EXHIBIT 10.37
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HOLLYWOOD PARK, INC.
HOLLYWOOD PARK OPERATING COMPANY
Companies
BAYVIEW YACHT CLUB, INC.
BOOMTOWN HOTEL & CASINO, INC.
BOOMTOWN, INC.
CRYSTAL PARK HOTEL & CASINO DEVELOPMENT COMPANY, LLC
HOLLYWOOD PARK FALL OPERATING COMPANY
HOLLYWOOD PARK FOOD SERVICES, INC.
HP/COMPTON, INC.
HP YAKAMA, INC.
LOUISIANA GAMING ENTERPRISES, INC.
LOUISIANA-I GAMING, A LOUISIANA PARTNERSHIP IN COMMENDAM
MISSISSIPPI-I GAMING, L.P.
TURF PARADISE, INC.
Initial Guarantors
9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
_________________
INDENTURE
Dated as of August 1, 1997
_________________
_________________
THE BANK OF NEW YORK
_________________
Trustee
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 -- DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1
Section 1.01. Definitions.............................................. 1
Section 1.02. Other Definitions........................................ 19
Section 1.03. Incorporation by Reference of Trust Indenture Act........ 20
Section 1.04. Rules of Construction.................................... 20
ARTICLE 2 -- THE NOTES....................................................... 21
Section 2.01. Form and Dating.......................................... 21
Section 2.02. Execution and Authentication............................. 21
Section 2.03. Registrar and Paying Agent............................... 21
Section 2.04. Paying Agent to Hold Money in Trust...................... 22
Section 2.05. Holder Lists............................................. 22
Section 2.06. Transfer and Exchange.................................... 22
Section 2.07. Replacement Notes........................................ 28
Section 2.08. Outstanding Notes........................................ 29
Section 2.09. Treasury Notes........................................... 29
Section 2.10. Temporary Notes.......................................... 29
Section 2.11. Cancellation............................................. 29
Section 2.12. Defaulted Interest....................................... 30
Section 2.13. CUSIP Numbers............................................ 30
ARTICLE 3 -- REDEMPTION AND PREPAYMENT....................................... 30
Section 3.01. Notices to Trustee....................................... 30
Section 3.02. Selection of Notes to Be Redeemed........................ 30
Section 3.03. Notice of Redemption..................................... 31
Section 3.04. Effect of Notice of Redemption........................... 31
Section 3.05. Deposit of Redemption Price.............................. 32
Section 3.06. Notes Redeemed in Part................................... 32
Section 3.07. Redemption............................................... 32
Section 3.08. Mandatory Redemption..................................... 33
Section 3.09. Offer to Purchase by Application of Excess Proceeds...... 33
ARTICLE 4 -- COVENANTS....................................................... 35
Section 4.01. Payment of Notes......................................... 35
Section 4.02. Maintenance of Office or Agency.......................... 35
Section 4.03. Reports.................................................. 36
Section 4.04. Compliance Certificate................................... 36
Section 4.05. Taxes.................................................... 37
Section 4.06. Stay, Extension and Usury Laws........................... 37
Section 4.07. Restricted Payments...................................... 37
Section 4.08. Incurrence of Indebtedness and Issuance of Preferred
Stock................................................... 41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 4.09. Asset Sales............................................. 41
Section 4.10. Transactions with Affiliates............................ 43
Section 4.11. Continued Existence..................................... 43
Section 4.12. Offer to Repurchase Upon Change of Control.............. 44
Section 4.13. Limitation on Liens..................................... 45
Section 4.14. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries....................... 45
Section 4.15. No Subordinated Debt Senior To The Notes or Guaranties.. 46
Section 4.16. Designation Of Restricted and Unrestricted Subsidiaries. 46
Section 4.17. Material Restricted Subsidiaries To Become Guarantors.. 46
Section 4.18. Lines of Business....................................... 47
ARTICLE 5 -- SUCCESSORS................................................... 47
Section 5.01. Merger, Consolidation, or Sale of Assets................ 47
Section 5.02. Successor Corporation Substituted....................... 48
ARTICLE 6 -- DEFAULTS AND REMEDIES........................................ 48
Section 6.01. Events of Default....................................... 48
Section 6.02. Acceleration............................................ 50
Section 6.03. Other Remedies.......................................... 51
Section 6.04. Waiver of Past Defaults................................. 51
Section 6.05. Control by Majority..................................... 51
Section 6.06. Limitation on Suits..................................... 52
Section 6.07. Rights of Holders of Notes to Receive Payment........... 52
Section 6.08. Collection Suit by Trustee.............................. 52
Section 6.09. Trustee May File Proofs of Claim........................ 53
Section 6.10. Priorities.............................................. 53
Section 6.11. Undertaking for Costs................................... 53
ARTICLE 7 -- TRUSTEE...................................................... 54
Section 7.01. Duties of Trustee....................................... 54
Section 7.02. Rights of Trustee....................................... 55
Section 7.03. Individual Rights of Trustee............................ 55
Section 7.04. Trustee's Disclaimer.................................... 55
Section 7.05. Notice of Defaults...................................... 56
Section 7.06. Reports by Trustee to Holders of the Notes.............. 56
Section 7.07. Compensation and Indemnity.............................. 56
Section 7.08. Replacement of Trustee.................................. 57
Section 7.09. Successor Trustee by Merger, etc. ...................... 58
Section 7.10. Eligibility; Disqualification........................... 58
Section 7.11. Preferential Collection of Claims Against Companies..... 58
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
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ARTICLE 8 -- LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................... 58
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance 58
Section 8.02. Legal Defeasance and Discharge.......................... 58
Section 8.03. Covenant Defeasance..................................... 59
Section 8.04. Conditions to Legal or Covenant Defeasance.............. 59
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions................ 60
Section 8.06. Repayment to Company.................................... 61
Section 8.07. Reinstatement........................................... 61
ARTICLE 9 -- AMENDMENT, SUPPLEMENT AND WAIVER............................. 62
Section 9.01. Without Consent of Holders of Notes..................... 62
Section 9.02. With Consent of Holders of Notes........................ 63
Section 9.03. Compliance with Trust Indenture Act..................... 64
Section 9.04. Revocation and Effect of Consents....................... 64
Section 9.05. Notation on or Exchange of Notes........................ 64
Section 9.06. Trustee to Sign Amendments, etc. ....................... 64
ARTICLE 10 -- SUBORDINATION............................................... 65
Section 10.01. Agreement to Subordinate................................ 65
Section 10.02. Certain Definitions..................................... 65
Section 10.03. Liquidation; Dissolution; Bankruptcy.................... 66
Section 10.04. Default on Designated Senior Debt....................... 66
Section 10.05. Acceleration of Notes................................... 67
Section 10.06. When Distribution Must Be Paid Over..................... 67
Section 10.07. Notice by Companies..................................... 68
Section 10.08. Subrogation............................................. 68
Section 10.09. Relative Rights......................................... 68
Section 10.10. Subordination May Not Be Impaired by Obligors........... 69
Section 10.11. Distribution or Notice to Representative................ 69
Section 10.12. Rights of Trustee and Paying Agent...................... 70
Section 10.13. Authorization to Effect Subordination................... 70
Section 10.14. Amendments.............................................. 71
ARTICLE 11 -- MISCELLANEOUS............................................... 71
Section 11.01. Trust Indenture Act Controls............................ 71
Section 11.02. Notices................................................. 71
Section 11.03. Communication by Holders of Notes with Other Holders
of Notes................................................ 72
Section 11.04. Certificate and Opinion as to Conditions Precedent...... 72
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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Section 11.05. Statements Required in Certificate or Opinion........... 73
Section 11.06. Rules by Trustee and Agents............................. 73
Section 11.07. No Personal Liability of Directors, Officers, Employees
and Stockholders........................................ 73
Section 11.08. Governing Law........................................... 73
Section 11.09. No Adverse Interpretation of Other Agreements........... 73
Section 11.10. Successors.............................................. 74
Section 11.11. Severability............................................ 74
Section 11.12. Counterpart Originals................................... 74
Section 11.13. Table of Contents, Headings, etc. ...................... 74
ARTICLE 12 -- GUARANTY.................................................... 74
Section 12.01. The Guaranty............................................ 74
Section 12.02. Nature of Guaranty...................................... 74
Section 12.03. Authorization........................................... 75
Section 12.04. Certain Waivers......................................... 76
Section 12.05. No Subrogation; Certain Agreements...................... 77
Section 12.06. Bankruptcy No Discharge................................. 77
Section 12.07. Severability of Void Guaranteed Obligations Under
Guaranty................................................ 78
Section 12.08. Right of Contribution................................... 78
Section 12.09. Additional Guarantors................................... 78
Section 12.10. Release of a Guarantor.................................. 79
v
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B CERTIFICATE OF TRANSFEROR
Exhibit C INVESTMENTS SCHEDULE
vi
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.10
(b)............................................. 7.10
(c)............................................. N.A.
311(a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)............................................. 2.05
(b).............................................11.03
(c).............................................11.03
313(a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.07
(c)........................................7.06;11.02
(d)............................................. 7.06
314(a)........................................4.03;11.02
(b)............................................. N.A.
(c)(1)..........................................11.04
(c)(2)..........................................11.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e).............................................11.05
(f)............................................. N.A.
315(a)............................................. 7.01
(b)........................................7.05,11.02
(c)............................................. 7.01
(d)............................................. 7.01
(e)............................................. 6.11
316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. 2.12
317(a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318(a).............................................11.01
(b)............................................. N.A.
(c).............................................11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
INDENTURE dated as of August 1, 1997 among Hollywood Park, Inc., a
Delaware corporation ("HPI"), Hollywood Park Operating Company, a Delaware
corporation ("HPOC" and collectively, together with HPI, the "Companies"), all
of the existing and future Material Restricted Subsidiaries (as defined below)
of the Companies (other than HPOC) (collectively, the "Guarantors") and The Bank
of New York, a New York banking corporation, as trustee (the "Trustee").
The Companies, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the Companies' 9 1/2% Series A Senior Subordinated Notes due 2007 (the "Series A
Notes") and the 9 1/2% Series B Senior Subordinated Notes (the "Series B Notes")
and collectively, together with the Series A Notes, (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of another Person and any of such other Person's Subsidiaries
existing at the time such other Person becomes a Subsidiary of such Person or at
the time it merges or consolidates with such Person or any of such Person's
Subsidiaries or is assumed by such Person or any Subsidiary of such Person in
connection with the acquisition of assets from such other Person and in each
case not Incurred by such Person or any Subsidiary of such Person or such other
Person in connection with, or in anticipation or contemplation of, such other
Person becoming a Subsidiary of such Person or such acquisition, merger or
consolidation.
"Addendum to Guaranty" has the meaning provided in Section 12.09
hereof.
"Affiliate" means, when used with reference to any Person, (i) any
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, the referent Person or such other Person, as
the case may be, or (ii) any directors, officer or partner of such Person or any
Person specified in clause (i) above. For the purposes of this definition, the
term "control" when used with respect to any specified Person means the power to
direct or cause the direction of management or policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling," and "controlled" have
meanings correlative of the foregoing. None of the Initial Purchasers nor any
of their respective Affiliates shall be deemed to be Affiliates of any Obligor
or of any of their respective Affiliates. No Wholly Owned Restricted Subsidiary
of either Company shall be deemed to be an Affiliate of any Obligor.
"Asset Acquisition" means (i) an Investment by any Obligor in any
other Person, as a result of which such Person shall become an Obligor or a
Wholly Owned Restricted Subsidiary of an Obligor or shall be merged with or into
any Obligor or any Wholly Owned Restricted Subsidiary of an Obligor, or (ii) the
acquisition by any Obligor of assets of any Person comprising a division or line
of business of such Person or all or substantially all of the assets of such
Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other disposition (for purposes of this definition,
each a "disposition") by any Obligor (including, without limitation, pursuant to
any Sale and Leaseback Transaction or any merger or consolidation of any
Restricted Subsidiary of either Company with or into another Person (other than
another Obligor) whereby such Restricted Subsidiary shall cease to be a
Restricted Subsidiary of either Company) to any Person of (i) any property or
assets of any Obligor to the extent that any such disposition is not in the
ordinary course of business of such Obligor or (ii) any Capital Stock of any
Restricted Subsidiary, other than (1) any disposition to either Company, (2) any
disposition to any Obligor or Wholly Owned Restricted Subsidiary, (3) any
disposition that constitutes a Restricted Payment or a Permitted Investment that
is made in accordance with Section 4.07 hereof, (4) any transaction or series of
related transactions resulting in net cash proceeds to such Obligor of less than
$1 million, (5) any transaction that is consummated in accordance with Section
5.01 hereof, (6) the sale or discount, in each case without recourse (direct or
indirect), of accounts receivable arising in the ordinary course of business of
either Company or such Restricted Subsidiary, as the case may be, but only in
connection with the compromise or collection thereof, (7) any pledge, assignment
by way of collateral security, grant of security interest, hypothecation or
mortgage, permitted by this Indenture or any foreclosure, judicial or other
sale, public or private, by the pledgee, assignee, mortgagee or other secured
party of the subject assets, (8) a disposition of assets constituting a
Permitted Investment or (9) distributions, recapitalizations or
reclassifications of Equity Interests (other than Disqualified Capital Stock) of
HPI or HPOC in connection with the REIT Restructuring.
"Bank Credit Facility" means the Credit Facility provided to HPI
pursuant to the Reducing Revolving Loan Agreement, dated as of March 27, 1997,
by and among HPI, the financial institutions from time to time named therein
(the "Banks"), Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents for the Banks, and Bank of America National Trust and Savings
Association, as Managing Agent, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time by the
same or different institutional lenders.
"Bankruptcy Law" means the United States Bankruptcy Code and any other
bankruptcy, insolvency, receivership, reorganization, moratorium or similar law
providing relief to debtors, in each case, as from time to time amended and
applicable to the relevant case.
"Board" means the Board of Directors or similar governing entity of an
Obligor, the members of which are elected by the holders of Capital Stock of
such Obligor or, if applicable, a duly-appointed committee of such Board of
Directors or similar governing body, having jurisdiction over the subject matter
at issue.
"Boomtown Notes" means the 11 1/2% First Mortgage Notes due 2003
issued by Boomtown and remaining outstanding after Boomtown's offer to
repurchase and repurchase of such notes pursuant to an Offer to Purchase and
Consent Solicitation Statement dated March 28, 1997, as amended.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, rights, interests, participations or other
equivalents (however designated and whether or not voting) of corporate stock,
including each class of common stock and preferred stock of such Person, and
(ii) with
2
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the discounted
rental stream payable by such Person that is required to be classified and
accounted for as a capital lease obligation under GAAP and, for purposes of this
definition, the amount of such obligation at any date shall be the capitalized
amount of such obligation at such date, determined in accordance with GAAP. The
final maturity of any such obligation shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without penalty.
"Cash Equivalents" means (i) Government Securities; (ii) certificates
of deposit, Eurodollar time deposits and bankers acceptances maturing within 12
months from the date of acquisition thereof by any Obligor and issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of foreign bank
having, at the date of acquisition of the applicable Cash Equivalent, (A)
combined capital and surplus of not less than $500 million and (B) a commercial
paper rating of at least A-1 from S&P or at least P-1 from Moody's; (iii)
repurchase obligations with a term of not more than seven days after the date of
acquisition thereof by any Obligor for underlying securities of the types
described in clauses (i), (ii) and (vi) hereof, entered into with any financial
institution meeting the qualifications specified in clause (ii) above; (iv)
commercial paper having a rating of at least P-1 from Moody's or a rating of at
least A-1 from S&P on the date of acquisition thereof by any Obligor; (v) debt
obligations of any corporation maturing within 12 months after the date of
acquisition thereof by any Obligor, having a rating of at least P-1 or aaa from
Moody's or A-1 or AAA from S&P on the date of such acquisition; and (vi) mutual
funds and money market accounts investing at least 90% of the funds under
management in instruments of the types described in clauses (i) through (v)
above and, in each case, maturing within the period specified above for such
instrument after the date of acquisition thereof by any Obligor.
"Certificated Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1, 2 and 3 thereof.
"Change of Control" means the occurrence of any of the following: (i)
the REIT Restructuring, (ii) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one transaction
or a series of related transactions, of all or substantially all of the assets
of either Company or the Companies and their Restricted Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) (as defined below), (iii) the adoption, or, if applicable, the approval of
any requisite percentage of either Company's stockholders of a plan relating to
the liquidation or dissolution of such Company, (iv) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than a Principal,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of either Company (measured by voting power rather than
number of shares), or (v) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of either Company
(together with any new directors whose election to such Board or whose
nomination for election by the stockholders of such Company was approved by a
vote of a majority of the directors of such Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for
3
election was previously so approved) cease for any reason to constitute a
majority of the Board of such Company then in office. Except as otherwise
expressly provided, the term "Change of Control" shall include a REIT Change of
Control.
"Company" means either HPI or HPOC until a successor replaces either
such Person in accordance with the terms of this Indenture and thereafter means
such successor.
"Consolidated Coverage Ratio" means, with respect to any Person on any
date of determination, the ratio of (a) Consolidated EBITDA for the period of
four fiscal quarters most recently ended prior to such date for which internal
financial reports are available, ended not more than 135 days prior to such date
to (b) (i) Consolidated Interest Expense during such period plus (ii) dividends
on or in respect of any Capital Stock of any such Person paid in cash during
such period; provided that the Consolidated Coverage Ratio shall be calculated
giving pro forma effect, as of the beginning of the applicable period, to any
acquisition, Incurrence or redemption of Indebtedness (including the Notes),
issuance or redemption of Disqualified Capital Stock, acquisition, Asset Sale,
purchases of assets that were previously leased, redemption of the Convertible
Preferred Stock or re-designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, at any time during or subsequent to such period, but on or prior to
the applicable Determination Date. In making such computation, Consolidated
Interest Expense (i) attributable to any Indebtedness bearing a floating
interest rate shall be computed on a pro forma basis as if the rate in effect on
the date of computation had been the applicable rate for the entire period, or
(ii) attributable to interest on any Indebtedness under a revolving Credit
Facility shall be computed on a pro forma basis based upon the average daily
balance of such Indebtedness outstanding during the applicable period.
