1
EXHIBIT 4.2
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THE MAJESTIC STAR CASINO, LLC
ISSUER
$105,000,000
12-3/4% Senior Secured Notes due 2003
with Contingent Interest
and
$105,000,000
12-3/4% Senior Exchange Secured Notes due 2003
with Contingent Interest
---------------------------
INDENTURE
---------------------------
Dated as of May 22, 1996
---------------------------
IBJ Schroder Bank & Trust Company
Trustee
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2
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) 10.03
(b)(2) 7.06
7.07
(c) 7.06
11.02
(d) 7.06
314 (a) 4.03
4.04
11.02
(b) 10.02
(c)(1) 11.04
(c)(2) 11.04
(c)(3) N.A.
(d) 10.02
10.03
10.05
(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
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
(a)(2) N.A.
(b) 6.07
(c) 2.13
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 the Indenture.
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TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS AND INCORPORATIONBY REFERENCE (1)
SECTION 1.01. DEFINITIONS (1)
SECTION 1.02. OTHER DEFINITIONS (17)
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT (18)
SECTION 1.04. RULES OF CONSTRUCTION (19)
ARTICLE 2
THE NOTES (19)
SECTION 2.01. FORM AND DATING (19)
SECTION 2.02. EXECUTION AND AUTHENTICATION (20)
SECTION 2.03. REGISTRAR AND PAYING AGENT (21)
SECTION 2.04. DEPOSITORY (21)
SECTION 2.05. HOLDER LISTS (21)
SECTION 2.06. TRANSFER AND EXCHANGE (21)
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 (30)
SECTION 2.12. DEFAULTED INTEREST (30)
SECTION 2.13. RECORD DAT . (30)
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION (30)
SECTION 3.01. NOTICES TO TRUSTEE (30)
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED (31)
SECTION 3.03. NOTICE OF REDEMPTION (32)
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION (32)
SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE (33)
SECTION 3.06. NOTES PURCHASED OR REDEEMED IN PART (33)
SECTION 3.07. OPTIONAL REDEMPTION (33)
SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW (34)
SECTION 3.09. MANDATORY REDEMPTION (34)
SECTION 3.10. REPURCHASE OFFERS (34)
ARTICLE 4
COVENANTS (36)
SECTION 4.01. PAYMENT OF NOTES (36)
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY (37)
SECTION 4.03. REPORTS (37)
(i)
5
SECTION 4.04. COMPLIANCE CERTIFICATE (38)
SECTION 4.05. TAXES (39)
SECTION 4.06. STAY, EXTENSION AND USURY LAWS (39)
SECTION 4.07. RESTRICTED PAYMENTS (39)
SECTION 4.08. RESTRICTIONS ON JOINT VENTURE (41)
SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND
ISSUANCE OF DISQUALIFIED CAPITAL STOCK (42)
SECTION 4.10. ASSET SALES (43)
SECTION 4.11. EVENT OF LOSS (44)
SECTION 4.12. TRANSACTIONS WITH AFFILIATES (46)
SECTION 4.13. LIENS (46)
SECTION 4.14. LINE OF BUSINESS (46)
SECTION 4.15. CORPORATE EXISTENCE (47)
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL (47)
SECTION 4.17. REGISTRATION RIGHTS (47)
SECTION 4.18. USE OF PROCEEDS (48)
SECTION 4.19. CASH COLLATERAL AND DISBURSEMENT AGREEMENT (48)
SECTION 4.20. GAMING LICENSES (48)
SECTION 4.21. CONSTRUCTION (49)
SECTION 4.22. MAINTENANCE OF INSURANCE (49)
SECTION 4.23. LIMITATION ON STATUS AS INVESTMENT COMPANY (50)
SECTION 4.24. COLLATERAL DOCUMENTS (50)
SECTION 4.25. FURTHER ASSURANCES (50)
SECTION 4.26. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES (51)
SECTION 4.27. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY (51)
SECTION 4.28. UNCOMPLETED PROJECT OFFER (52)
SECTION 4.29. UNCOMPLETED VESSEL OFFER (53)
SECTION 4.30. ADDITIONAL SUBSIDIARIES (54)
SECTION 4.31. RATING (54)
ARTICLE 5
SUCCESSORS (54)
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS (54)
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED (55)
ARTICLE 6
DEFAULTS AND REMEDIES (55)
SECTION 6.01. EVENTS OF DEFAULT (55)
SECTION 6.02. ACCELERATION (58)
SECTION 6.03. OTHER REMEDIES (59)
SECTION 6.04. WAIVER OF PAST DEFAULTS (60)
SECTION 6.05. CONTROL BY MAJORITY (60)
SECTION 6.06. LIMITATION ON SUITS (60)
(ii)
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SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO
RECEIVE PAYMENT (61)
SECTION 6.08. COLLECTION SUIT BY TRUSTEE (61)
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM (61)
SECTION 6.10. PRIORITIES (62)
SECTION 6.11. UNDERTAKING FOR COSTS (62)
SECTION 6.12. MANAGEMENT OF CASINOS (62)
ARTICLE 7
TRUSTEE (63)
SECTION 7.01. DUTIES OF TRUSTEE (63)
SECTION 7.02. RIGHTS OF TRUSTEE (64)
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE (65)
SECTION 7.04. TRUSTEE'S DISCLAIMER (65)
SECTION 7.05. NOTICES OF DEFAULTS (65)
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES (65)
SECTION 7.07. COMPENSATION AND INDEMNITY (66)
SECTION 7.08. REPLACEMENT OF TRUSTEE (67)
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC (68)
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION (69)
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY (69)
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE (69)
