Binion Seller in the
Actual Cash Sale.
3. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Brunson in
addition to the Purchase Price an amount equal to $167,907 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, with the final payment of the Purchase Price on or before
April 15, 2003, including interest at 12% from the Acquisition Closing Date. If
the Purchase Price has been paid in full at the time of the Acquisition Closing
Date, then the Additional Amounts shall be paid within 45 days of the
Acquisition Closing Date.
4. Brunson represents and warrants that he is the lawful record and
beneficial owner of the .614885% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
2
5. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
7. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of
the date and year first written above. "HORSESHOE"
HORSESHOE GAMING, L.L.C.
By:
Jack B. Binion, President
"BRUNSON"
Doyle Brunson
3
EXHIBIT 10.55
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the 1st day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and KEY FECHSER ("Fechser").
RECITALS:
A. Horseshoe is a holding company which holds ownership interests in
various companies which own and operate casinos. Horseshoe's principal office is
located in Las Vegas, Nevada.
B. Fechser is the current owner of a .220958% interest in Horseshoe.
C. Horseshoe believes it is in its best interest to acquire from
Fechser his .220958% interest.
D. Horseshoe and Fechser have agreed that the fair market value of the
.220958% interest in Horseshoe is $945,278.
E. Horseshoe will also return to Fechser, as part of this Agreement, an
amount equal to the value of his capital account at July 31, 1999 which was
$140,053.
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Concurrently with the execution of this Agreement, Fechser has sold
to Horseshoe, and Horseshoe has purchased from Fechser, Fechser's .220958%
interest in Horseshoe at the price of $945,278 plus a return of capital of
$140,053, for a total purchase price of $1,085,331 ("Purchase Price"). The
Purchase Price shall be paid as follows:
a. The sum of $112,500 shall be paid in cash
concurrently with the purchase of Fechser's interest
by Horseshoe, at the execution of this Agreement.
b. The principal sum of $112,500 on or before October
15, 2000, plus accumulated interest as provided
herein.
c. The balance shall be paid on or before April 15,
2003. The outstanding balance of the Purchase Price
shall bear interest at a rate of 12% per annum. After
making the payment as required in Section 1(b)
hereof, Horseshoe shall pay outstanding interest, if
any, to Fechser on or before April 15th of each year.
2. If, prior to Horseshoe making all payments to Fechser due under this
Agreement, Jack Binion, his family members or trusts for his benefit or for the
benefit of his family members (collectively, the "Binion Seller") transfers or
sell for cash (an "Actual Cash Sale") an ownership stake in Horseshoe equal to
or greater than 60% of the outstanding equity interest in Horseshoe, then
Horseshoe shall, in lieu of making the remainder of the payments set forth
hereunder, pay to Fechser a lump sum equal to .220958% of the Value of
Horseshoe, less all amounts (including capital payments, interest and principal)
paid by Horseshoe to Fechser prior to the date of the Actual Cash Sale. For
purposes of this Agreement, the "Value" of Horseshoe shall be the price which
would have been received by the Binion Seller upon a sale for cash of 100% of
the outstanding equity interest of Horseshoe (the "Hypothetical Sale") assuming
(a) the Binion Seller owned 100% of the outstanding equity interest of Horseshoe
and (b) the per unit purchase price paid for each unit in the Hypothetical Sale
would be equal to the purchase price per unit paid to the Binion Seller in the
Actual Cash Sale.
3. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Fechser in
addition to the Purchase Price an amount equal to $60,337 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, with the final installment payment of the Purchase Price on
or before April 15, 2003, including interest at 12% from the Acquisition Closing
Date. If the Purchase Price has been paid in full at the time of the Acquisition
Closing Date, then the Additional Amounts shall be paid within 45 days of the
Acquisition Closing Date.
4. Fechser represents and warrants that he is the lawful record and
beneficial owner of the .220958% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
5. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
2
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
7. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of
the date and year first written above.
"HORSESHOE"
HORSESHOE GAMING, L.L.C.
By:
Jack B. Binion, President
"FECHSER"
Key Fechser
3
EXHIBIT 10.56
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated and effective as
of the 1st day of August, 1999, between HORSESHOE GAMING, L.L.C. ("Horseshoe"),
and DAVID REESE ("Reese").
RECITALS:
A. Horseshoe is a holding company which holds ownership interests in
various companies which own and operate casinos. Horseshoe's principal office is
located in Las Vegas, Nevada.
B. Reese is the current owner of a 2.45954% interest in Horseshoe.
C. Horseshoe believes it is in its best interest to acquire from Reese
his 2.45954% interest.
D. Horseshoe and Reese have agreed that the fair market value of the
2.45954% interest in Horseshoe is $10,522,181.
E. Horseshoe will also return to Reese, as part of this Agreement, an
amount equal to the value of his capital account at July 31, 1999 which was
$1,583,644.
F. Horseshoe is party to an agreement pursuant to which it may acquire
(the "Acquisition") Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), and Empress Casino Joliet Corporation, an Illinois
corporation ("Empress Joliet"), both of which are subsidiaries of Empress
Entertainment, Inc., a Delaware corporation (collectively, "Empress").