For purposes of calculating Consolidated EBITDA of the Companies for
the most recently completed period of four full fiscal quarters ending on the
last day of the last quarter for which internal financial statements are
available (such period of four fiscal quarters, the "Measurement Period"), not
more than 135 days prior to the transaction or event giving rise to the need to
calculate the Consolidated EBITDA, (A) any Person that is a Restricted
Subsidiary on such Determination Date (or would become a Restricted Subsidiary
on such Determination Date in connection with the transaction that requires the
determination of the Consolidated Coverage Ratio) shall be deemed to have been a
Restricted Subsidiary at all times during such Measurement Period, (B) any
Person that is not a Restricted Subsidiary on such Determination Date (or would
cease to be a Restricted Subsidiary on such Determination Date in connection
with the transaction that requires the determination of the Consolidated
Coverage Ratio) will be deemed not to have been a Restricted Subsidiary at any
time during such Measurement Period, (C) if either Company or any Restricted
Subsidiary shall have in any manner (1) acquired (including through an Asset
Acquisition or the commencement of activities constituting such operating
business) or (2) disposed of (including by way of an Asset Sale or the
termination or discontinuance of activities constituting such operating
business) any operating business during such Measurement Period or after the end
of such Measurement Period and on or prior to the Determination Date, such
calculation shall be made on a pro forma basis in accordance with GAAP as if, in
the case of an Asset Acquisition or the commencement of activities constituting
such operating business, all such transactions had been consummated on the first
day of such Measurement Period and, in the case of an Asset Sale or termination
or discontinuance of activities constituting such operating business, all such
transactions had been consummated prior to the first day of such Measurement
Period; provided, however, that such pro forma adjustment shall not give effect
to the Consolidated EBITDA of any acquired Person to the extent that such
Person's net income would be excluded pursuant to clause (vi) of the definition
of Consolidated Net Income and (D) any Indebtedness Incurred and proceeds
thereof received and
4
applied as a result of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio will be deemed to have been so Incurred, received
and applied on the first day of such Measurement Period.
"Consolidated EBITDA" means, with respect to any Person for any
period, the sum (without duplication) of (i) the Consolidated Net Income of such
Person for such period, plus (ii) to the extent that any of the following shall
have been taken into account in determining such Consolidated Net Income, and
without duplication, (A) all income taxes of such Person and its Restricted
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions of assets outside the
ordinary course of business), (B) the Consolidated Interest Expense of such
Person for such period, (C) the amortization expense (including the amortization
of deferred financing charges) and depreciation expense for such Person and its
Restricted Subsidiaries for such period and (D) other non-cash items (other than
non-cash interest) of such Person or any of its Restricted Subsidiaries
(including any non-cash compensation expense attributable to stock option or
other equity compensation arrangements), other than any non-cash item for such
period that requires the accrual of or a reserve for cash charges for any future
period and other than any non-cash charge for such period constituting an
extraordinary item of loss, less (iii)(A) all non-cash items of such Person or
any of its Restricted Subsidiaries increasing such Consolidated Net Income for
such period and (B) all cash payments during such period relating to non-cash
items that were added back in determining Consolidated EBITDA in any prior
period.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capitalized Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) any interest expense on Indebtedness of another Person that is guaranteed
by such Person or one of its Restricted Subsidiaries or secured by a Lien on
assets of such Person or one of its Restricted Subsidiaries (whether or not such
Support Obligation or Lien is called upon) and (iv) the product of (a) all
dividend payments on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall be excluded therefrom (i) net
after-tax gains and losses from all sales or dispositions of assets outside of
the ordinary course of business, (ii) net after-tax extraordinary or non-
recurring gains or losses, (iii) the net income of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of such Person or is merged or consolidated with or into
such Person or any Restricted Subsidiary, (iv) the cumulative effect of a change
in accounting principles, (v) any net income of any other Person if such other
Person is not a Restricted Subsidiary and is accounted for by the equity method
of accounting, except that such Person's equity in the net income of any such
other Person for such period shall be included in such Consolidated Net Income
up to the aggregate amount of cash actually distributed by such other Person
during such period to such Person or a Restricted Subsidiary as a dividend or
other distribution,
5
(subject, in case of a dividend or other distribution to a Restricted
Subsidiary, to the limitation that such amount so paid to a Restricted
Subsidiary shall be excluded to the extent that such amount could not at that
time be paid to the Companies due to the restrictions set forth in clause
(vi) below (regardless of any waiver of such conditions), (vi) any net income of
any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, by contract, operation of law, pursuant to
its charter or otherwise on the payment of dividends or the making of
distributions by such Restricted Subsidiary to such Person except that (A) such
Person's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been paid or distributed during such period to
such Person as a dividend or other distribution (provided that such ability is
not due to a waiver of such restriction) and (B) such Person's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income regardless of any such restriction,
(vii) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (viii) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (ix) in the case of a successor to such Person by consolidation
or merger or as a transferee of such Person's assets, any net income or loss of
the successor corporation prior to such consolidation, merger or transfer of
assets and (x) the net income (but not loss) of any Unrestricted Subsidiary,
whether or not distributed to any Obligor.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date, plus (ii) the
respective amounts reported on such Person's consolidated balance sheet as of
such date with respect to any series of preferred stock (other than Disqualified
Capital Stock) that by its terms is not entitled to the payment of dividends
unless such dividends may be declared and paid only out of net earnings in
respect of the year of such declaration and payment, but only to the extent of
any cash received by such Person upon issuance of such preferred stock, less (A)
all write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the Issue Date in
the book value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (B) all investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Subsidiaries (except, in each case, Permitted
Investments), and (C) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Convertible Preferred Stock" means HPI's $70.00 Convertible Preferred
Stock, par value $1.00 per share, and all depository shares relating thereto.
"Core Businesses" means the gaming, card club, racing, sports,
entertainment, lodging, restaurant, riverboat operations, real estate
development and all other businesses and activities necessary for or reasonably
related or incident thereto, including without limitation related acquisition,
construction, development or operation of truck stop, transportation, retail and
other facilities designed to enhance any of the foregoing.
"Corporate Trust Office of the Trustee" shall mean the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Companies.
"Credit Facilities" means, with respect to any Obligor, one or more
debt facilities or commercial paper facilities with any combination of banks,
other institutional lenders and other Persons
6
extending financial accommodations or holding corporate debt obligations in the
ordinary course of their business, providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time by the same or different institutional lenders.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Determination Date" means, with respect to any calculation, the date
on or as at which such calculation is made in accordance with the terms hereof.
"Disqualified Capital Stock" means any Capital Stock, other than the
Convertible Preferred Stock, which by its terms (or by the terms of any security
into which it is, by its terms, convertible or for which it is, by its terms,
exchangeable at the option of the holder thereof), or upon the happening of any
specified event, is required to be redeemed or is redeemable (at the option of
the holder thereof) at any time prior to the earlier of the repayment of all
Notes or the stated maturity of the Notes or is exchangeable at the option of
the holder thereof for Indebtedness at any time prior to the earlier of the
repayment of all Notes or the stated maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that shall be made by the Companies
pursuant to the Registration Rights Agreement to exchange the Series A Notes for
the Series B Notes.
"Exchange Offer Registration Statement" means the registration
statement relating to the Exchange Offer to be filed by the Companies pursuant
to the Registration Rights Agreement.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Gaming Approval" means any governmental approval relating to any
gaming business or enterprise.
7
"Gaming Authority" means any governmental authority with regulatory
oversight of, authority to regulate or jurisdiction over any gaming businesses
or enterprises, including the State Gaming Control Board of Nevada, the Washoe
County, Nevada or the Nevada, Mississippi or Louisiana commission with
regulatory oversight of, authority to regulate or jurisdiction over any gaming
operation (or proposed gaming operation) owned, managed or operated by any
Obligor.
"Gaming Laws" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations and ordinances of
any Gaming Authority, (ii) Gaming Approvals and (iii) orders, decisions,
judgments, awards and decrees of any Gaming Authority.
"Global Note" means a Note in substantially the form of Exhibit A
hereto, including footnotes 1, 2 and 3 thereto.
"Government Securities" means marketable direct obligations issued by,
or unconditionally guaranteed by, the United States government or issued by any
agency or instrumentality thereof and backed by the full faith and credit of the
United States, in each case maturing within 12 months from the date of
acquisition thereof by any Obligor.
"Guarantor" means any existing or future Material Restricted
Subsidiary of either Company, which has guaranteed the obligations of the
Companies arising under or in connection with the Notes, as required by Section
4.17 hereof.
"Guaranty" means a guaranty by a Guarantor of the Obligations of the
Companies pursuant to Article 12 hereof or an Addendum to Guaranty.
"Hedging Obligations" means all obligations of the Obligors arising
under or on connection with any rate or basis swap, forward contract, commodity
swap or option, equity or equity index swap or option, bond, note or bill
option, interest rate option, foreign currency exchange transaction, cross
currency rate swap, currency option, cap, collar or floor transaction, swap
option, synthetic trust product, synthetic lease or any similar transaction or
agreement.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"HPI" has the meaning provided in the preamble.
"HPOC" has the meaning provided in the preamble.
"Incur" means, with respect to any Indebtedness or any Lien, to
create, issue, incur (by conversion, exchange or otherwise), assume, guarantee
or otherwise become liable in respect of such Indebtedness or Lien or the
recording, as required pursuant to GAAP or otherwise, of any such Indebtedness
or Lien on the balance sheet of any Person (and "Incurrence," "Incurred,"
"Incurrable," and "Incurring" shall have meanings correlative to the foregoing).
"Indebtedness" means with respect to any Person, without duplication,
whether contingent or otherwise, (i) any obligations for money borrowed,
(ii) any obligation evidenced by bonds, debentures, notes, or other similar
instruments, (iii) Letter of Credit Obligations and obligations under other
similar instruments, (iv) any obligations to pay the deferred purchase price of
property or services, including
8
Capitalized Lease Obligations, (v) the maximum fixed redemption or repurchase
price of Disqualified Capital Stock, (vi) Indebtedness of other Persons of the
types described in clauses (i) through (v) above, secured by a Lien on the
assets of such Person or its Restricted Subsidiaries, valued, in such cases
where the recourse thereof is limited to such assets, at the lesser of the
principal amount of such Indebtedness or the fair market value of the subject
assets, (vii) indebtedness of other Persons of the types described in clauses
(i) through (v) above, guaranteed by such Person or any of its Restricted
Subsidiaries and (viii) the net obligations of such Person under Hedging
Obligations; provided that the amount of any Indebtedness at any date shall be
calculated as the outstanding balance of all unconditional obligations and the
maximum liability supported by any contingent obligations at such date.
Notwithstanding the foregoing, "Indebtedness" shall not be construed to include
trade payables, credit on open account, accrued liabilities, provisional credit,
daylight overdrafts or similar items. For purposes hereof, the "maximum fixed
redemption or repurchase price" of any Disqualified Capital Stock that does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Capital Stock as if such Disqualified Capital Stock were
repurchased on the date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
fair market value of such Disqualified Capital Stock, such fair market value
shall be determined reasonably and in good faith by the Board of the issuing
Person. Unless otherwise specified herein, the amount outstanding at any time of
any Indebtedness issued with original issue discount is the full amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Indiana Joint Venture Project" means the possible development of a
riverboat casino facility in Switzerland County, Indiana.
"Initial Purchasers" means Oppenheimer & Co., Inc., BT Securities
Corporation and BancAmerica Securities, Inc.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Interest Swap Obligations" means the net obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap, collar or swap or other
interest rate Hedging Obligation.
"Investment" by any Person means any direct or indirect (i) loan,
advance or other extension of credit or capital contribution (valued at the fair
market value thereof as of the date of contribution or transfer) (by means of
transfers of cash or other property or services for the account or use of other
Persons, or otherwise); (ii) purchase or acquisition of Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by any
other Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness); (iii) guarantee or assumption of any Indebtedness or
any other obligation of any other Person (except for an assumption of
Indebtedness for which the assuming Person receives consideration at the time of
such assumption in the form of property or assets with a fair market value at
least equal to the principal amount of the Indebtedness assumed); (iv) the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or other beneficial ownership of any Person; and (v) all
9
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person prepared in accordance with GAAP. Notwithstanding
the foregoing, the purchase or acquisition of any securities, Indebtedness or
Productive Assets of any other Person solely with Qualified Capital Stock shall
not be deemed to be an "Investment." The term "Investments" shall also exclude
extensions of trade credit and advances to customers and suppliers to the extent
made in the ordinary course of business on ordinary business terms. The amount
of any non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of affected Obligor unless
the fair market value of such Investment exceeds $5 million, in which case the
fair market value shall be determined conclusively in good faith by the Board of
such Obligor at the time such Investment is made. The amount of any Investment
shall not be adjusted for increases or decreases in value, or write-ups, write-
downs or write-offs subsequent to the date such Investment is made with respect
to such Investment.
"Issue Date" means August 6, 1997.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Credit Obligations" means all Obligations of any Obligor in
respect of letters of credit, which Indebtedness shall be calculated as (a) the
aggregate maximum amount then available to be drawn under all such letters of
credit (the determination of such maximum amount to assume compliance with all
conditions for drawing), (b) the aggregate amount that has then been paid for
the account of, and not reimbursed by, such Obligor under such letters of
credit, and (c) any accrued and unpaid interest, fees or other charges arising
in connection therewith.
"Lien" means, with respect to any assets, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance (including without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any option or other agreement to sell, and any filing of or
agreement to give, any security interest).
"Liquidated Damages" means, on any date of reference thereto, any
liquidated damages then owing pursuant to Section 4 of the Registration Rights
Agreement.
"Material Restricted Subsidiary" means any Subsidiary which is both a
Material Subsidiary and a Restricted Subsidiary.
"Material Subsidiary" means, at any date of determination, any
Subsidiary of either Company which together with its Subsidiaries either (i) had
assets which, as of the date of the Companies' most recent quarterly
consolidated balance sheet, constituted 5% or more of the Companies' total
assets on a consolidated basis as of such date, in each case determined in
accordance with GAAP, (ii) had Consolidated EBITDA for the 12-month period
ending on the date of the Companies' most recent quarterly consolidated
statement of income which constituted 5% or more of the Companies' Consolidated
EBITDA (such calculation of Consolidated EBITDA of the Companies for the
purposes of this definition to be calculated without giving effect to clause
(vi) of the definition of Consolidated Net Income) for such period or (iii)
would constitute a Significant Subsidiary.
10
"Moody's" means Moody's Investors Services, Inc., and its successors.
"Net Cash Proceeds" means with respect to any Asset Sale, the proceeds
in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents received by any Obligor from such Asset Sale, net of (i) reasonable
out-of-pocket expenses, fees and other direct costs relating to such Asset Sale
(including, without limitation, brokerage, legal, accounting and investment
banking fees and sales commissions), (ii) taxes paid or payable after taking
into account any reduction in tax liability due to available tax credits or
deductions and any tax sharing arrangements, (iii) repayment of Indebtedness
(other than any intercompany Indebtedness) that is required by the terms thereof
to be repaid or pledged as cash collateral, or the holders of which otherwise
have a contractual claim that is legally superior to any claim of the holders
(including a restriction on transfer) to the proceeds of the subject assets, in
connection with such Asset Sale, and (iv) appropriate amounts to be provided by
any applicable Obligor as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and any reserve for adjustment to the sale price
received in such Asset Sale for so long as such reserve is held.
"Net Proceeds Offer" has the meaning provided in Section 4.09.
"Non-Recourse Indebtedness" means Indebtedness of an Unrestricted
Subsidiary (a) as to which none of the Obligors (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor
or otherwise) or (iii) constitutes the lender; (b) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of either Company or any of their Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(c) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of either Company or any of their
Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" means the Series A Notes and the Series B Notes, as amended or
supplemented from time to time in accordance with the terms of this Indenture,
that are issued pursuant to this Indenture, treated as a single class of
securities for all purposes and in particular, for voting and exercise of other
consensual rights, which may be exercised by the Holders of Series A Notes and
Series B Notes only as a single class.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities, whether
absolute or contingent, payable under the documentation governing any
Indebtedness.
"Obligor" means either Company or any Guarantor.
11
"Offering Memorandum" means the Offering Memorandum dated August 1,
1997, of the Companies relating to the offering of the Notes.
"Officer" means, (i) with respect to any Person that is a corporation,
the Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary, the Assistant Secretary or any Vice-
President of such Person and (ii) with respect to any other Person, the
individuals selected by the Board of Directors or corresponding governing or
managing body of such Person to perform functions similar to those of the
officers listed in clause (i).
"Officers' Certificate" means (i) with respect to the Companies, a
certificate signed on behalf of the Companies by two Officers of each Company,
one of whom must be the principal executive officer, the principal financial
officer or the principal accounting officer of such Company, or (ii) with
respect to any other Obligor, a certificate signed on behalf of such Obligor by
two officers of such Obligor, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Obligor and in each case, that meets the requirements of Sections 11.04 and
11.05 hereof.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
11.04 and 11.05 hereof, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" means the Person so designated by the Companies in
accordance with Section 2.03 hereof, initially the Trustee.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness of the Obligors outstanding on the Issue Date and
reflected in the financial statements set forth in the Offering Memorandum as in
effect on the Issue Date as reduced by the amount of any scheduled amortization
payments or mandatory prepayments when actually paid or permanent reductions
thereon;
(ii) Indebtedness Incurred by the Companies under the Notes
and by the Guarantors under the Guaranties;
(iii) Indebtedness Incurred by any Obligor pursuant to the
Boomtown Notes and the Bank Credit Facility; provided that the aggregate
principal amount of Indebtedness of the Obligors outstanding thereunder as of
any date of Incurrence shall not exceed $100 million, to be reduced dollar-for-
dollar by the amount of any increase to the face amount of Support Obligations
permitted to be Incurred pursuant to clause (xi) of this definition;
(iv) Indebtedness of either Company to any Obligor or of any
Guarantor to any other Obligor for so long as such Indebtedness is held by
either Company or by another Obligor; provided that (A) any Indebtedness of
either Company to any other Obligor is unsecured and evidenced by an
intercompany promissory note that is subordinated, pursuant to a written
agreement, to such Company's obligations under this Indenture, the Notes and the
Registration Rights Agreement, and (B) if as of any date any Person other than
either Company or a Guarantor owns or holds any such Indebtedness or holds a
Lien
12
in respect of such Indebtedness, such date shall be deemed to be an Incurrence
of Indebtedness not constituting Permitted Indebtedness under this clause (iv)
by the issuer of such Indebtedness ;
(v) Indebtedness of a Restricted Subsidiary to either Company for so
long as such Indebtedness is held by an Obligor; provided that if as of any date
any Person other than an Obligor acquires any such Indebtedness or holds a Lien
in respect of such Indebtedness, such acquisition shall be deemed to be an
Incurrence of Indebtedness not constituting Permitted Indebtedness under this
clause (v) by the issuer of such Indebtedness;
(vi) Permitted Refinancing Indebtedness;
(vii) the Incurrence by Unrestricted Subsidiaries of Non-Recourse
Indebtedness, provided that, if any such Indebtedness ceases to be Non-Recourse
Indebtedness of an Unrestricted Subsidiary, such event shall be deemed to
constitute an Incurrence of Indebtedness that is not permitted by this clause
(vii);
(viii) Indebtedness Incurred by any Obligor solely to finance the
construction, acquisition or improvement of, or consisting of Capitalized Leased
Obligations Incurred to acquire rights of use in, capital assets useful in such
Obligor's business and, in any such case, Incurred prior to or within 180 days
after the construction, acquisition, improvement or leasing of the subject
assets, not to exceed in aggregate principal amount outstanding at any time,
(A) $15 million per Obligor or (B) $100 million in the aggregate for all of the
Obligors, and additional Indebtedness of the kind described in this clause
(viii) with respect to which no Obligor is directly or indirectly liable and
which is expressly made non-recourse to the Obligors and all of their assets,
except the asset so financed;
(ix) Interest Swap Obligations entered into not as speculative
Investments but as hedging transactions designed to protect the Obligors against
fluctuations in interest rates in connection with Indebtedness otherwise
permitted hereunder;
(x) Indebtedness of any Obligor arising in respect of performance
bonds and completion guaranties (to the extent that the Incurrence thereof does
not result in the Incurrence of any obligation for the payment of borrowed money
of others), in the ordinary course of business, in amounts and for the purposes
customary in such Obligor's industry for businesses comparable to those of such
Obligor; provided, that such Indebtedness shall be Incurred solely in connection
with the development, construction, improvement or enhancement of assets useful
in such Obligor's business; and
(xi) other Indebtedness consisting of Support Obligations not
exceeding $25 million in aggregate principal amount at any time, which may be
increased by the Companies in their discretion, subject to availability under,
and a corresponding reduction to, the principal amount of Indebtedness permitted
to be Incurred under the Bank Credit Facility pursuant to clause (iii) of this
definition.
"Permitted Investments" means, without duplication, each of the
following:
(i) Investments in cash (including deposit accounts with major
commercial banks) and Cash Equivalents;
13
(ii) Investments by the Obligors in any Obligor or in any Person
that is or will become upon giving effect to such Investment or as a result of
which, such Person is merged, consolidated or liquidated into, or conveys
substantially of all its assets to, an Obligor or a Wholly Owned Restricted
Subsidiary; provided that for purposes of calculating at any date the aggregate
amount of Investments made since the Issue Date pursuant to Section 4.07 hereof,
any such Investment shall be a Permitted Investment only so long as any
Subsidiary in which any such Investment has been made continues to be an Obligor
or a Wholly Owned Restricted Subsidiary;
(iii) Investments existing on the Issue Date, each such Investment
to be (A) in an amount less than $1 million, (B) listed on a schedule hereto or
(C) an existing Investment by a member or members of the Hollywood Park, Inc.
consolidated group in other members of such group;
(iv) accounts receivable created or acquired in the ordinary
course of business of any Obligor on ordinary business terms;
(v) Investments arising from transactions by the Obligors with trade
creditors or customers in the ordinary course of business (including any such
Investment received pursuant to any plan of reorganization or similar
arrangement pursuant to the bankruptcy or insolvency of such trade creditors or
customers or otherwise in settlement of a claim);
(vi) Investments made as the result of non-cash consideration
received from an Asset Sale that was made pursuant to and in compliance with
Section 4.09 hereof; and
(vii) Investments consisting of advances to officers, directors
and employees of the Obligors for travel, entertainment, relocation, purchases
of Capital Stock of an Obligor permitted hereby and analogous ordinary business
purposes.
"Permitted Junior Securities" means Equity Interests in the Obligors
or debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes and the Guaranties are subordinated
to Senior Debt pursuant to Article 10 hereof.
"Permitted Liens" means (i) Liens (A) in favor of either Company or
(B) encumbering the assets of any Guarantor, for so long as any such Lien is
held by either Company or another Guarantor; provided, that as of the date any
Person other than either Company or a Guarantor owns or holds any such Lien,
such date shall be deemed to be an Incurrence of a Lien not constituting a
Permitted Lien under this clause (i)(B); (ii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with any
Obligor; provided that such Liens were not Incurred in anticipation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with such Obligor; (iii) Liens on property
existing at the time of acquisition thereof by any Obligor; provided that such
Liens were not Incurred in anticipation of such acquisition; (iv) Liens Incurred
to secure Indebtedness permitted by clause (viii) of the definition of Permitted
Indebtedness, attaching to or encumbering only the subject assets and directly
related property such as proceeds and products thereof and accessions and
replacements thereto; (v) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (vi) Liens created by
"notice" or "precautionary" filings in connection with operating leases or other
transactions pursuant to which no Indebtedness is Incurred by any Obligor;
(vii) Liens existing on the
14
Issue Date; (viii) Liens for taxes, assessments or governmental charges or
claims (including, without limitation, Liens securing the performance of workers
compensation, social security, or unemployment insurance obligations) that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in accordance with
GAAP shall have been made therefor; (ix) Liens on shares of any equity security
or any warrant or operation to purchase an equity security or any security which
is convertible into an equity security issued by any Obligor that holds,
directly or indirectly through a holding company or otherwise, a license under
any applicable Gaming Laws; provided that this clause (ix) shall apply if and
only so long as such Gaming Laws provide that the creation of any restriction on
the disposition of any of such securities shall not be effective and, if such
Gaming Laws at any time cease to so provide, then this clause (ix) shall be of
no further effect; and (x) Liens on securities constituting "margin stock"
within the meaning of Regulation G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System, to the extent that (A) prohibiting such
Liens would result in the classification of the Obligations of the Companies
under the Notes as a "purpose credit" and (B) the Investment by any Obligor in
such margin stock is permitted hereby; (xi) Liens securing Permitted Refinancing
Indebtedness; provided that any such Lien attaches only to the assets encumbered
by the predecessor Indebtedness, unless the Incurrence of such Liens is
otherwise permitted hereunder; (xii) Liens securing stay and appeal bonds or
judgment Liens in connection with any judgment not giving rise to an Event of
Default under Section 6.01(e); (xiii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business, in respect of
obligations not constituting Indebtedness and not past due; provided that
adequate reserves shall have been established therefor in accordance with GAAP;
(xiv) easements, rights-of-way, zoning restrictions, reservations, encroachments
and other similar charges or encumbrances in respect of real property which do
not individually or in the aggregate, materially interfere with the conduct of
business by any Obligor; (xv) any interest or title of a lessor under any
Capitalized Lease Obligation permitted to be Incurred hereunder; (xvi) Liens
upon specific items of inventory or equipment and proceeds thereof, Incurred to
secure obligations in respect of bankers' acceptances issued or created for the
account of any Obligor in the ordinary course of business to facilitate the
purchase, shipment, or storage of such inventory or equipment; (xvii) Liens
securing Letter of Credit Obligations permitted to be Incurred hereunder
Incurred in connection with the purchase of inventory or equipment by an Obligor
in the ordinary course of the business and secured only by such inventory or
equipment, the documents issued in connection therewith and the proceeds thereof
and (xviii) Liens in favor of the Trustee arising under Section 7.07 hereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of any
Obligor issued in exchange for, or the net proceeds of which are used to repay,
redeem, extend, refinance, renew, replace, defease or refund other Permitted
Indebtedness of such Obligor arising under clauses (i), (viii), (x) or (xi) of
the definition of "Permitted Indebtedness" or Indebtedness Incurred under the
Consolidated Coverage Ratio test pursuant to Section 4.08 hereof (any such
Indebtedness, "Existing Indebtedness"); provided that: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of such Existing Indebtedness (plus the amount of prepayment penalties, premiums
and expenses incurred or paid in connection therewith), except to the extent
that the Incurrence of such excess is otherwise permitted by this Indenture;
(ii) if such Indebtedness is subordinated to, or pari passu in right of payment
with, the Notes, such Permitted Refinancing Indebtedness has a final maturity
date on or later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, such Existing Indebtedness, (iii) if such Existing Indebtedness is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date on or later than the final maturity date
of, and is subordinated in right of payment to, the Notes on terms at least as
favorable
15
to the holders of Notes as those contained in the documentation governing the
Indebtedness being repaid, redeemed, extended, refinanced, renewed, replaced,
defeased or refunded and (iv) such Permitted Refinancing Indebtedness shall be
Indebtedness solely of the Obligors originally liable thereunder, unless the
Incurrence of Indebtedness by additional Obligors is otherwise permitted
hereby.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Plan of Liquidation" means, with respect to any Person, a plan
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accomplished by (whether or not
substantially contemporaneously) (i) the sale, lease or conveyance of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance, or other disposition and
all or substantially all of the remaining assets of such Person to holders of
Capital Stock of such Person.
"Principals" means (a) R.D. Hubbard, (b) any spouse, parent or child
of such Principal or (c) any trust, corporation, partnership or other Person,
the beneficiaries, stockholders, partners, owners or other Persons holding an
80% or more controlling interest in which are Persons described in clause (a) or
(b) of this definition.
"Productive Assets" means assets (including assets owned directly or
indirectly through Capital Stock of a Restricted Subsidiary) of a kind used or
usable in the businesses of the Obligors as they are conducted on the date of
the Asset Sale.
"Public Equity Offering" means a public equity offering, underwritten
by a nationally recognized underwriter pursuant to an effective registration
statement under the Securities Act, of Qualified Capital Stock.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Rating Agencies" means (i) S&P, (ii) Moody's or (iii) a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Companies, which may be substituted for S&P or Moody's or both.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P, 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as
from BB to BB-, will constitute a decrease of one gradation).
"Rating Decline" means (i) if the Notes are rated, immediately prior
to the announcement of the REIT Restructuring, as investment grade instruments
by both Rating Agencies, a subsequent decline in rating to a rating below
investment grade by at least one Rating Agency, (ii) if the Notes are rated,
immediately prior to the announcement of the REIT Restructuring, as investment
grade instruments by
16
either Rating Agency, a subsequent decline in the rating of the Notes by both
Rating Agencies to a rating below investment grade or (iii) if the Notes are
rated, immediately prior to the announcement of the REIT Restructuring, as below
investment grade instruments by both Rating Agencies, a subsequent decline in
the rating of the Notes by either or both of the Rating Agencies by one or more
gradations (including gradations within Rating Categories as well as between
Rating Categories).
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 1, 1997, by and among the Companies, the
Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.
"REIT" means a real estate investment trust into which HPI may be
reorganized pursuant to the REIT Restructuring.
"REIT Change of Control" means the occurrence of both (i) the REIT
Restructuring and (ii) a Rating Decline within 30 days after giving effect to
the REIT Restructuring.
"REIT Restructuring" means a restructuring, the possibility of which
is currently being explored by the Companies, after giving effect to which (if
implemented), inter alia, HPI would become the REIT and the common stock of HPI
and HPOC would be paired so that they would be transferable and tradeable only
in combination as units, including the distribution of the stock of HPOC to the
stockholders of HPI and any transfer of assets among the Obligors in connection
with such distribution.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning provided in Section 4.07.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that has not been designated as an Unrestricted Subsidiary. If
no referent Person is specified, "Restricted Subsidiary" means a Subsidiary of
either Company.
"S&P" means Standard & Poors Rating Group, a division of The McGraw-
Hill Industries, Inc., and its successors.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing pursuant to a capitalized lease to either Company or a Subsidiary of
any property, whether owned by such Company or such Subsidiary at the
17
Issue Date or later acquired, which has been or is to be sold or transferred by
such Company or such Subsidiary to such Person or to any other Person by whom
funds have been or are to be advanced on the security of such property.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency having similar responsibilities and powers.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series A Notes" has the meaning provided in the preamble hereto.
"Series B Notes" has the meaning provided in the preamble hereto.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary," with respect to any Person, means (i) any corporation or
comparably organized entity, a majority of whose voting stock (defined as any
class or class of capital stock having voting power under ordinary circumstances
to elect a majority of the Board of such Person) is owned, directly or
indirectly, by any one or more of the Obligors and (ii) any other Person (other
than a corporation) in which any one or more of the Obligors, directly or
indirectly, has at least a majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof, or of which such Obligor is
the managing general partner.
"Support Obligation" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Support Obligation" shall not include (a) endorsements
for collection or deposit in the ordinary course of business, or (b) commitments
to make Permitted Investments in Obligors or their Restricted Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA, except as provided in Section 9.03.
18
"Transfer Restricted Security" has the meaning assigned to the term
"restricted securities" in Rule 144(a)(3) under the Securities Act; provided,
however, that the Trustee shall be entitled to request and conclusively rely on
an Opinion of Counsel with respect to whether any Note constitutes a Transfer
Restricted Security.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary of either Company
that is designated by the Board of such Company as an Unrestricted Subsidiary
pursuant to a board resolution; but only to the extent that such Subsidiary
(a) has, or will have after giving effect to such designation, no Indebtedness
other than Non-Recourse Indebtedness, (b) is not party to any agreement,
contract, arrangement or understanding with any Obligor unless the terms of any
such agreement, contract, arrangement or understanding are no less favorable to
such Obligor than those that might be obtained at the time from Persons who are
not Affiliates of such Obligor, (c) is a Person with respect to which none of
the Obligors has any direct or indirect obligation (x) to subscribe for
additional equity interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results, (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of any Obligor, and (e) has at
least one director on its Board that is not a director or executive officer of
any Obligor and has at least one executive officer that is not a director or
executive officer of any Obligor. Any such designation by the Board of either
Company shall be evidenced to the Trustee by filing with the Trustee a certified
copy of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by Section 4.07 hereof. If at any time any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes hereof and any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary as of such time (and, if such
Indebtedness is not permitted to be Incurred as of such date under Section 4.08
hereof the Companies shall be in default of such covenant). The Board of either
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an Incurrence
of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be permitted if
(i) such Indebtedness is permitted under Section 4.08 hereof calculated on a
pro forma basis as if such designation had occurred at the beginning of the
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment or
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Wholly Owned Subsidiary
of either Company that is a Restricted Subsidiary.
19
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than directors'
qualifying shares) which normally have the right to vote in the election of
directors are owned by such Person or any wholly owned Subsidiary of such
Person.
Section 1.02. Other Definitions.
Defined
in
Term Section
---- --------
"Accrued Bankruptcy Interest".................... 10.02
"Affiliate Transaction".......................... 4.10
"Asset Sale Offer"............................... 3.09
"Beneficiary".................................... 12.01
"Change of Control Offer"........................ 4.12
"Change of Control Payment"...................... 4.12
"Change of Control Payment Date"................. 4.12
"Covenant Defeasance"............................ 8.03
"Designated Senior Debt"......................... 10.02
"Event of Default"............................... 6.01
"Fair Saleable Value"............................ 12.08
"Fair Valuation"................................. 12.08
"Funding Guarantor".............................. 12.08
"Guaranteed Obligations"......................... 12.01
"Hedging Obligations"............................ 10.02
"Legal Defeasance"............................... 8.02
"Maximum Net Worth".............................. 12.08
"Net Proceeds Offer Amount"...................... 4.09
"Net Proceeds Offer Payment Date"................ 4.09
"Net Proceeds Offer Trigger Date"................ 4.09
"Net Worth"...................................... 12.08
"Offer Amount"................................... 3.09
"Offer Period"................................... 3.09
"Other Guaranty"................................. 12.02
"Paying Agent"................................... 2.03
"Payment Default"................................ 6.01
"Payment Restriction"............................ 4.14
"Purchase Date".................................. 3.09
"Registrar"...................................... 2.03
"Remaining Guarantor"............................ 12.08
"Representative"................................. 10.02
"Restricted Payment"............................. 4.07
"Senior Debt".................................... 10.02
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
20
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means any Obligor and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the respective meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act, the
Exchange Act, the TIA or any other applicable statute shall be deemed to
include substitute, replacement or successor sections or rules adopted by
the SEC from time to time; and
(7) references to any contract, instrument or agreement shall be
deemed to include any amendments, modifications or supplements thereto or
restatements thereof not prohibited hereby, through the date of reference
thereto.
21
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Companies, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for each Obligor by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Companies signed by two
Officers of each Company, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Companies to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Companies
or an Affiliate of the Companies.
22
Section 2.03. Registrar and Paying Agent.
The Companies shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Companies may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Companies may change
any Paying Agent or Registrar without notice to any Holder. The Companies shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Companies fail to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. Either Company or
any of their Subsidiaries may act as Paying Agent or Registrar.
The Companies initially appoint The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Companies initially appoint the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Companies shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Companies in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Companies at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than either Company or a
Subsidiary) shall have no further liability for the money. If either Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to either Company,
the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Companies shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Companies shall otherwise comply with TIA (S) 312(a).
23
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Certificated Notes. When Certificated
Notes are presented by a Holder to the Registrar with a request:
(y) to register the transfer of the Certificated Notes; or
(z) to exchange such Certificated Notes for an equal principal
amount of Certificated Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Notes presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed
by such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Certificated Note that is a Transfer
Restricted Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from
such Holder (in substantially the form of Exhibit B hereto); or
(C) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably acceptable to the Companies and to
the Registrar to the effect that such transfer is in compliance with the
Securities Act.
24
(b) Transfer of a Certificated Note for a Beneficial Interest in a
Global Note. A Certificated Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Certificated Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Certificated Note is a Transfer Restricted Security,
a certification from the Holder thereof (in substantially the form of
Exhibit B hereto) to the effect that such Certificated Note is being
transferred by such Holder to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule 144A under
the Securities Act; and
(ii) whether or not such Certificated Note is a Transfer
Restricted Security, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Certificated Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Companies shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Certificated Note or New Note.
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Certificated Note.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global
Note, and, in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the form of
Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities
25
Act) in accordance with Rule 144A under the Securities Act or pursuant to
an exemption from registration in accordance with Rule 144 or Rule 904
under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the Securities
Act, a certification to that effect from the transferor (in substantially
the form of Exhibit B hereto) and an Opinion of Counsel from the transferee
or transferor reasonably acceptable to the Companies and to the Registrar
to the effect that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depositary and the Note Custodian, cause
the aggregate principal amount of Global Notes to be reduced accordingly
and the Trustee shall authenticate and deliver to the transferee a
Certificated Note or a New Note, as the case may be, in the appropriate
principal amount.
(ii) Certificated Notes or New Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.06(d) shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Certificated Notes or New Notes, as the case may be, to the
Persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) Authentication of Certificated Notes in Absence of Depositary.