NOW, THEREFORE, in consideration of the premises and each act performed
by either party hereto, the parties agree as follows:
1. Concurrently with the execution of this Agreement, Reese has sold to
Horseshoe, and Horseshoe has purchased from Reese, Reese's 2.45954% interest in
Horseshoe at the price of $10,522,181, plus a return of capital of $1,583,644,
for a total purchase price of $12,105,825 ("Purchase Price"). The Purchase Price
shall be paid as follows:
a. The sum of $1,250,000 shall be paid in cash concurrently with
the purchase of Reese's interest by Horseshoe, at the time of
the execution of this Agreement.
b. The principal sum of $1,250,000 on or before October 15, 2000,
plus accumulated interest as provided herein.
c. The balance shall be paid on or before April 15, 2003. The
outstanding balance of the Purchase Price shall bear interest at
a rate of 12% per annum. After making the payment as required in
Section 1(b) hereof, Horseshoe shall pay outstanding interest,
if any, to Reese or before April 15th of each year.
2. If, prior to Horseshoe making all payments to Reese due under this
Agreement, Jack Binion, his family members or trusts for his benefit or for the
benefit of his family members (collectively, the "Binion Seller") transfers or
sell for cash (an "Actual Cash Sale") an ownership stake in Horseshoe equal to
or greater than 60% of the outstanding equity interest in Horseshoe, then
Horseshoe shall, in lieu of making the remainder of the payments set forth
hereunder, pay to Reese a lump sum equal to 2.45954% of the Value of Horseshoe,
less all amounts (including capital payments, interest and principal) paid by
Horseshoe to Reese prior to the date of the Actual Cash Sale. For purposes of
this Agreement, the "Value" of Horseshoe shall be the price which would have
been received by the Binion Seller upon a sale for cash of 100% of the
outstanding equity interest of Horseshoe (the "Hypothetical Sale") assuming (a)
the Binion Seller owned 100% of the outstanding equity interest of Horseshoe and
(b) the per unit purchase price paid for each unit in the Hypothetical Sale
would be equal to the purchase price per unit paid to the Binion Seller in the
Actual Cash Sale.
3. If the Acquisition is closed (the date of such closing being
referred to as the "Acquisition Closing Date"), Horseshoe shall pay Reese in
addition to the Purchase Price an amount equal to $671,629 (the "Additional
Amount"). The parties hereto agree that the Acquisition shall be deemed to have
closed in any of the following circumstances: (i) the Acquisition is consummated
in accordance with its terms or as may be amended by the parties to the
Acquisition agreement, or their successors, assignees or transferees; (ii)
Horseshoe renegotiates the agreement relating to the Acquisition so as to allow
the merger to be consummated as to either Empress Hammond or Empress Joliet and
the merger is then consummated with either Empress Hammond or Empress Joliet;
(iii) Horseshoe combines with another party such that the Acquisition is
consummated with Horseshoe obtaining Empress Hammond or Empress Joliet and the
other party obtaining the other; (iv) Horseshoe consummates the Acquisition in
accordance with its terms or as may be amended by the parties to that agreement,
but either Empress Hammond or Empress Joliet is spun off such that the Horseshoe
is combined with only one; or (v) Horseshoe sells or transfers its interest in
the Acquisition agreement to an unrelated third party. The Additional Amount, if
any, shall be paid, with the final payment of the Purchase Price on or before
April 15, 2003, including interest at 12% from the Acquisition Closing Date. If
the Purchase Price has been paid in full at the time of the Acquisition Closing
Date, then the Additional Amounts shall be paid within 45 days of the
Acquisition Closing Date.
4. Reese represents and warrants that he is the lawful record and
beneficial owner of the 2.45954% interest in Horseshoe, free and clear of any
liens, claims, encumbrances, marital property rights, security agreements,
equities, options, charges or restrictions of any kind.
2
5. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof and may be amended only by a writing signed
by each party hereto.
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legatees, personal representatives,
successors and assigns.
7. This Agreement shall be governed and interpreted in accordance with
the laws of the State of Nevada.
IN WITNESS WHEREOF, this Agreement was executed by the parties as of
the date and year first written above. "HORSESHOE"
HORSESHOE GAMING, L.L.C.
By:
Jack B. Binion, President
"REESE"
David Reese
3
EXHIBIT 21.1
HORSESHOE GAMING HOLDING CORP.
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1999
SUBSIDIARY STATE OF INCORPORATION
---------- ----------------------
Horseshoe GP, Inc.(1) Nevada
New Gaming Capital Partnership(2) Nevada
Horseshoe Entertainment L.P. Louisiana
Bossier City Land Corporation(3) Louisiana
Robinson Property Group, Limited Partnership Mississippi
Empress Casino Hammond Corporation(6) Indiana
Hammond Residential LLC(4) Indiana
Hammond Bridge and Road Works(4) Indiana
Empress Casino Joliet Corporation(6) Illinois
Horseshoe Gaming, Inc.(6) Nevada
Horseshoe Ventures(5) Nevada
Red Oak Insurance Company Ltd.(6) Barbados
Horseshoe Maryland, Inc.(6) Maryland
(1) 100% owned by Horseshoe Gaming Holding Corp. and is the 1% General
Partner of both New Gaming Capital Partnership and Robinson Property
Group Limited Partnership.
(2) New Gaming Capital Partnership is the 89% General Partner and a 2.92%
Limited Partner of Horseshoe Entertainment L.P.
(3) Bossier City Land Corporation is 100% owned by Horseshoe Entertainment.
(4) Hammond Residential LLC and Hammond Bridge and Road Works are 100%
owned by Empress Casino Hammond Corporation
(5) Horseshoe Ventures is owned 50% by Horseshoe Gaming, L.L.C.
(6) 100% by Horseshoe Gaming Holding Corp.
ARTICLE 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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