If at any time:
(i) the Depositary for the Notes notifies the Companies that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by
the Companies within 90 days after delivery of such notice; or
(ii) the Companies, at their sole discretion, notify the Trustee
in writing that they elect to cause the issuance of Certificated Notes
under this Indenture
26
in exchange for all or any part of the Notes represented by one or more
Global Notes,
then the Obligors shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and Certificated Notes
(and all Notes issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANIES THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANIES SO REQUEST), (2) TO
THE COMPANIES OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
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PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Certificated Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Certificated Note that
does not bear the first legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall not be required
to bear the first legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.06(c) hereof; provided, however,
that with respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a Certificated Note that
does not bear the first legend set forth in (i) above, which request is
made in reliance upon Rule 144, the Holder thereof shall certify in writing
to the Registrar that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Companies shall issue and the Guarantors shall execute
and, upon receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate Series B Notes in exchange for
Series A Notes accepted for exchange in the Exchange Offer, which Series B
Notes shall not bear the legend set forth in (i) above, and the Registrar
shall rescind any restriction on the transfer of such new debt securities,
in each case unless the Holder of such Series B Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution of the Series
A Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of
either Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Certificated
Notes, redeemed, repurchased or canceled, all Global Notes shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Certificated Notes, redeemed, repurchased or canceled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Obligors shall execute and the Trustee shall authenticate Certificated
Notes and Global Notes at the Registrar's request. The Companies will take
such further action as any Holder or beneficial owner may reasonably
request to enable such Holder or beneficial owner to transfer its Notes
without registration under the Securities Act within the limitation of the
exemption provided by Rule 144A, at the expense of such requesting Holder
or beneficial owner.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Companies may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.09 and 9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes or Global Notes
shall be the valid obligations of the Obligors evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Certificated
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(v) The Companies shall not be required:
(A) to issue, to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days before the day
of any selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Companies may deem and treat
the Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and interest
on such Notes, and neither the Trustee, any Agent nor the Companies shall
be affected by notice to the contrary.
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(vii) The Trustee shall authenticate Certificated Notes and
Global Notes in accordance with the provisions of Section 2.02 hereof.
Each Holder of a Note agrees to indemnify the Obligors and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable U.S. federal or state securities law.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or either Company,
or if the Companies and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note, the Companies shall issue, the
Guarantors shall execute and the Trustee, upon the written order of the
Companies signed by two Officers of each Company, shall authenticate a
replacement Note if the Trustee's requirements are met. An indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Companies to protect the Companies, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Companies may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Obligors and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because a Company or an Affiliate of a Company
holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a "bona fide purchaser" or "protected purchaser", as
such terms may from time to time be defined in Article 8 of the Uniform
Commercial Code as in effect in the State of New York.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than an Obligor, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Obligors or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Companies shall be considered
as though not outstanding, except that for the purposes of determining whether
the Trustee
30
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trustee actually knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until Certificated Notes are ready for delivery, the Companies may
prepare, the Guarantors may execute and the Trustee shall authenticate temporary
Notes upon a written order of the Companies signed by two Officers of each
Company. Temporary Notes shall be substantially in the form of Certificated
Notes but may have variations that the Companies consider appropriate for
temporary Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Companies shall prepare, the Guarantors shall execute
and the Trustee shall authenticate Certificated Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11. Cancellation.
The Companies at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). All canceled Notes shall be delivered to the Companies. The Companies
may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Obligors default in a payment of interest on the Notes, they
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Companies shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Companies shall fix or cause to be
fixed each such special record date and payment date; provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Companies (or, upon the written request of the Companies, the Trustee in the
name and at the expense of the Companies) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
Section 2.13. CUSIP Numbers.
The Companies in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Companies will promptly notify the Trustee of any
change in the CUSIP numbers.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Companies elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, they shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time, the
Trustee will select the Notes to be redeemed among the Holders of Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate.
The Trustee shall promptly notify the Companies in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
provided, that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Note. Notes called for redemption
become due on the date fixed for redemption. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Companies shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
number, if applicable), and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
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(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Companies default in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and any applicable Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Companies' request, the Trustee shall give the notice of
redemption in the Companies' name and at their expense; provided, however, that
the Companies shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter period is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
On or before 10:00 a.m. New York time on the redemption date, the
Companies shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. Funds so deposited later than 12 noon New York time
on the day prior to a redemption will not be invested. The Trustee or the
Paying Agent shall promptly return to the Companies any money deposited with the
Trustee or the Paying Agent by the Companies in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Notes to be
redeemed.
If the Companies comply with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Companies to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
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Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Companies shall
issue, the Guarantors shall execute and, upon the Companies' written request,
the Trustee shall authenticate for the Holder at the expense of the Companies a
new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
Section 3.07. Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Companies shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to August 1, 2002. Thereafter, the Companies shall have the option
to redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the aggregate principal amount thereof) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date, if redeemed during the twelve-month period beginning
on August 1, of the years indicated below:
YEAR PERCENTAGE
---- ----------
2002.......................... 104.75%
2003.......................... 102.375%
2004.......................... 101.188%
2005 and thereafter........... 100%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
(i) the Companies may, during the first 36 months after the Issue Date, redeem
up to 25% of the initially outstanding aggregate principal amount of Notes with
the net cash proceeds of one or more Public Equity Offerings of common stock of
HPI at a redemption price in cash of 109.5% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date; provided that at least 75% of the initially outstanding
aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption; and provided, further, that written notice of any
such redemption shall be given by the Companies to the Holders and the Trustee
within 15 days after the consummation of any such Public Equity Offering and
such redemption shall occur within 60 days after the date of such notice and
(ii) if any Gaming Authority requires that a Holder or beneficial owner of Notes
must be licensed, qualified or found suitable under any applicable gaming law
and such Holder or beneficial owner (A) fails to apply for a license,
qualification or a finding of suitability within 30 days (or such shorter period
as may be required by the applicable Gaming Authority) after being requested to
do so by the Gaming Authority or (B) is denied such license or qualification or
not found suitable, the Companies shall have the right, at their option, (1) to
require any such Holder or beneficial owner to dispose of its Notes within 30
days (or such earlier date as may be required by the applicable Gaming
Authority) of receipt of such notice or finding by such Gaming Authority or
(2) to call for the redemption of the Notes of such Holder or beneficial owner
at a redemption price equal to the least of (x) the principal amount thereof,
(y) the price at which such Holder or beneficial owner acquired the Notes in
either such case, together with accrued interest and Liquidated Damages, if any,
to the earlier of the date of redemption or the date of the denial of license or
qualification or of the finding of unsuitability by such Gaming Authority or
(z) such other lesser amount as may be required by any Gaming Authority. The
Companies shall notify the Trustee in writing of any such redemption as soon as
practicable. The Holder or beneficial owner applying for license, qualification
or a finding of suitability must pay all costs of the licensure or investigation
for such qualification or finding of suitability.
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(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.09 and 4.12 hereof, the Companies
shall not be required to make mandatory redemption payments or sinking fund
payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.09 hereof, the Companies
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), they shall follow the procedures specified below.
The Asset Sale Offer shall comply in all respects with Regulation 14E
under the Exchange Act and the rules promulgated thereunder, including Rule
14(e)(1), and in particular, shall remain open for a period of at least 20
Business Days, except to the extent that a different period is required by
applicable law or the rules of any national exchange on which the Notes are
listed (the "Offer Period"). No later than five Business Days after the
termination of the Offer Period (the "Purchase Date"), the Companies shall
purchase the principal amount of Notes required to be purchased pursuant to
Section 4.09 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer. Payment
for any Notes so purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest or Liquidated Damages,
if any, shall be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.
Upon the commencement of an Asset Sale Offer, the Companies shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.09 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Companies default in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest or Liquidated Damages, if applicable, after the Purchase
Date;
35
(e) that any Holder electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that any Holder electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Companies, a
depositary, if appointed by the Companies, or a Paying Agent at the address
specified in the notice at least three Business Days before the Purchase
Date;
(g) that a Holder shall be entitled to withdraw its election if the
Companies, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of the Note such Holder delivered for purchase and a statement that
such Holder is withdrawing its election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Companies shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Companies so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Companies shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Companies in
accordance with the terms of this Section 3.09. The Companies, the depositary
or the Paying Agent, as the case may be, shall promptly (but in any case not
later than three Business Days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Companies for purchase, and the Companies shall
promptly issue a new Note, and the Trustee, upon written request from the
Companies shall authenticate and mail or deliver such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Companies
to the Holder thereof. The Companies shall publicly announce the results of the
Asset Sale Offer on the Purchase Date or as soon as practicable thereafter (and
in no event later than such an announcement may be required by applicable law).
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Companies shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than an Obligor, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by any Obligor in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due. The Companies shall pay all Liquidated Damages,
if any, in the same manner on the dates and in the amounts set forth in the
Registration Rights Agreement.
The Companies shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; they shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Companies shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Companies in respect of the Notes and this Indenture may
be served. The Companies shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Companies shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Companies may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Companies of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Companies shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Companies hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Companies in accordance with Section
2.03.
Section 4.03. Reports.
(a) The Companies (at their own expense) shall file with the SEC and
shall send to the Trustee within 15 days after such filing with the SEC, copies
of the quarterly, annual and current reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) of the Companies required to be filed
pursuant to Section 13 or 15(d) of the Exchange Act (without regard to whether
the Companies are subject on or after such time to
37
the requirements of such Section 13 or 15(d) of the Exchange Act unless the SEC
declines to accept such a filing), on or prior to the date on which such items
are required. The year-end financial statements contained in such reports shall
be audited by a "big six" accounting firm. Upon qualification of this Indenture
under the TIA, the Companies shall also comply with the provisions of TIA (S)
314(a).
(b) In addition, for so long as any Notes remain outstanding, the
Companies covenant and agree that they shall, during any period in which the
Companies are not subject to Section 13 or 15(d) under the Exchange Act or not
filing the reports and other information required thereby when so subject, make
available to any Holder or beneficial owner of Notes that continue to be
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of Notes from such Holder or beneficial owner the
information required pursuant to Rule 144A(d)(4) under the Securities Act upon
the request of any Holder or beneficial owner of the Notes.
(c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Companies' compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(d) For the purposes of compliance with the reporting requirements of
the foregoing subsections (a) and (b), the Companies may deliver to the Trustee
the consolidated reports of HPI.
Section 4.04. Compliance Certificate.
(a) The Companies shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Obligors and their Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Obligors have kept, observed, performed and
fulfilled their respective obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Obligors have kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and are not in default in
the performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Obligors are taking or propose to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes are prohibited or if such event
has occurred, a description of the event and what action the Obligors are taking
or propose to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Companies' independent public accountants (which shall
be a "big six" firm) that in making the examination necessary for certification
of such financial statements, nothing has come to their attention that would
lead them to believe that any Obligor has violated any provisions of Article
Four hereof or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
38
(c) The Companies shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer of the Companies becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Companies are taking or
propose to take with respect thereto.
Section 4.05. Taxes.
The Companies shall pay, and shall cause each of their Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
Each Obligor covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and each Obligor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
(a) No Obligor will, directly or indirectly, (i) declare or pay any
dividend or make any other payment or distribution (other than dividends or
distributions payable solely in Qualified Capital Stock of HPI or dividends or
distributions payable to an Obligor) in respect of any Obligor's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving any Obligor) or to the direct or indirect
holders of any Obligor's Equity Interests in their capacity as such, (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, any payment in connection with any merger or consolidation involving
any Obligor) Equity Interests of any Obligor or of any direct or indirect parent
or Affiliate of any Obligor (other than any such Equity Interests owned by any
Obligor), (iii) make any payment on or with respect to, or purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value any
Indebtedness that is subordinate in right of payment to the Notes, except a
payment of principal, interest, or other amounts required to be paid at Stated
Maturity, or (iv) make any Investment (other than Permitted Investments) (each
of the foregoing prohibited actions set forth in clauses (i), (ii), (iii) and
(iv) being referred to as a "Restricted Payment"), if at the time of such
proposed Restricted Payment or immediately after giving effect thereto, (A) a
Default or an Event of Default has occurred and is continuing or would result
therefrom, or (B) the Companies are not, or would not be, able to Incur at least
$1.00 of additional Indebtedness under the Consolidated Coverage Ratio test
described in the second paragraph of Section 4.08 hereof or (C) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of the applicable Obligor) exceeds or
would exceed the sum, without duplication, of:
39
(1) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Companies during the period (treating such period as a single accounting period)
beginning on the Issue Date and ending on the last day of the most recent fiscal
quarter of the Companies ending immediately prior to the date of the making of
such Restricted Payment for which internal financial statements are available
ending not more than 135 days prior to the date of determination, plus
(2) 100% of the aggregate net cash proceeds received by HPI from any
Person (other than from a Subsidiary of HPI) from the issuance and sale of
Qualified Capital Stock of HPI or the conversion of debt securities or
Convertible Preferred Stock into Qualified Capital Stock of HPI (to the extent
that proceeds of the issuance of such Qualified Capital Stock would be
includable in this clause upon initial issuance for cash), subsequent to the
Issue Date and on or prior to the date of the making of such Restricted Payment
(excluding any Qualified Capital Stock of HPI, the purchase price of which has
been financed directly or indirectly using funds (A) borrowed from any Obligor,
unless and until and to the extent such borrowing is repaid, or (B)
contributed, extended, guaranteed or advanced by any Obligor (including, without
limitation, in respect of any employee stock ownership or benefit plan)), plus
(3) 100% of the aggregate cash received by HPI subsequent to the Issue
Date and on or prior to the date of the making of such Restricted Payment upon
the exercise of options or warrants (whether issued prior to or after the Issue
Date) to purchase Qualified Capital Stock of HPI, plus
(4) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or Cash Equivalents or otherwise liquidated or
repaid for cash or Cash Equivalents, or any dividends, distributions, principal
repayments, or returns of capital are received by any Obligor in respect of any
Restricted Payment, valued, in each such case, the lesser of (A) the cash or
marked-to-market value of Cash Equivalents received with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus
(5) 50% of the aggregate dividends and distributions received by any
Obligor from an Unrestricted Subsidiary, to the extent not already included in
the calculation of Consolidated Net Income.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit:
(1) the payment of any dividend or the making of any distribution
within 60 days after the date of declaration of such dividend or distribution if
the making thereof would have been permitted on the date of declaration;
provided such dividend will be deemed to have been made as of its date of
declaration or the giving of such notice for purposes of this clause (1);
(2) the redemption, repurchase, retirement or other acquisition of
Capital Stock of HPI or warrants, rights or options to acquire Capital Stock of
HPI either (A) solely in exchange for shares of Qualified Capital Stock of HPI
or warrants, rights or options to acquire Qualified Capital Stock of HPI, or (B)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of HPI) of shares of Qualified Capital Stock of
HPI or warrants, rights or options to acquire Qualified Capital Stock of HPI;
provided that no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would result therefrom;
40
(3) the redemption, repurchase, retirement, defeasance or acquisition
of Indebtedness of any Obligor that is subordinate or junior in right of payment
to the Notes or the Guaranties either (A) solely in exchange for shares of
Qualified Capital Stock of HPI or for Permitted Refinancing Indebtedness, or (B)
through the application of the net proceeds of a substantially concurrent sale
for cash (other than to an Obligor) of (I) shares of Qualified Capital Stock of
HPI or warrants, rights or options to acquire Qualified Capital Stock of HPI or
(II) Permitted Refinancing Indebtedness; provided that no Default or Event of
Default shall have occurred and be continuing at the time of such Restricted
Payment pursuant to this clause (3) and would not result therefrom;
(4) repurchases by HPI of its common stock; provided that the
aggregate amount expended for all such common stock repurchases by HPI shall not
exceed $10 million on a cumulative basis commencing on the Issue Date; and
provided, further, that no Default or Event of Default shall have occurred and
be continuing at the time of such Restricted Payment or would result therefrom;
(5) (A) scheduled dividends payable in respect of the Convertible
Preferred Stock not to exceed $2 million in the aggregate in any fiscal year;
provided, that no Event of Default shall have occurred and be continuing at the
time of such Restricted Payment or would result therefrom and (B) redemption of
all of the outstanding Convertible Preferred Stock by means of conversion into
shares of HPI's common stock plus payment of accrued and unpaid dividends;
(6) redemptions, repurchases or repayments to the extent required by
any Gaming Authority having jurisdiction over any Obligor or deemed necessary by
the Board of either Company in order to avoid the suspension, revocation or
denial of a gaming license by any Gaming Authority;
(7) Investments in the Indiana Joint Venture Project, not to exceed
$70 million in the aggregate;
(8) other Restricted Payments not to exceed $20 million in the
aggregate at any time; provided no Default or Event of Default then exists or
would result therefrom;
(9) repurchases by HPI of common stock of HPI or options or warrants
or other securities exercisable or convertible into such common stock from
employees and directors of HPI or any of its subsidiaries upon death, disability
or termination of employment or directorship of such employees or directors;
(10) the payment of any amounts in respect of Equity Interests by any
Restricted Subsidiary organized as a partnership or a limited liability or other
pass-through entity, to the extent of capital contributions made to such
Restricted Subsidiary (other than capital contributions made to such Restricted
Subsidiary by the Obligors); provided, that no Default or Event of Default has
occurred and is continuing at the time of such Restricted Payment or would
result therefrom;
(11) the payment of any amounts in respect of Equity Interests by any
Restricted Subsidiary organized as a partnership or a limited liability company
or other pass-through entity (A) to the extent required by applicable law or (B)
to the extent necessary for holders thereof to pay taxes with respect to the net
income of such Restricted Subsidiary, the payment of which amounts under this
clause (B) is required by the terms of the relevant partnership agreement,
limited liability company operating agreement
41
or other governing document; provided, that except in the case of clause (A), no
Default or Event of Default has occurred and is continuing at the time of such
Restricted Payment or would result therefrom;
(12) the payment of dividends or other distributions on minority
interests in Equity Interests of Restricted Subsidiaries pursuant to
requirements under partnership agreements, membership or other organizational
agreements of other pass-through entities as in effect on the Issue Date;
provided such distributions are made pro rata with the distributions paid
contemporaneously to an Obligor or its Affiliates holding an interest in such
Equity Interests; provided, further, that no Default or Event of Default has
occurred and is continuing at the time of such Restricted Payment or would
result therefrom;
(13) Investments in Unrestricted Subsidiaries, joint ventures,
partnerships or limited liability companies consisting of conveyances of
substantially undeveloped real estate in a number of acres which, after giving
effect to any such conveyance, would not exceed in the aggregate for all such
conveyances after the Issue Date, 50% of the sum of (A) the acres of undeveloped
real estate held by the Obligors on the date of such conveyance plus (B) the
acres of undeveloped real estate previously so conveyed by the Obligors after
the Issue Date; provided, that no Default or Event of Default has occurred and
is continuing at the time of such Restricted Payment or would result therefrom;
or
(14) Investments, not to exceed $10 million in the aggregate at any
time outstanding, in any combination of (A) readily marketable equity securities
and (B) assets of the kinds described in the definition of "Cash Equivalents";
provided, that for the purposes of this clause (14), such Investments may be
made without regard to the rating requirements or maturity limitations set forth
in such definition.
(c) In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, Restricted Payments made pursuant to clauses (1)-
(5), (7) and (8) of this subsection 4.07(b) shall, in each case, be excluded
from such calculation; provided, that any amounts expended or liabilities
incurred in respect of fees, premiums or similar payments in connection
therewith shall be included in such calculation.
(d) No later than the date of making any Restricted Payment, the
applicable Obligor shall deliver to the Trustee an Officers' Certificate stating
that such Restricted Payment complies with this Section 4.07 and setting forth
in reasonable detail the basis upon which the required calculations were
computed (upon which the Trustee may conclusively rely without any investigation
whatsoever), which calculations may be based upon the Companies' latest
available internal quarterly financial statements.
(e) The Board of either Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Obligors (except to the extent repaid in cash or in kind) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
42
Section 4.08. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Companies will not, directly or indirectly, (i) Incur any
Indebtedness or issue any Disqualified Capital Stock, other than Permitted
Indebtedness, or (ii) cause or permit any of their Subsidiaries to Incur any
Indebtedness or issue any Disqualified Capital Stock or preferred stock, in each
case, other than Permitted Indebtedness.
Notwithstanding the foregoing limitations, either Company may issue
Disqualified Capital Stock, and any Obligor may Incur Indebtedness (including,
without limitation, Acquired Debt) or issue preferred stock, if (i) no Default
or Event of Default shall have occurred and be continuing on the date of the
proposed Incurrence or issuance or would result as a consequence of such
proposed Incurrence or issuance and (ii) immediately after giving pro forma
effect to such proposed Incurrence or issuance and the receipt and application
of the net proceeds therefrom, the Companies' Consolidated Coverage Ratio would
not be less, for any period of four fiscal quarters ending during the applicable
period specified in the table below, than the ratio specified opposite such
period:
Period Ratio
------ ---------
Issue Date - December 31, 1998 2.00:1.00
January 1, 1999 - December 31, 1999 2.25:1.00
January 1, 2000 and thereafter 2.50:1.00
Any Indebtedness of any Person existing at the time it becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition of capital
stock or otherwise) shall be deemed to be Incurred as of the date such Person
becomes a Restricted Subsidiary.
For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xi) of
such definition or is entitled to be Incurred pursuant to the second paragraph
of this covenant, the Companies will, in their sole discretion, classify such
item of Indebtedness in any manner that complies with this covenant and such
item of Indebtedness will be treated as having been Incurred pursuant to only
one of such clauses or pursuant to the second paragraph hereof. The Companies
may reclassify such Indebtedness from time to time in their sole discretion.
Accrual of interest and the accretion of principal amount will not be deemed to
be an Incurrence of Indebtedness for purposes of this covenant.
Section 4.09. Asset Sales.
No Obligor will, directly or indirectly, consummate or enter into a
binding commitment to consummate an Asset Sale unless (a) such Obligor, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets sold or of which other disposition
is made (as determined reasonably and in good faith by the Board of such
Obligor) and (b) at least 75% of the consideration received by such Obligor from
such Asset Sale will be cash or Cash Equivalents and will be received at the
time of the consummation of any such Asset Sale; provided, however, that the
amount of (x) any liabilities as shown on the Obligors' most recent balance
sheet (or in the notes thereto) (other than
43
(i) Indebtedness subordinate in right of payment to the Notes, (ii) contingent
liabilities, (iii) liabilities or Indebtedness to Affiliates of the Companies
and (iv) Non-Recourse Indebtedness) that are assumed by the transferee of any
such assets and (y) to the extent of the cash received, any notes or other
obligations received by such Obligor or any such Restricted Subsidiary from such
transferee that are converted by such Obligor into cash within 60 days of
receipt, will be deemed to be cash for purposes of this provision.
Notwithstanding the foregoing, an Obligor will be permitted to
consummate an Asset Sale without complying with the foregoing provisions if
(i) such Obligor receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or other property sold, issued or
otherwise disposed of (as evidenced by a resolution of the Board of such Obligor
as set forth in an Officers' Certificate delivered to the Trustee), (ii) the
transaction constitutes a "like-kind exchange" of the type contemplated by
Section 1031 of the Internal Revenue Code and (iii) the consideration for such
Asset Sale constitutes Productive Assets; provided that any non-cash
consideration not constituting Productive Assets received by such Obligor in
connection with such Asset Sale that is converted into or sold or otherwise
disposed of for cash or Cash Equivalents at any time within 360 days after such
Asset Sale and any Productive Assets constituting cash or Cash Equivalents
received by such Obligor in connection with such Asset Sale shall constitute Net
Cash Proceeds subject to the provisions set forth above.
Upon the consummation of an Asset Sale, the Issuers or the affected
Obligor will be required to apply all Net Cash Proceeds that are received from
such Asset Sale within 360 days of the receipt thereof either (A) to reinvest
(or enter into a binding commitment to invest, if such investment is effected
within 360 days after the date of such commitment) in Productive Assets or in
Asset Acquisitions not otherwise prohibited by this Indenture, or (B) to
permanently prepay or repay Indebtedness of any Obligor other than Indebtedness
that is subordinate in right of payment to the Notes. Pending the final
application of any such Net Cash Proceeds, the Obligors may temporarily reduce
revolving Indebtedness or otherwise invest such Net Cash Proceeds in any manner
not prohibited by this Indenture. On the 361st day after an Asset Sale or such
earlier date, if any, as the Board of each Issuer or the affected Obligor
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in clauses (A) or (B) of the preceding sentence (each a "Net Proceeds
Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not
been applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (A) or (B) of the preceding sentence (each a "Net Proceeds Offer
Amount"), will be applied by the Issuers to make an offer to purchase (the "Net
Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than
30 nor more than 60 days following the applicable Net Proceeds Offer Trigger
Date, from all holders on a pro rata basis, Notes in an amount equal to the Net
Proceeds Offer Amount at a price in cash equal to 100% of the aggregate
principal amount of Notes, in each case, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon on the Net Proceeds Offer Payment Date;
provided that if at any time within 360 days after an Asset Sale any non-cash
consideration received by the Issuers or the affected Obligor in connection with
such Asset Sale is converted into or sold or otherwise disposed of for cash,
then such conversion or disposition will be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof will be applied in accordance with
this covenant. To the extent that the aggregate principal amount of Notes
tendered pursuant to the Net Proceeds Offer is less than the Net Proceeds Offer
Amount, the Obligors may use any remaining proceeds of such Asset Sales for
general corporate purposes (but subject to the other terms of this Indenture).
Upon completion of a Net Proceeds Offer, the Net Proceeds Offer Amount relating
to such Net Proceeds Offer will be deemed to be zero for purposes of any
subsequent Asset Sale. In the event that a Restricted Subsidiary consummates an
Asset Sale, only that portion of the Net Cash Proceeds therefrom (including any
Net Cash Proceeds received upon the sale or other disposition of any non-
44
cash proceeds received in connection with an Asset Sale) that are distributed to
any Obligor will be required to be applied by the Obligors in accordance with
the provisions of this paragraph.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less
than $10 million the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Issue Date of the Notes from all Asset
Sales by the Obligors in respect of which a Net Proceeds Offer has not been made
aggregate at least $10 million at which time the affected Obligor will apply all
Net Cash Proceeds constituting all Net Proceeds Offer Amounts that have been so
deferred to make a Net Proceeds Offer (each date on which the aggregate of all
such deferred Net Proceeds Offer Amounts is equal to $10 million or more will be
deemed to be a Net Proceeds Offer Trigger Date). In connection with any Asset
Sale with respect to assets having a book value in excess of $10 million or as
to which it is expected that the aggregate consideration therefor be received by
the affected Obligor will exceed $10 million in value, such Asset Sale will be
approved, prior to the consummation thereof, by the Board of the applicable
Obligor.
Section 4.10. Transactions with Affiliates.
No Obligor will make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is, considered in light of any series of
related transactions of which it comprises a part, on terms that are fair and
reasonable and no less favorable to such Obligor than those that might
reasonably have been obtained at such time in a comparable transaction or series
of related transactions on an arms-length basis from a Person that is not such
an Affiliate, (b) with respect to any Affiliate Transaction involving aggregate
consideration of $3 million or more, a majority of the disinterested members of
the Board of HPI (and of any other affected Obligor, where applicable) shall,
prior to the consummation of any portion of such Affiliate Transaction, have
reasonably and in good faith determined, as evidenced by a resolution of its
Board, that such Affiliate Transaction meets the requirements of the foregoing
clause; and (c) with respect to any Affiliate Transaction involving value of $10
million or more, the Board of the applicable Obligor shall have received prior
to the consummation of any portion of such Affiliate Transaction, a written
opinion from an independent investment banking, accounting or appraisal firm of
recognized national standing that such Affiliate Transaction is on terms that
are fair to such Obligor from a financial point of view. The foregoing
restrictions will not apply to (i) reasonable fees and compensation (including
any such compensation in the form of Equity Interests not derived from
Disqualified Capital Stock, together with loans and advances, the proceeds of
which are used to acquire such Equity Interests) paid to, and indemnity provided
on behalf of, officers, directors, employees or consultants of the Obligors as
determined in good faith by the Board or senior management, (ii) any transaction
solely between or among Obligors to the extent any such transaction is otherwise
in compliance with, or not prohibited by, this Indenture or (iii) any Restricted
Payment permitted by the terms of Section 4.07 hereof.
Section 4.11. Continued Existence.
Except as otherwise provided in Article 5 hereof, each of the Obligors
shall do or shall cause to be done all things necessary to preserve and keep in
full force and effect (i) its corporate existence, and the corporate,
partnership, limited liability company or other existence of each of its
Subsidiaries, in
45
accordance with the respective organizational documents (as the same may be
amended from time to time) of each such Obligor and each such Subsidiary and
(ii) the material rights (charter and statutory), licenses and franchises of
each Obligor and each Subsidiary; provided, however, that no Obligor shall be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if its Board shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Companies or the Obligors, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.12. Offer to Repurchase Upon Change of Control.
Within 30 days after the occurrence of a Change of Control, the
Companies shall commence an offer (a "Change of Control Offer") to each Holder
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of each Holder's Notes at an offer price in cash (the "Change of Control
Payment") equal to 101%, or, in the case of a REIT Change of Control, 102%, of
the aggregate principal amount thereof to the date of repurchase plus accrued
and unpaid interest and Liquidated Damages, if any. The Change of Control Offer
shall be made in compliance with all applicable laws, including, without
limitation, Regulation 14E of the Exchange Act and the rules thereunder and all
applicable federal and state securities laws, and shall include all instructions
and materials necessary to enable Holders to tender their Notes.
Within 30 days following any Change of Control, the Companies shall
mail a notice to the Trustee and each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.12 and that all Notes tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Companies default in the payment of the Change
of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, or transfer by book-entry transfer, to the Companies, the
depository (if appointed by the Companies) or to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) that a Holder will be entitled to withdraw its election if either
Company, the depository or the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change of
Control Payment Date, a facsimile
46
transmission or letter setting forth the name of such Holder, the
principal amount of Notes delivered for purchase, and a statement that
such Holder is withdrawing its election to have the Notes purchased;
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof; and
(8) a brief summary of the circumstances and relevant facts regarding
such Change of Control.
On the Change of Control Payment Date, the Companies shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted, together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Companies. The Paying Agent shall promptly mail to each Holder
of Notes so tendered the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Companies shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
Prior to complying with the foregoing provisions of this Section 4.12,
but in any event within 90 days following the occurrence of a Change of Control,
the Companies shall either (x) repay all Obligations outstanding with respect to
Senior Debt, (y) obtain the requisite consents, if any, from the holders of
Senior Debt to permit the Companies to repurchase Notes under this Section 4.12,
or (z) deliver to the Trustee an Officers' Certificate to the effect that no
action of the kind described in clauses (x) or (y) is necessary.
Section 4.13. Limitation on Liens.
No Obligor will, directly or indirectly, create, Incur or assume any
Lien, except a Permitted Lien, securing Indebtedness that is pari passu with or
subordinate in right of payment to the Notes or the Guaranties, on or with
respect to any of its property or assets including any shares of stock or
Indebtedness of any Restricted Subsidiary, whether owned on the Issue Date or
thereafter acquired, or any income, profits or proceeds therefrom unless (x) in
the case of any Lien securing Indebtedness that is pari passu in right of
payment with the Notes or the Guaranties, the Notes or the Guaranties are
secured by a Lien on such property, assets or proceeds that is senior in
priority to or pari passu with such Lien and (y) in the case of any Lien
securing Indebtedness that is subordinate in right of payment to the Notes or
the Guaranties, the Notes or the Guaranties are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien.
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Section 4.14. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
No Obligor will, directly or indirectly, create or otherwise cause or
permit or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock, (b) make loans or advances to or pay any
Indebtedness or other obligations owed to any Obligor or Restricted Subsidiary
or (c) transfer any of its property or assets to any Obligor or to any
Restricted Subsidiary (each such encumbrance or restriction in clause (a), (b)
or (c), a "Payment Restriction"), except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) this Indenture; (3)
customary non-assignment provisions of any purchase money financing contract or
lease of any Restricted Subsidiary entered into in the ordinary course of
business of such Restricted Subsidiary; (4) any instrument governing Acquired
Debt Incurred in connection with an acquisition by any Obligor in accordance
with this Indenture as the same is in effect on the date of such Incurrence;
provided that such encumbrance or restriction is not, and will not be,
applicable to any Person, or the properties or assets of any Person, other than
the Person and its Subsidiaries or the property or assets, including directly-
related assets, such as accessions and proceeds so acquired or leased; (5) any
restriction or encumbrance contained in contracts for the sale of assets to be
consummated in accordance with this Indenture solely in respect of the assets to
be sold pursuant to such contract; (6) any restrictions of the nature described
in clause (c) above with respect to the transfer of assets secured by a Lien
that is permitted by this Indenture to be Incurred; (7) any encumbrance or
restriction contained in Permitted Refinancing Indebtedness; provided that the
provisions relating to such encumbrance or restriction contained in any such
Permitted Refinancing Indebtedness are no less favorable to the holders of the
Notes in any material respect in the good faith judgment of the Board of either
Company than the provisions relating to such encumbrance or restriction
contained in the Indebtedness being refinanced or (8) Indebtedness or
Investments existing on the Issue Date, as in effect on the Issue Date.
Section 4.15. No Subordinated Debt Senior To The Notes or Guaranties.
Notwithstanding the provisions of Section 4.08 hereof, no Obligor
shall Incur any Indebtedness that is subordinate or junior in right of payment
to any Senior Debt and senior in any respect in right of payment to the Notes or
the Guaranties.
Section 4.16. Designation Of Restricted and Unrestricted Subsidiaries.
The Board of either Company may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary at any time; provided, however, that immediately
after giving effect to such designation on a pro forma basis as if the same had
occurred at the beginning of the most recently ended full fiscal quarter of the
Obligors for which internal consolidated financial statements are available, (i)
the Obligors would be permitted to incur at least $1.00 of additional
Indebtedness under the Consolidated Coverage Ratio test and (ii) an Officers'
Certificate with respect to such designation is delivered to the Trustee within
45 days after the end of the fiscal quarter of the Obligors in which such
designation is made (or, in the case of a designation made during the last
fiscal quarter of the Companies' fiscal year, within 120 days after the end of
such fiscal year), which Officers' Certificate states the effective date of such
designation; and provided, further, that such designation shall be deemed to be
an Incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if no Default or Event of Default would result from or be in existence
following such designation.
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The Board of either Company may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default;
provided, however, that immediately after giving effect to such designation on a
pro forma basis, the Companies would be in compliance with Section 4.07 hereof.
For purposes of making such determination, all outstanding Investments by the
Obligors (except to the extent repaid in cash or in the form in which such
Investment was originally made) in the Subsidiary so designated, whether made
before or after the Issue Date, shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the greatest of (i) the net book value of such
Investments at the time of such designation, (ii) the fair market value of such
Investments at the time of such designation and (iii) the original fair market
value of such Investments at the time they were made. Such designation shall
only be permitted if such Restricted Payments would be permitted at such time
and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
Section 4.17. Material Restricted Subsidiaries To Become Guarantors.
The Companies shall cause each Person which becomes a Material
Restricted Subsidiary after the Issue Date to become a Guarantor by executing
and delivering an Addendum to Guaranty in accordance with Section 12.09 hereof,
subject to applicable Gaming Laws. The Companies shall use their best efforts
to obtain all Gaming Approvals necessary to permit their Material Restricted
Subsidiaries to become Guarantors as promptly as is practicable.
Section 4.18. Lines of Business.
No Obligor will engage in any lines of business other than the Core
Businesses.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
No Obligor may, in a single transaction or a series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of such
Obligor's properties or assets whether as an entirety or substantially as an
entirety to any Person or adopt a Plan of Liquidation unless:
(i) either (1) in the case of a consolidation or merger, such Obligor
shall be the surviving or continuing corporation or (2) the Person (if other
than such Obligor) formed by such consolidation or into which such Obligor is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition of the properties and assets of such Obligor and
of such Obligor's Subsidiaries substantially as an entirety, or in the case of a
Plan of Liquidation, the Person to which assets of such Obligor and such
Obligor's Subsidiaries have been transferred (x) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium, if any, and interest on all of the Notes and, if
applicable, the Guaranties and the performance of
49
every covenant of the Notes, this Indenture and the Registration Rights
Agreement on the part of such Obligor to be performed or observed;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness and Acquired Debt Incurred or anticipated to be Incurred in
connection with or in respect of such transaction), (1) the Obligors (including
any Person becoming an Obligor through the operation of clause (i)(2) above)
shall have a Consolidated Net Worth immediately after the transaction equal to
or greater than the Consolidated Net Worth of the Obligors immediately preceding
the transaction; and (2) (A) the Obligors (including any Person becoming an
Obligor through the operation of clause (i)(2) above) could Incur at least $1.00
of Indebtedness pursuant to the Consolidation Coverage Ratio test set forth in
Section 4.08 hereof or (B) any other Person which would, as a result of the
applicable transaction, properly classify such Obligor as a consolidated
Subsidiary in accordance with GAAP, satisfies the conditions set forth in clause
(i)(2)(x) above and also either (x) satisfies the condition set forth in clause
(i)(2)(y) above and causes each acquired Company to become a Guarantor or (y)
becomes a Guarantor, and, in either such case, after giving effect to the
assumption of the Notes or the Incurrence of Obligations under the Guaranty such
assuming or guarantying Person would be able to Incur at least $1.00 of
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.08
hereof;
(iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Debt Incurred or anticipated to be Incurred and any Lien granted in connection
with or in respect of the transaction) no Default and no Event of Default shall
have occurred or be continuing; and
(iv) such Obligor or such other Person shall have delivered to the
Trustee (A) an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance,
other disposition or Plan of Liquidation and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the applicable provisions of this Indenture and that all conditions
precedent in this Indenture relating to such transaction have been satisfied and
(B) a certificate from the Companies' independent certified public accountants
stating that such Obligor has made the calculations required by clause (ii)
above in accordance with the terms of this Indenture and the Notes after the
consummation of such transaction.
Notwithstanding clause (ii)(2) above, (A) any Restricted Subsidiary may
consolidate with, or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to an
Obligor or to a Wholly Owned Restricted Subsidiary of such Obligor (and a
Company may effect such a transaction with the other Company) and (B) any
Obligor may consolidate with or merge with or into any Person that has conducted
no business and Incurred no Indebtedness or other liabilities if such
transaction is solely for the purpose of effecting a change in the state of
incorporation of such Obligor. Notwithstanding any other provision of this
Section 5.01, the Companies may effect the REIT Restructuring if the respective
Boards of the Companies determine, in good faith and in the exercise of their
reasonable business judgment, that it is in the best interest of each of the
Companies to do so.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
any Obligor, the Capital Stock of which constitutes all or substantially all of
the properties
50
and assets of such Obligor, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the such Obligor.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of any Obligor in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which such Obligor is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made, or any successor Person described in Section 5.0(ii)(B)(x) above, shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to such Obligor shall refer instead to
the successor Person and not to such Obligor), and may exercise every right and
power of such Obligor under this Indenture with the same effect as if such
successor Person had been named as an Obligor herein; provided, however, that
the predecessor Obligor shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of such Obligor's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An event of default (an "Event of Default") shall occur upon the
happening of any of the following (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary 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 to pay interest or Liquidated Damages on any Note or
Guaranty for a period of 30 days or more after the same becomes due and payable
(whether or not such payment is prohibited by the provisions of Article 10
hereof); or
(b) the failure to pay the principal or principal amount of any Note
or Guaranty, when such principal or principal amount becomes due and payable, at
maturity, upon acceleration or redemption, pursuant to a Net Proceeds Offer, a
Change of Control Offer or otherwise (whether or not such payment is prohibited
by the provisions of Article 10 hereof); or
(c) a default in the observance or performance of any other covenant
or agreement contained in this Indenture, the Notes or the Guaranties, which
default continues for a period of 45 days after the Companies receive a written
notice stating that the notice is a "notice of default", specifying the default
and requiring that such default be remedied from the Trustee or from Holders of
not less than 25% in aggregate principal amount of outstanding Notes; or
(d) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by any Obligor (or the payment of which is
guaranteed by any Obligor), whether such Indebtedness or guarantee now exists,
or is created after the Issue Date, which default (i) is caused by a failure to
pay principal of or premium, if
51
any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10 million or more; or
(e) one or more judgments in an aggregate amount in excess of $10
million (which are not paid or covered by third-party insurance by financially
sound carriers or underwriters that have acknowledged liability in writing)
being rendered against any Obligor and such judgment or judgments remain
undischarged, or unstayed or unsatisfied for a period of 60 days after such
judgment or judgments become final and non-appealable; or
(f) as a consequence of the occurrence or continuation of any
nonscheduled event comparable to a default having the effect of an acceleration
in a transaction in which "defaults" are not designated, any Obligor has become
obligated to purchase or repay Indebtedness before its express maturity or
before its regularly scheduled dates of payment in an aggregate principal amount
of at least $10 million; or
(g) any Obligor (i) commences a voluntary case or proceeding under any
Bankruptcy Law with respect to itself, (ii) consents to the entry of a judgment,
decree or order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (iii) consents to the appointment of a custodian of it or
for substantially all of its property, (iv) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (v) makes a
general assignment for the benefit of its creditors, or (F) takes any formal
corporate action to authorize or effect any of the foregoing; or
(h) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of any Obligor in an involuntary case or proceeding
under any Bankruptcy Law, which shall (i) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in respect of any
Obligor, (ii) appoint a custodian of any Obligor or for substantially all of its
property, or (iii) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(i) any holder of at least $10 million in aggregate principal amount
of Indebtedness of any Obligor shall commence judicial proceedings to foreclose
upon assets of any Obligor having an aggregate fair market value, individually
or in the aggregate, of at least $10 million or shall have exercised any right
under applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure.
The Companies shall provide an Officers' Certificate to the Holders
and the Trustee promptly upon any Officer of either Company obtaining knowledge
of any Default or Event of Default (provided, however, that pursuant to the
reporting requirements of Section 4.04 hereof such Officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
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Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (d)(ii), (f), (g) or (h) of Section 6.01 hereof) occurs and is
continuing, then and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the then outstanding Notes may declare
the principal amount, together with any accrued and unpaid interest, premium and
Liquidated Damages on all the Notes and Guaranties then outstanding to be due
and payable, by a notice in writing to the Companies (and to the Trustee, if
given by Holders) specifying the Event of Default and that it is a "notice of
acceleration" and on the fifth Business Day after delivery of such notice the
principal amount, in either case, together with any accrued and unpaid interest,
premium and Liquidated Damages on all the Notes or the Guaranties then
outstanding will become immediately due and payable, notwithstanding anything
contained in this Indenture, the Notes or the Guaranties to the contrary. Upon
the occurrence of any Event of Default specified in clauses (d)(ii), (f), (g) or
(h) of Section 6.01 hereof, the principal amount, together with any accrued and
unpaid interest, premium and Liquidated Damages, will immediately and
automatically become due and payable, without the necessity of notice or any
other action by any Person. Holders of the Notes may not enforce this
Indenture, the Notes or the Guaranties except as provided herein.
After a declaration of acceleration, but before a judgment decree of
money due in respect to the Notes has been obtained, the Holders of not less
than a majority in aggregate principal amount of the Notes then outstanding by
written notice to the Trustee may rescind an acceleration and its consequences
if all existing Events of Default (other than the nonpayment of principal of and
premium, if any, interest and Liquidated Damages, if any, on the Notes which has
become due solely by virtue of such acceleration) have been cured or waived and
if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
If an Event of Default occurs on or after August 1, 2002 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of any
Obligor with the intention of avoiding payment of the premium that the Companies
would have had to pay had the Companies then elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 1, 2002
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of any Obligor with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 1 of the years
set forth below, as set forth below (expressed as a percentage of the principal
to the date of payment that would otherwise be due but for the provisions of
this sentence):
YEAR PERCENTAGE
------- ------------
1997..................... 9.50%
1998..................... 8.3125%
1999..................... 7.125%
2000..................... 5.9375%
2001..................... 4.75%
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Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes or Guaranties (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted solely from such
acceleration). The waiver by the holders of any Indebtedness described in
clauses (d) or (f) of Section 6.01 of the predicating default under such
Indebtedness shall be deemed a waiver of such Default or Event of Default
arising under, and a rescission of any acceleration automatically resulting from
the application of clause (d)(ii) or (f), from the effective date, during the
effective period and to the extent of, the waiver by the holders of such other
Indebtedness. Upon any waiver granted or deemed granted in accordance with the
terms hereof, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured and waived for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy (including, without limitation,
the institution of any proceeding, judicial or otherwise, with respect to the
Notes or this Indenture or for the appointment of a receiver or trustee) with
respect to this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
54
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in such Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Companies for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to any
Obligor, its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any
55
and all distributions, dividends, money, securities and other properties that
the Holders may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to the provisions of Section 10.06 hereof, pay out the money in the
following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to or at the direction of the Companies, or to such party as
a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its
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exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
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 shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Companies. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from any Obligor shall be sufficient if
signed by an Officer of such Obligor.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with any Obligor or any
Affiliate of any Obligor with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Companies' use of the proceeds from the Notes or any money
paid to any Obligor or upon any Obligor's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
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Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after the Trustee obtains knowledge
thereof. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Companies and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Companies shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Companies shall pay to the Trustee from time to time such
compensation as shall be agreed among the Companies and the Trustee for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Companies shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Obligors shall indemnify each of the Trustee and any predecessor
Trustee against any and all losses, damages, claims, liabilities or expenses,
including taxes (other than taxes based on the income of the Trustee) incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses of enforcing
this Indenture, the Registration Rights Agreement or the Notes against any
Obligor (including this Section 7.07) and defending itself against any claim
(whether asserted by any Obligor or any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Companies promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Companies shall not relieve the Obligors of their
obligations hereunder. The Obligors shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Obligors shall pay the reasonable fees and expenses of such counsel. No Obligor
need pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
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The obligations of any Obligor under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Obligor's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Companies. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Companies in writing. The Companies
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Companies shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Companies.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Companies, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Companies. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
that all sums owing to the Trustee hereunder and subject to the Lien provided in
Section 7.07 hereof have been paid. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Obligors' obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Companies.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Companies may, at the option of each of their Boards of Directors
evidenced by resolutions set forth in Officers' Certificates, at any time, elect
to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes
upon compliance with the conditions set forth below in this Article Eight.
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Section 8.02. Legal Defeasance and Discharge.
Upon the Companies' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, each Obligor shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied ("Legal Defeasance"). For
this purpose, Legal Defeasance means that the Obligors shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Companies, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due, (b) the Companies' obligations with respect to
such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Companies'
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Companies may exercise their option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Companies' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, each Obligor shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.14 and 4.15 hereof with respect to the outstanding Notes on and after the date
the conditions set forth below are satisfied ("Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Companies may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Companies' exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
(a) the Companies must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars, non-
callable Government Securities, or a combination
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thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on the
outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be and the Companies must specify whether the Notes
are being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Obligors shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Companies have
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the Issue Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(c) in the case of Covenant Defeasance, the Obligors shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the Incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such Incurrence) or insofar as an Event of
Default under Sections 6.01(g) or 6.01(h) hereof is concerned, at any time
in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which any Obligor is
a party or by which any Obligor is bound;
(f) the Obligors shall have delivered to the Trustee an Opinion of
Counsel to the effect that as of the date of such Opinion of Counsel,
assuming that no Holder would be considered an insider of any Obligor under
applicable Bankruptcy Law, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any Bankruptcy Law as
applied to any Obligor;
(g) the Obligors shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Obligors with the
intent of preferring the Holders over any other creditors of the Obligors,
or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Obligors or others; and
(h) the Obligors shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including any Obligor acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Companies shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Companies from time to time upon the request
of the Companies any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Companies, in trust for the payment of the principal of, premium or
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, premium or Liquidated Damages, if any, or
interest has become due and payable shall be paid to the Companies on its
request or (if then held by the Companies) shall be discharged from such trust;
and the Holder of such Note shall thereafter look only to the Companies for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Companies as trustees
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Companies cause to be published once, in the New York Times and
The Wall Street Journal (national editions), 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 Companies.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of an order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Obligors under this Indenture, the
Guaranties and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such
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time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Companies make any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Companies shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Obligors, when
authorized by a resolution of the Board, and the Trustee, together, may amend or
supplement this Indenture, a Guaranty or the Notes without notice to or consent
of any Holder: (i) to cure any ambiguity, defect or inconsistency; provided,
however, that such amendment or supplement does not adversely affect the rights
of any Holder; (ii) to effect the assumption by a successor Person of all
obligations of the Obligors under the Notes, the Guaranties, this Indenture and
the Registrations Rights Agreement in connection with any transaction complying
with Article 5 hereof, (iii) to provide for uncertificated Notes in addition to
or in place of Certificated Notes; (iv) to comply with any requirements of the
SEC in order to effect or maintain the qualification of this Indenture under the
TIA, or to comply with any other requirement of applicable law; (v) to make any
change that would provide any additional benefit or rights to the Holders; (vi)
to provide for issuance of Series B Senior Subordinated Notes pursuant to the
Registration Rights Agreement (which will have terms substantially identical in
all material respects to the Notes except that the transfer restrictions
contained in the Notes will be modified or eliminated, as appropriate), and
which will be treated together with any outstanding Notes as a single issue of
securities; (vii) to make any other change that does not adversely affect the
rights of any Holder under this Indenture; or (viii) to provide for the REIT
Restructuring and such related modifications to this Indenture and the Notes as
may be necessary to permit the implementation of, and the continuing operations
of HPOC and the REIT after giving effect to, the REIT Restructuring, including
the making of operating lease payments by HPOC to HPI, the distribution by HPI
of such amounts as may be required by the Internal Revenue Code and the
regulations promulgated thereunder to maintain REIT status, which would include
95% of its taxable income (excluding net capital gains) under current law, and
any other modifications to the covenants that may be necessary to comply with
the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder, or may be necessary, in the good faith determination of
the respective Boards of the Companies as evidenced by Board resolutions, to
provide for the same relative benefits and restrictions as existed under this
Indenture prior to the REIT Restructuring; provided, however, that the Obligors
shall, in any of the foregoing cases, have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that such amendment or supplement
is authorized by the provisions of this Indenture (it being understood that the
necessity for making such amendment, supplement or modification in the case of
clause (viii) above is a determination of the Boards of the Companies only); and
provided, further, that in the case of an amendment or supplement of the kind
described in clause (viii) above, the Companies shall have delivered to the
Depositary a letter in the customary form then used by the Depositary, pursuant
to which the Companies shall have agreed not to refuse to transfer securities of
the Issuers to Cede & Co., as nominee of the Depositary, or to the participants
of the Depositary, by reason of the fact that Cede & Co., Inc. or certain of the
Depositary's participants may from time to time hold, as custodian or in "street
name", 10% or more of all or any class of such securities, so long as neither
Cede & Co., Inc. nor any such participant is directly or indirectly the
beneficial owner
65
(including any securities constructively owned under applicable federal income
tax law) of any amount or percentage of such securities greater than the amount
or percentage permitted to be so owned under any restrictions on ownership set
forth in the certificates of incorporation and bylaws of the Issuers.
Notwithstanding any provision of clause (viii) above to the contrary,
no transaction described therein may be effected except in compliance with the
"Asset Sale" covenant in effect on the Issue Date or as amended in accordance
with the terms of this Indenture (excluding such clause (viii)).
Upon the request of the Companies accompanied by resolutions of their
Boards of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Obligors in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any such amended or supplemental Indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Obligors and the
Trustee may amend or supplement this Indenture (including, without limitation,
Sections 3.09, 4.09 and 4.12 hereof, and including the defined terms used
therein), any Guaranty and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a purchase of, or a tender offer or exchange offer
for, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a purchase of,
or a tender offer or exchange offer for, the Notes).
Upon the request of the Obligors accompanied by a resolution of the
Board authorizing the execution of any such amended or supplemental Indenture,
and upon the filing with the Trustee of evidence satisfactory to the Trustee of
the consent of the Holders of Notes as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Obligors in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Obligors shall mail to the Holders of the Notes affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Obligors to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver.
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Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Notes then outstanding may waive compliance in a
particular instance by any Obligor with any provision of this Indenture, any
Guaranty or the Notes. However, without (a) the consent of the Holders of at
least 66 2/3% of the outstanding principal amount of the Notes, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder)
modify the provisions of Article 10 in any manner which would have an adverse
effect on the Holders or (b) the consent of each Holder affected, an amendment
or waiver may not (with respect to any Notes held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions under Sections 3.09, 4.09 and
4.12 hereof), (iii) reduce the rate of or change the time for payment of
interest on any Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes,
(vii) waive a redemption payment with respect to any Note (other than a payment
required by Sections 3.09, 4.09 and 4.12 hereof), (viii) release any Guarantor
from its obligations under any Guaranty, or (ix) make any change in the
foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by such Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as
to its Note if the Trustee receives written notice of revocation prior to the
earlier of (i) the date of a press release or (ii) the date on which notice has
been duly given to all the Holders of the acceptance of the requisite percentage
of consents. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Companies, in
exchange for all Notes, may issue, the Guarantors may execute and the Trustee
shall thereupon authenticate new Notes that reflect the amendment, supplement or
waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Obligors may not sign an amendment or supplemental Indenture until their
Boards approve it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
Each Obligor agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Note is subordinated in right of payment, to
the extent and in the manner provided in this Article, to the prior payment in
full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, Incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt. No holder of Senior Debt need prove its
reliance on this Article 10 to enforce the provisions hereof.
Section 10.02. Certain Definitions.
"Accrued Bankruptcy Interest" means, with respect to any Senior Debt,
all interest accruing thereon after the filing of a petition or commencement of
any other proceeding by or against any Obligor under any Bankruptcy Law, in
accordance with and at the rate (including any rate applicable upon any default
or event of default, to the extent lawful) specified in the documents evidencing
or governing such Indebtedness or Hedging Obligations, whether or not the claim
for such interest is allowed as a claim after such filing in any proceeding
under such Bankruptcy Law.
"Designated Senior Debt" means any Indebtedness under the Bank Credit
Facility (which is outstanding or which the lenders thereunder have a commitment
to extend) and, if applicable, any other Senior Debt permitted under this
Indenture, the principal amount (committed or outstanding) of which is $25
million or more and that has been designated by the Companies as "Designated
Senior Debt."
"Hedging Obligations" means all obligations of the Obligors arising
under or in connection with any rate or basis swap, forward contract, commodity
swap or option, equity or equity index swap or option, bond, note or bill
option, interest rate option, foreign currency exchange transaction, cross
currency rate swap, currency option, cap, collar or floor transaction, swap
option, synthetic trust product, synthetic lease or any similar transaction or
agreement.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
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"Senior Debt" means, with respect to any Obligor, (i) all Indebtedness
of such Obligor outstanding under Credit Facilities and all Hedging Obligations
with respect thereto, (ii) any other Indebtedness permitted to be Incurred by
such Obligor under the terms of this Indenture, unless the instrument under
which such Indebtedness is Incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes and (iii) all Obligations
with respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (A) any liability for federal, state,
local or other taxes owed or owing by such Obligor, (B) any Indebtedness of such
Obligor to any of its Restricted Subsidiaries or other Affiliates, (C) any trade
payables, (D) any Indebtedness that is incurred in violation of this Indenture
and (E) Indebtedness which, when Incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without recourse to
such Obligor.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all other
Obligations relating thereto shall not be deemed to have been paid in full
unless the holders or owners thereof shall have received payment in full in cash
with respect to such Designated Senior Debt and all other Obligations with
respect thereto including, without limitation, all Accrued Bankruptcy Interest.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of any Obligor in a liquidation or
dissolution of such Obligor or in a proceeding under Bankruptcy Law relating to
such Obligor or its property, in an assignment for the benefit of creditors or
any marshaling of such Obligor's assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations in respect of such Senior Debt (including Accrued
Bankruptcy Interest) and to have all outstanding Letter of Credit
Obligations and applicable Hedging Obligations fully cash collateralized
before the Trustee or the Holders shall be entitled to receive any payment
or distribution of Obligations with respect to the Notes (except that the
Trustee or the Holders may receive payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof and
Permitted Junior Securities); and
(ii) until all Obligations with respect to Senior Debt (as provided
in clause (i) above) are paid in full and all outstanding Letter of Credit
Obligations and applicable Hedging Obligations are fully cash
collateralized, any distribution to which the Trustee or the Holders would
be entitled but for this Article, including any such distribution that is
payable or deliverable by reason of the payment of any other Indebtedness
of such Obligor being subordinated to the payment of the Notes, shall be
made to holders of Senior Debt or their Representatives, ratably in
accordance with the respective amounts of the principal of such Senior
Debt, interest (including, without limitation, Accrued Bankruptcy Interest)
thereon and all other Obligations with respect thereto (except that Holders
may receive payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 and Permitted Junior Securities hereof),
as their respective interests may appear.
Any holder of Designated Senior Debt may file any proof of claim or
similar document on behalf of the Trustee or any Holder if such a document has
not been filed by the date which is 30 days prior to the last day specified for
filing of such documents. In any proceeding under Bankruptcy Law,
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neither the Trustee nor any Holder shall initiate, or vote in support of, any
challenge to the rights of the holders of Senior Debt.
Section 10.04. Default on Designated Senior Debt.
The Obligors may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations arising under in connection with the
Notes and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof and Permitted Junior Securities)
until all principal and other Obligations arising under or in connection with
the Senior Debt have been paid in full or fully cash-collateralized, if not yet
due if:
(i) a default in the payment of any Obligations with respect to
Designated Senior Debt occurs and is continuing (including any default in
payment upon the maturity of any Designated Senior Debt by lapse of time,
acceleration or otherwise), or any judicial proceeding is pending to
determine whether any such default has occurred; or
(ii) a default or event of default (as such terms may be defined
in any agreement, indenture or other document governing such Designated
Senior Debt), other than a payment default described in subsection (i)
above, on Designated Senior Debt, including any default or event of default
that would result upon any payment or distribution with respect to the
Notes, that would cause or permit the acceleration of the maturity of the
Designated Senior Debt, occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt as to which
such default relates to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the affected
Obligors or the holders of any Designated Senior Debt. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section unless and until at
least 360 days shall have elapsed since the first day of effectiveness of
the immediately prior Payment Blockage Notice. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been waived for a
period of not less than 180 days.
If the Companies are prohibited from making payments on or
distributions in respect of the Notes or from acquiring any Notes under
subsection (i) or (ii) above, the Companies may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon:
(1) in the case of any prohibition referred to in Section 10.04(i)
hereof, the date upon which the default, event of default or other event giving
rise to such prohibition is cured or waived or shall have ceased to exist,
unless another default, event of default or other event that would prohibit such
payment, distribution or acquisition under Section 10.04(i) has occurred and is
continuing, or all Obligations in respect of such Designated Senior Debt shall
have been discharged or paid in full, or
(2) in the case of any prohibition referred to in Section 10.04(ii)
hereof, the earlier of the date on which the default, event of default or other
event giving rise to such prohibition is cured or waived or 179 days pass after
the relevant Payment Blockage Notice is received by the Trustee thereunder,
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unless the maturity of any Designated Senior Debt has been accelerated, in each
such case, if this Article otherwise permits the payment, distribution or
acquisition.
The provisions of this Article shall not be construed to prohibit the
Companies from repurchasing, redeeming, repaying or prepaying any or all of the
Notes to the extent required to do so by any Gaming Authority having authority
over any Obligor.
Section 10.05. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of Default,
the Companies shall promptly notify holders of Senior Debt of the acceleration.
Section 10.06. When Distribution Must Be Paid Over.
If, notwithstanding the provisions of Sections 10.03 and 10.04, any
direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Notes or acquisition,
repurchase, redemption, retirement or defeasance of any of the Notes shall be
made by or on behalf of any Obligor (including any payments or distribution by
any liquidating trustee or agent or other Person in a proceeding referred to in
Section 10.03) and received by the Trustee or any Holder at a time when such
payment or distribution was prohibited by the provisions of Section 10.03 or
10.04 or such payment or distribution was required to be made to holders of
Senior Debt or their Representatives, then, unless and until such payment or
distribution is no longer prohibited by Section 10.03 or 10.04, such payment or
distribution shall be received, segregated from other funds or assets and held
in trust by the Trustee or such Holder, as the case may be, for the benefit of,
and shall be immediately paid or delivered over to, those Persons known to the
Trustee or, as the case may be, such Holder, as, or identified by the Companies
as, or to a fund for the benefit of, the holders of Senior Debt or their
Representatives, ratably in accordance with the respective amounts of the
principal of such Senior Debt, interest (including, without limitation, Accrued
Bankruptcy Interest) thereon and all other Obligations with respect thereto held
or represented by each, until the principal of all Senior Debt, interest
(including Accrued Bankruptcy Interest) thereon and all other Obligations with
respect thereto have been paid in full and all outstanding Letter of Credit
Obligations and applicable Hedging Obligations have been fully cash
collateralized. Any distribution to the holders of Senior Debt or their
Representatives of assets other than cash may be held by such holders or such
Representatives as additional collateral without any duty to the Holder to
liquidate or otherwise realize on such assets or to apply such assets to any
Senior Debt or other Obligations relating thereto.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to or on behalf of
Holders or any Obligor or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee. Nothing in this Section 10.06 shall affect the obligation of any
Person other than the Trustee to hold such payment or distribution for the
benefit of, and to pay or deliver such payment or distribution over to, the
holders of Senior Debt or their Representatives.
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Section 10.07. Notice by Companies.
The Companies shall promptly notify the Trustee and the Paying Agent
of any facts known to the Companies that would cause a payment of any
Obligations with respect to the Notes to violate this Article, but failure to
give such notice shall not affect the subordination of the Notes and the
Guaranties to the Senior Debt as provided in this Article.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior
Debt that otherwise would have been made to Holders is not, as between the
Obligors and Holders, a payment by any Obligor on the Notes or the Guaranties.
Section 10.09. Relative Rights.
This Article 10 defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Article 10 shall:
(1) impair, as between the Obligors and Holders, the obligation of
the Obligors, which is absolute and unconditional, to pay principal of and
interest, including Liquidated Damages, if any, on the Notes and the
Guaranties in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Obligors other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
If any Obligor fails because of this Article to pay principal of or
interest, including Liquidated Damages, if any, on a Note or Guaranty on the due
date, the failure is still a Default or Event of Default.
Section 10.10. Subordination May Not Be Impaired by Obligors.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by any Obligor or any Holder of Notes or any holder of
Senior Debt or by the failure of any Obligor or any Holder of Notes or any
holder of Senior Debt to comply with this Indenture regardless of any knowledge
thereof that any such Holder of Notes or holder of Senior Debt, as the case may
be, may have or be otherwise charged with. The holders of Senior Debt may
extend, renew, restate, supplement, modify or amend the terms of the Senior Debt
or any Obligations with respect thereto or any security therefor and release,
sell or exchange such security and otherwise deal freely with any Obligor and
its Subsidiaries and Affiliates all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders. No provision in
any
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supplemental indenture that adversely affects the subordination of the Notes
or other provisions of this Article 10 shall be effective against the holders of
the Designated Senior Debt unless the requisite percentage of such holders have
consented thereto.
Each Holder of the Notes by its acceptance thereof: (a) acknowledges
and agrees that the holders of any Senior Debt or their Representative, in its
or their discretion, and without affecting any rights of any holder of Senior
Debt under this Article 10, may foreclose any mortgage or deed of trust covering
interest in real property securing such Senior Debt or any guarantee thereof by
judicial or nonjudicial sale, even though such action may release an Obligor or
any guarantor of such Senior Debt from further liability under such Senior Debt
or any guarantee thereof or may otherwise limit the remedies available to the
holders thereof; and (b) hereby waives any defense that such Holder may
otherwise have to the enforcement of this Article 10 by any holder of any Senior
Debt or any Representative of such holder against such Holder after or as a
result of any action, including any such defense based on any loss or impairment
of rights of subrogation.
If at any time any payment of Obligations with respect to any Senior
Debt is rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of any Obligor or otherwise, the provisions of
this Article 10 shall continue to be effective or reinstated, as the case may
be, to the same extent as though such payments had not been made.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of any Obligor referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of such
Obligor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Subject to the provisions of Section 7.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee or agent on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Debt (or a trustee or agent on behalf of any such holder). 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 Debt to
participate in any payment or distribution pursuant to this Article 10, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt 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 10, and if such evidence is not furnished, the Trustee may defer
any payment which it may be required to make for the benefit of such Person
pursuant to the terms of this Indenture pending judicial determination as to the
rights of such Person to receive such payment.
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Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least two Business Days prior to
the date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Notes to violate this Article. Only the
Companies or a Representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes.
Each Obligor, the Trustee and each Holder by their acceptance of the
Notes acknowledge that damages would be inadequate to compensate the holders of
Senior Debt for any breach or default by any Obligor, the Trustee or any such
Holder of its obligations under this Article 10, and, therefore, agree that the
holders of Senior Debt and their Representatives shall be entitled to equitable
relief, including injunctive relief and specific performance, in the enforcement
thereof.
Section 10.14. Amendments.
(a) The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt unless such
amendment or modification does not adversely affect the holders of such Senior
Debt.
(b) Without the consents of the Holders of at least 66 2/3% in
principal amount of the Notes then outstanding, no Obligor will amend, modify or
alter the terms of any indebtedness subordinated to the Notes or the Guaranties
in any way that will (i) increase the rate of or change the time for payment of
interest on any indebtedness subordinated to the Notes, (ii) increase the
principal of, advance the final maturity date of or shorten the Weighted Average
Life to Maturity of any such subordinated indebtedness, (iii) alter the
redemption provisions or the price or terms at which the Companies are required
to offer to purchase such subordinated indebtedness or (iv) amend the
subordination provisions of any documents, instruments or agreements governing
any such subordinated indebtedness, except to the extent that any of the
foregoing would be required to permit any Obligor to make a Restricted Payment
permitted by Section 4.07 hereof.
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ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Companies or the Trustee to the
other is duly given if in writing and delivered in Person or mailed by first
class mail, telecopier or overnight air courier guaranteeing next day delivery,
to the other's address:
If to the Companies:
Hollywood Park, Inc.
Hollywood Park Operating Company
1050 South Prairie Avenue
P.O. Box 369
Inglewood, CA 90306-0369
Telecopier No.: 310/671-4460
Attention: G. Michael Finnigan
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Telecopier No.: 310/203-7199
Attention: Alvin G. Segel, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
Either Company or the Trustee, by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and the
next
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Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail to its address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA (S) 313(c),
to the extent required by the TIA. Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Companies mail a notice or communication to Holders, they shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Companies,
any Guarantor, the Trustee, the Registrar and anyone else shall have the
protection of TIA (S) 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Companies to the Trustee to
take any action under this Indenture, except the initial authentication and
delivery of the Notes on the Issue Date, the Companies shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied. Such counsel
may rely on representations, warranties and certificates of other Persons
as to matters of fact, and may qualify the Opinion of Counsel with
customary assumptions and exceptions.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
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(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, agent,
manager, partner, member, incorporator or stockholder of any Obligor, in such
capacity, shall have any liability for any obligations of the Obligors under the
Notes, this Indenture or the Guaranties, or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes and the Guaranties.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES, SUBJECT TO APPLICABLE GAMING LAWS.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of any Obligor or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Obligors in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
77
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
ARTICLE 12
GUARANTY
Section 12.01. The Guaranty.
The Guarantors hereby absolutely and unconditionally, jointly and
severally guaranty and promise to pay to the Holders and the Trustee (each a
"Beneficiary"), as their respective interests appear, on demand, in lawful money
of the United States of America, any and all Guaranteed Obligations of the
Companies from time to time owed to the Beneficiaries. The term "Guaranteed
Obligations" means any and all present and future obligations and liabilities
of the Companies of every type and description to the Beneficiaries under this
Indenture, the Notes and the Registration Rights Agreement, whether for
principal, premium (if any), interest, expenses, indemnities or other amounts,
in each case whether due or not due, absolute or contingent, voluntary or
involuntary, liquidated or unliquidated, determined or undetermined, now or
hereafter existing, renewed or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred, whether or
not arising after the commencement of a proceeding under Bankruptcy Law
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding, and whether or not recovery of any such obligation
or liability may be barred by a statute of limitations or such obligation or
liability may otherwise be unenforceable. All Guaranteed Obligations shall be
conclusively presumed to have been created in reliance on this Guaranty. This
Guaranty is a continuing guaranty of the Guaranteed Obligations and, except as
otherwise provided in Section 9.02 or 12.10, may not be revoked and shall not
otherwise terminate unless and until any and all Guaranteed Obligations have
been indefeasibly paid and performed in full.
Section 12.02. Nature of Guaranty.
The liability of each Guarantor under this Guaranty is independent of
and not in consideration of or contingent upon the liability of the Companies or
any other Obligor and a separate action or actions may be brought and prosecuted
against any Guarantor, whether or not any action is brought or prosecuted
against the Companies or any other Obligor or whether either Company or any
other Obligor is joined in any such action or actions. This Guaranty given by
each Guarantor shall be construed as a continuing, absolute and unconditional
guaranty of payment (and not merely of collection) without regard to:
(a) the legality, validity or enforceability of the Notes, this
Indenture or any of the Guaranteed Obligations, or the Guaranty given by any
other Guarantor (an "Other Guaranty");
78
(b) any defense (other than payment), set-off or counterclaim that may
at any time be available to either Company or any other Obligor against, and any
right of set-off at any time held by, any Beneficiary; or
(c) any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor or any other Obligor), whether or not similar to any
of the foregoing, that constitutes, or might be construed to constitute, an
equitable or legal discharge of either Company or any other Obligor, in
bankruptcy or in any other instance.
Any payment by any Obligor or other circumstance that operates to toll
any statute of limitations applicable to such Obligor shall also operate to toll
the statute of limitations applicable to each Guarantor.
Section 12.03. Authorization.
Each Guarantor authorizes each Beneficiary, without notice to or
further assent by such Guarantor, and without affecting any Guarantor's
liability hereunder (regardless of whether any subrogation or similar right that
such Guarantor may have or any other right or remedy of such Guarantor is
extinguished or impaired or the risk to such Guarantor is materially increased),
from time to time to do any or all of the following:
(a) permit either Company to increase or create Guaranteed Obligations
(including by issuing Series B Notes), or terminate, release, compromise,
subordinate, extend, accelerate or otherwise change the amount or time, manner
or place of payment of, or rescind any demand for payment or acceleration of,
the Guaranteed Obligations or any part thereof, consent or enter into
supplemental indentures (including without limitation, one or more supplemental
indentures necessary to effect the REIT Restructuring and to permit the making
of lease payments by HPOC, distributions by the REIT and such other amendments
as may be necessary to permit the operations of the REIT) or otherwise amend the
terms and conditions of this Indenture, the Notes or the Registration Rights
Agreement or any provision thereof;
(b) take and hold collateral security from either Company or any other
Person, perfect or refrain from perfecting a Lien on any such collateral
security, and exchange, enforce, subordinate, release (whether intentionally or
unintentionally), or take or fail to take any other action in respect of, any
such collateral security or Lien or any part thereof;
(c) exercise in such manner and order as it elects in its sole
discretion, fail to exercise, waive, suspend, terminate or suffer expiration of,
any of the remedies or rights of such Beneficiary against either Company or any
other Obligor in respect of any Guaranteed Obligations or any collateral
security;
(d) release, add or settle with any Obligor in respect of the
Guaranty or the Guaranteed Obligations;
(e) accept partial payments on the Guaranteed Obligations and apply
any and all payments or recoveries from such Obligor or collateral security to
such of the Guaranteed Obligations as any Beneficiary may elect in its sole
discretion, whether or not such Guaranteed Obligations are secured or entitled
to the benefits of Support Obligations;
79
(f) refund at any time, at such Beneficiary's sole discretion, any
payments or recoveries received by such Beneficiary in respect of any Guaranteed
Obligations or collateral security; and
(g) otherwise deal with either Company, any other Obligor and any
collateral security as such Beneficiary may elect in its sole discretion.
Section 12.04. Certain Waivers.
Each Guarantor waives:
(a) the right to require the Beneficiaries to proceed against either
or both of the Companies or any other Obligor, to proceed against or exhaust any
collateral security or to pursue any other remedy in any Beneficiary's power
whatsoever and the right to have the property of either Company or any other
Obligor first applied to the discharge of the Guaranteed Obligations;
(b) all rights and benefits under applicable law purporting to reduce
a guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in other respects more burdensome than that of the principal;
(c) the benefit of any statute of limitations affecting the Guaranteed
Obligations or any Guarantor's liability hereunder;
(d) any requirement of marshaling or any other principle of election
of remedies;
(e) any right to assert against any Beneficiary any defense (legal or
equitable), set-off, counterclaim and other right that any Guarantor may now or
any time hereafter have against either or both of the Companies or any other
Obligor;
(f) presentment, demand for payment or performance (including
diligence in making demands hereunder), notice of dishonor or nonperformance,
protest, acceptance and notice of acceptance of this Guaranty, and, except to
the extent expressly required by this Indenture, the Notes or the Registration
Rights Agreement, all other notices of any kind, including (i) notice of any
action taken or omitted by the Beneficiaries in reliance hereon, (ii) notice of
any default by either Company or any other Obligor, (iii) notice that any
portion of the Guaranteed Obligations is due, (iv) notice of any action against
either Company or any other Obligor, or any enforcement of other action with
respect to any collateral security, or the assertion of any right of any
Beneficiary hereunder; and
(g) all defenses that at any time may be available to any Guarantor by
virtue of any valuation, stay, moratorium or other law now or hereafter in
effect.
Section 12.05. No Subrogation; Certain Agreements
(a) EACH GUARANTOR WAIVES ANY AND ALL RIGHTS OF SUBROGATION, INDEMNITY
OR REIMBURSEMENT, AND ANY AND ALL BENEFITS OF AND RIGHTS TO ENFORCE ANY POWER,
RIGHT OR REMEDY THAT ANY BENEFICIARY MAY NOW OR HEREAFTER HAVE IN RESPECT OF THE
GUARANTEED OBLIGATIONS AGAINST THE
80
COMPANIES OR OTHER OBLIGOR (OTHER THAN RIGHTS OF CONTRIBUTION FROM OTHER
GUARANTORS), ANY AND ALL BENEFITS OF AND RIGHTS TO PARTICIPATE IN ANY
COLLATERAL, WHETHER REAL OR PERSONAL PROPERTY, NOW OR HEREAFTER HELD BY ANY
BENEFICIARY, AND ANY AND ALL OTHER RIGHTS AND CLAIMS (WITHIN THE MEANING OF
APPLICABLE BANKRUPTCY LAW) ANY GUARANTOR MAY HAVE AGAINST EITHER COMPANY, UNDER
APPLICABLE LAW OR OTHERWISE, AT LAW OR IN EQUITY, BY REASON OF ANY PAYMENT UNDER
THE GUARANTY, WHETHER OR NOT THE GUARANTEED OBLIGATIONS SHALL HAVE BEEN PAID IN
FULL.
(b) Each Guarantor assumes the responsibility for being and keeping
itself informed of the financial condition of each other Obligor and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations that diligent inquiry would reveal, and agrees that the
Beneficiaries shall have no duty to advise any Guarantor of information
regarding such condition or any such circumstances.
Section 12.06. Bankruptcy No Discharge
(a) Without limiting Section 12.02, the Guaranty shall not be
discharged or otherwise affected by any bankruptcy, reorganization or similar
proceeding commenced by or against either Company or any other Obligor,
including (i) any discharge of, or bar or stay against collecting, all or any
part of the Guaranteed Obligations in or as a result of any such proceeding,
whether or not assented to by any Beneficiary, (ii) any disallowance of all or
any portion of any Beneficiary's claim for repayment of the Guaranteed
Obligations, (iii) any use of cash or other collateral in any such proceeding,
(iv) any agreement or stipulation as to adequate protection in any such
proceeding, (v) any failure by any Beneficiary to file or enforce a claim
against either Company or any other Obligor or its estate in any bankruptcy or
reorganization case, (vi) any amendment, modification, stay or cure of any
Beneficiary's rights that may occur in any such proceeding, (vii) any election
by any Beneficiary under Section 1111(b)(2) of the Bankruptcy Code, or (viii)
any borrowing or grant of a Lien under Section 364 of the Bankruptcy Code. Each
Guarantor understands and acknowledges that by virtue of this Guaranty, it has
specifically assumed any and all risks of any such proceeding with respect to
the Company and each other Obligor.
(b) Notwithstanding anything in this Article Twelve to the contrary,
any Event of Default under Section 6.01(d)(ii), (g) or (h) of this Indenture
shall render all Guaranteed Obligations automatically due and payable for
purposes of the Guaranty, without demand on the part of the Trustee or any
Holder.
(c) Notwithstanding anything to the contrary herein contained, the
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment, or any part thereof, of any or all of the Guaranteed
Obligations is rescinded, invalidated, declared to be fraudulent or preferential
or otherwise required to be restored or returned by any Beneficiary in
connection with any bankruptcy, reorganization or similar proceeding involving
either Company, any other Obligor or otherwise, if the proceeds of any
collateral security are required to be returned by such Beneficiary under any
such circumstances, or if any Beneficiary elects to return any such payment or
proceeds or any part thereof in its sole discretion, all as though such payment
had not been made or such proceeds not been received.
Section 12.07. Severability of Void Guaranteed Obligations Under Guaranty.
81
The obligations of any Guarantor hereunder shall be limited to the
maximum amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the Bankruptcy Code or any applicable provisions
of other Bankruptcy Law or comparable state law.
Section 12.08. Right of Contribution.
In order to provide for just and equitable contribution among the
Guarantors in connection with the Guaranty, the Guarantors have agreed among
themselves that if any Guarantor satisfies some or all of the Guaranteed
Obligations (a "Funding Guarantor"), the Funding Guarantor shall be entitled to
contribution from the other Guarantors that have positive Maximum Net Worth (as
defined below) for all payments made by the Funding Guarantor in satisfying the
Guaranteed Obligations, so that each Guarantor that remains obligated under the
Guaranty at the time that a Funding Guarantor makes such payment (a "Remaining
Guarantor") and has a positive Maximum Net Worth shall bear a portion of such
payment equal to the percentage that such Remaining Guarantor's Maximum Net
Worth bears to the aggregate Maximum Net Worth of all Remaining Guarantors that
have positive Maximum Net Worth.
As used herein, "Net Worth" means, with respect to any Guarantor, the
amount, as of any date of calculation, by which the sum of a Person's assets
(including subrogation, indemnity, contribution, reimbursement and similar
rights that such Guarantor may have notwithstanding Section 12.05), determined
on the basis of a "fair valuation" or their "fair salable value" (whichever is
the applicable test under Section 548 and other relevant provisions of the
Bankruptcy Code or other Bankruptcy Law and the relevant state fraudulent
conveyance or transfer laws) is greater than the amount that will be required to
pay all of such Person's debts, in each case matured or unmatured, contingent or
otherwise, as of the date of calculation, but excluding liabilities arising
under the Guaranty and excluding, to the maximum extent permitted by applicable
law with the objective of avoiding rendering such Person insolvent, liabilities
subordinated to the Guaranteed Obligations arising out of loans or advances made
to such Person by any other Person. "Maximum Net Worth" means, with respect to
any Guarantor, the greatest of the Net Worths calculated as of the following
dates: (A) the date on which the Guarantor becomes a Guarantor hereunder, (B)
the date on which such Guarantor expressly reaffirms the Guaranty, (C) the date
on which demand for payment is made on such Guarantor hereunder, (D) the date on
which payment is made by such Guarantor hereunder or (E) the date on which any
judgment, order or decree is entered requiring such Guarantor to make payment
hereunder or in respect hereof. The meaning of the terms "fair valuation" and
"fair salable value" and the calculation of assets and liabilities shall be
determined and made in accordance with the relevant provisions of the Bankruptcy
Code, other Bankruptcy Law and applicable state fraudulent conveyance or
transfer laws.
Section 12.09. Additional Guarantors.
Each Subsidiary that executes and delivers to the Trustee from time to
time an Addendum to Guaranty after the Issue Date shall, from and after the date
of such execution and delivery, be a Guarantor with the same effect as if such
Subsidiary had been a signatory to this Indenture, and no such Addendum to
Guaranty must be executed and delivered by any other Obligors. Each Obligor
hereby consents to the execution, delivery and effectiveness of any such
Addendum, whether or not it receives notice thereof. Subject to compliance with
applicable Gaming Laws, each Person that becomes a Material Restricted
Subsidiary of either Company after the date hereof shall automatically be deemed
to be a Guarantor for all purposes of this Indenture, notwithstanding any such
Material Restricted Subsidiary's failure to execute and deliver an Addendum to
Guaranty as required by Section 4.17 hereof.
82
Section 12.10. Release of a Guarantor.
Upon either (a) the designation of a Guarantor as an Unrestricted
Subsidiary in accordance with the provisions of Section 4.16 hereof or (b) the
substitution of a successor Person for any Guarantor as contemplated by Section
5.02 hereof, such Guarantor shall be released from, and thereupon cease to have
or accrue any further liability under, its Guaranty. Upon receipt of an
Officers' Certificate and Opinion of Counsel as to compliance with Section 4.16
and this Section 12.10, the Trustee shall deliver to the Companies an
appropriate instrument evidencing such release.
[Signatures on following page]
83
SIGNATURES
THE ISSUERS
-----------
Dated as of August 1, 1997 HOLLYWOOD PARK, INC.
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK OPERATING COMPANY
By:_________________________________________
Name:
Title:
THE GUARANTORS
--------------
BAYVIEW YACHT CLUB, INC.
By:_________________________________________
Name:
Title:
BOOMTOWN, INC.
By:_________________________________________
Name:
Title:
BOOMTOWN HOTEL & CASINO, INC.
By:_________________________________________
Name:
Title:
84
CRYSTAL PARK HOTEL & CASINO DEVELOPMENT
COMPANY, LLC
By its Manager
HP/COMPTON, INC.
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK FALL OPERATING COMPANY
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK FOOD SERVICES, INC.
By:_________________________________________
Name:
Title:
HP/COMPTON, INC.
By:_________________________________________
Name:
Title:
HP YAKAMA, INC.
By:_________________________________________
Name:
Title:
85
LOUISIANA GAMING ENTERPRISES, INC.
By:_________________________________________
Name:
Title:
LOUISIANA-I GAMING, A LOUISIANA PARTNERSHIP
IN COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By:_________________________________________
Name:
Title:
MISSISSIPPI I-GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By:_________________________________________
Name:
Title:
TURF PARADISE, INC.
By:_________________________________________
Name:
Title:
THE TRUSTEE
-----------
Dated as of August 1, 1997 THE BANK OF NEW YORK,
Trustee
By:_________________________________________
Name:
Title:
86
Title:
================================================================================
Exhibit A
(Face of Note)
[Series A] [Series B] 9 1/2% Senior Subordinated Notes due 2007
No. $__________
HOLLYWOOD PARK, INC. CUSIP NO. _____
HOLLYWOOD PARK OPERATING COMPANY
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 1, 2007.
Interest Payment Dates:
Record Dates:
ISSUERS
-------
HOLLYWOOD PARK, INC.
By: ________________________________________
Name:
Title:
HOLLYWOOD PARK OPERATING COMPANY
By: ________________________________________
Name:
Title:
================================================================================
A-1
GUARANTORS
----------
BAYVIEW YACHT CLUB, INC.
By: ________________________________________
Name:
Title:
BOOMTOWN, INC.
By: ________________________________________
Name:
Title:
BOOMTOWN HOTEL & CASINO, INC.
By: ________________________________________
Name:
Title:
CRYSTAL PARK HOTEL & CASINO
DEVELOPMENT COMPANY, LLC
By its Manager
HP/COMPTON, INC.
By: ________________________________________
Name:
Title:
HOLLYWOOD PARK FALL OPERATING COMPANY
By: ________________________________________
Name:
Title:
A-2
HOLLYWOOD PARK FOOD SERVICES, INC.
By: ________________________________________
Name:
Title:
HP/COMPTON, INC.
By: ________________________________________
Name:
Title:
HP YAKAMA, INC.
By: ________________________________________
Name:
Title:
LOUISIANA GAMING ENTERPRISES, INC.
By: ________________________________________
Name:
Title:
LOUISIANA-I GAMING, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By: ________________________________________
Name:
Title:
A-3
MISSISSIPPI I-GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By: ________________________________________
Name:
Title:
TURF PARADISE, INC.
By: ________________________________________
Name:
Title:
Dated: ________________________
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: ___________________________
Authorized Signatory
A-4
(Back of Note)
[Series A] [Series B] 9 1/2% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the Companies or their agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]/1/
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANIES THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANIES SO
REQUEST), (2) TO THE COMPANIES OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.]/2/
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
_____________
/1/ To be included only if the Note is issued in Global form.
/2/ This legend should be included on the Series A Notes and omitted from
the Series B Notes.
A-5
1. Interest. Hollywood Park, Inc., a Delaware corporation and Hollywood
Park Operating Company, a Delaware corporation (collectively, the "Companies")
jointly and severally promise (i) to pay interest on the principal amount of
this Note at 9 1/2% per annum, accruing from the Issue Date until maturity and
(ii) to pay the Liquidated Damages payable pursuant to Section 4 of the
Registration Rights Agreement referred to below. The Companies will pay
interest and Liquidated Damages semi-annually on February 1 and August 1 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be February 1,
1998. The Companies shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; they shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. Upon consummation of the
Exchange Offer, the Series A Notes accepted for exchange shall cease to accrue
interest, and all accrued and unpaid interest thereon shall, subject to the
provisions of Articles 3, 4 and 6 of the Indenture, be payable on the first
Interest Payment Date for the Series B Notes, and interest on the Series B Notes
shall accrue from the date of consummation of the Exchange Offer.
2. Method of Payment. The Companies will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on January 15 or July 15
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium, interest and Liquidated Damages at the
office or agency of the Companies maintained for such purpose within or without
the City and State of New York, or, at the option of the Companies, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders; provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire transfer
instructions to the Companies or the Paying Agent. Such payment shall be in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.
The payment by the Companies of their Obligations arising under and in
connection with the Notes to Holders is guaranteed pursuant to the Guaranty by
each Guarantor, on the terms set forth in Article 12 of the Indenture. Each of
the Guarantors hereby indorses this Note as a joint payor, intending to incur
joint and several liability within the meaning of Article 3 of the Uniform
Commercial Code as enacted and in effect in the State of New York.
3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under this Indenture, will act as Paying Agent and Registrar. The
Companies may change any Paying Agent or Registrar without notice to any Holder.
The Companies or any of their Subsidiaries may act in any such capacity.
4. Indenture. The Companies issued the Notes under an Indenture dated as
of August 1, 1997 (the "Indenture") among the Companies, the Guarantors and the
Trustee. The terms of the Notes include those
A-6
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are obligations of the
Companies limited to $125 million in aggregate principal amount.
5. Optional Redemption. The Companies shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount thereof) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
1 of the years indicated below:
YEAR PERCENTAGE
- ---- ---------
2002...................... 104.75 %
2003...................... 102.375%
2004...................... 101.188%
2005 and thereafter....... 100.000%
Notwithstanding the foregoing, (a) the Companies may, during the first 36
months after the Issue Date, redeem up to 25% of the initially outstanding
aggregate principal amount of Notes with the net cash proceeds of one or more
Public Equity Offerings of the common stock of HPI at a redemption price in cash
of 109.5% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date; provided that at
least 75% of the initially outstanding aggregate principal amount of Notes
remains outstanding immediately after the occurrence of such redemption; and
provided, further, that written notice of any such redemption shall be given by
the Companies to the Holders and the Trustee within 15 days after the
consummation of any such Public Equity Offering and redemption shall occur
within 60 days after the date of such notice and (b) if any Gaming Authority
requires that a Holder or beneficial owner of Notes must be licensed, qualified
or found suitable under any applicable gaming law and such Holder or beneficial
owner (i) fails to apply for a license, qualification or a finding of
suitability within 30 days (or such shorter period as may be required by the
applicable Gaming Authority) after being requested to do so by the Gaming
Authority or (ii) is denied such license or qualification or not found suitable,
the Companies shall have the right, at their option, (A) to require such Holder
or beneficial owner to dispose of its Notes within 30 days (or such earlier date
as may be required by the applicable Gaming Authority) of receipt of such notice
or finding by such Gaming Authority or (B) to call for the redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
least of (x) the principal amount thereof, (y) the price at which such Holder or
beneficial owner acquired the Notes, in either case, together with, accrued
interest and Liquidated Damages, if any, to the earlier of the date of
redemption or the date of the denial of license or qualification or of the
finding of unsuitability by such Gaming Authority or (z) such other lesser
amount as may be required by any Gaming Authority. The Companies shall notify
the Trustee in writing of any such redemption as soon as practicable. The
Holder or beneficial owner applying for license, qualification or a finding of
suitability must pay all costs of the licensure or investigation for such
qualification or finding of suitability.
6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Companies shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
7. Repurchase at Option of Holders.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require the Companies to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
(the "Change in Control Payment") equal to 101% or, in the case of a REIT Change
of Control, 102% of the
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aggregate principal amount of Notes, in each case, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of repurchase.
Within 30 days following any Change of Control, the Companies will mail a notice
to each Holder describing the transactions or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice.
(b) If any Obligor consummates any Asset Sale and the aggregate
amount of Net Cash Proceeds not employed as contemplated by Section 4.09 of the
Indenture within the time periods therein specified exceeds $10 million, the
Companies shall commence an offer to all Holders of Notes (an "Asset Sale
Offer") pursuant to Sections 3.09 and 4.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash equal to 100% of the principal amount of the
Notes plus accrued and unpaid interest and Liquidated Damages, if any, thereon
on the Net Proceeds Offer Payment Date in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Companies may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Companies prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Companies may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Companies need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, they need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder, the Indenture or the Notes may be amended or supplemented to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Companies' obligations to Holders in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders or that does not adversely affect the legal rights under the Indenture
of any such
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Holder, to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
provide for the REIT Restructuring and such related modifications to the
Indenture and the Notes as may be necessary to permit the implementation of, and
the continuing operations of the Companies after giving effect to, the REIT
Restructuring, including the making of operating lease payments by HPOC to HPI,
the distribution by HPI of such amounts as may be required by the Internal
Revenue Code and the regulations promulgated thereunder to maintain REIT status,
and any other modifications to the covenants that may be necessary to comply
with the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder, or as may be necessary in the good faith determination
of the respective Boards of the Companies, as evidenced by Board resolutions, to
provide for the same relative benefits and restrictions as existed under the
Indenture prior to the REIT Restructuring.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages with respect
to the Notes or the Guaranties; (ii) default in payment when due of principal of
or premium, if any, on the Notes or the Guaranties when the same becomes due and
payable at maturity, upon acceleration, redemption (including in connection with
an offer to purchase) or otherwise, (iii) failure by the Obligors for 45 days
after notice to the Companies by the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with certain agreements
in the Indenture or the Notes; (iv) default under certain other agreements
relating to Indebtedness of the Obligors which default results in the
acceleration of such Indebtedness prior to its express maturity; (v) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; and (vi) certain events of bankruptcy or insolvency. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or cross-
acceleration, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Companies are required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Companies are required upon becoming aware of any Default or
Event of Default to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Subordination of Notes and Guaranties. The Indebtedness evidenced by
this Note and the Guaranties in respect hereof is, to the extent and in the
manner provided in the Indenture, subordinate in right of payment to the prior
payment in full of all Senior Debt and subject to the other subordination
provisions set forth in Article 10 of the Indenture. The Holder of this Note, by
its acceptance hereof, (a) agrees to be bound by such provisions, (b) authorizes
and directs the Trustee, on behalf of such Holder, to take such action as may be
necessary to or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for the
purpose of taking any such action in the name of the Holder.
14. Trustee Dealings with Obligors. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Obligors or their Affiliates, and may otherwise deal with the
Obligors or their Affiliates, as if it were not the Trustee.
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15. No Recourse Against Others. No past, present or future director,
officer, employee, agent, manager, partner, member, incorporator or stockholder,
of any Obligor, as such, shall have any liability for any obligations of such
Obligor under the Notes, the Guaranties or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes and the
Guaranties.
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of August 1, 1997, among the Companies,
the Guarantors and the Initial Purchasers (the "Registration Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Companies have
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Companies will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Assistant Treasurer
Hollywood Park, Inc.
1050 South Prairie Avenue
Inglewood, California 90301
Telephone: 301-419-1609
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THE NOTES AND THE INDENTURE, SUBJECT TO APPLICABLE GAMING LAWS.
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Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Companies. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ___________________________
Your Signature: _____________________________
(Sign exactly as your name
appears on the face of this
Note)
Signature Guarantee: ___________________________________
Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Companies
pursuant to Section 4.09 or 4.12 of this Indenture, check the box below:
[_] Section 4.09 [_] Section 4.12
If you want to elect to have only part of the Note purchased by the
Companies pursuant to Section 4.09 or Section 4.12 of this Indenture, state the
amount you elect to have purchased: $___________
Date: ________________________ Your Signature: _______________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.: _______________________
Signature Guarantee:_________________________________
Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
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SCHEDULE OF EXCHANGES/3/
The following exchanges of a part of this Global Note have been made:
PRINCIPAL AMOUNT OF SIGNATURE OF
AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN THIS GLOBAL NOTE AUTHORIZED SIGNATORY
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF FOLLOWING SUCH DECREASE OF TRUSTEE OR
DATE OF EXCHANGE THIS GLOBAL NOTE THIS GLOBAL NOTE (OR INCREASE) NOTE CUSTODIAN
- ---------------- --------------------- --------------------- ----------------------- --------------------
/3/ This should be included only if the Note is issued in global form.
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EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 9 1/2% Senior Subordinated Notes due 2007 of Hollywood Park, Inc. and
Hollywood Park Operating Company
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ certificated form by ________________ (the
"Transferor").
The Transferor*:
[_] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Note held by the Depositary a
Note or Notes in certificated, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[_] has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[_] Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
[_] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
[_] Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
[_] Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, Rule 144 or Rule 904 under the Securities Act. An Opinion
of Counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By: ________________________________
Date: __________________________________
____________
* Check applicable box.
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