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE (69)
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE (69)
SECTION 8.03. COVENANT DEFEASANCE (70)
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE (71)
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS (72)
SECTION 8.06. REPAYMENT TO COMPANY (72)
SECTION 8.07. REINSTATEMENT (73)
SECTION 8.08. NOTE COLLATERAL (73)
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER (73)
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES (73)
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES (74)
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT (76)
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS (76)
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES (76)
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. (76)
(iii)
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ARTICLE 10
COLLATERAL AND SECURITY (77)
SECTION 10.01. SECURITY (77)
SECTION 10.02. RECORDING AND OPINIONS (77)
SECTION 10.03. RELEASE OF NOTE COLLATERAL (79)
SECTION 10.04. PROTECTION OF THE TRUST ESTATE (80)
SECTION 10.05. CERTIFICATES OF THE COMPANY (80)
SECTION 10.06. CERTIFICATES OF THE TRUSTEE (80)
SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE COLLATERAL DOCUMENTS (81)
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE
UNDER THE COLLATERAL DOCUMENTS (81)
SECTION 10.09. TERMINATION OF SECURITY INTEREST (82)
SECTION 10.10. COOPERATION OF TRUSTEE (82)
SECTION 10.11. COLLATERAL AGENT (82)
SECTION 10.12. CASH COLLATERAL ACCOUNTS (82)
SECTION 10.13. ADDITIONAL COLLATERAL (83)
SECTION 10.14. GAMING LAWS (84)
ARTICLE 11
MISCELLANEOUS (85)
SECTION 11.01. TRUST INDENTURE ACT CONTROLS (85)
SECTION 11.02. NOTICES (85)
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES (87)
SECTION 11.04. CERTIFICATE AND OPTIONS AS TO CONDITIONS PRECEDENT (87)
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION (87)
SECTION 11.06. RULES BY TRUSTEE AND AGENTS (87)
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND MEMBERS (88)
SECTION 11.08. GOVERNING LAW (88)
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS (88)
SECTION 11.10. SUCCESSORS (88)
SECTION 11.11. SEVERABILITY (88)
SECTION 11.12. COUNTERPART ORIGINALS (88)
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC (88)
(iv)
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EXHIBIT B B-1
ANNEX A-1
Form of Construction Contract Assignment
ANNEX A-2
Form of Construction Security Agreement
ANNEX A-3
Form of First Preferred Ship Mortgage
(v)
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INDENTURE dated as of May 22, 1996 by and between The Majestic Star
Casino, LLC, an Indiana limited liability company (the "Company") and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the Senior Secured
Notes due 2003 and the Exchange Senior Secured Notes due 2003 (collectively,
the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Accrual Period" shall have the meaning specified in paragraph 1 of the
Notes.
"Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into such specified Person, including Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
such specified Person and (ii) Indebtedness encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise, provided, however,
that for purposes of Section 4.12 only, beneficial ownership of 10% or more of
the voting securities of a Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company
(each referred to in this definition as a "disposition") other than (a) a
disposition of inventory or other goods held for sale or disposition in the
ordinary course of business, (b) any disposition that is a Restricted Payment
permitted under Section 4.07 hereof or that is a dividend or distribution
permitted under Section 4.07 hereof or any Investment that is not prohibited
thereunder or any disposition of cash or Cash Equivalents, (c) any single
disposition, or related series of dispositions, of assets with an aggregate
fair market value of less than $500,000, (d) any Event of Loss, (e) any lease
or sublease permitted as described under Section 4.27 hereof and (f) any sale
of all or
10
substantially all of the assets of the Company which constitutes a Change of
Control pursuant to clause (iii) of the definition thereof.
"Asset Sale Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal, state
or tribal law or ordinance for the relief of debtors.
"BDI" means Barden Development, Inc., an Indiana corporation.
"BDI Pledge Agreement" means that certain Pledge Agreement executed by
BDI, providing for a pledge of BDI's entire membership interest in the Company
in favor of the Trustee, for the ratable benefit of the Holders of the Senior
Notes, as the same may be amended in accordance with the terms thereof and this
Indenture.
"Beneficial Owner" for purposes of the definition of Change of Control has
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time.
"Berthing Agreement" means the Majestic Berthing Agreement dated as of
April 23, 1996 between the Company and the BHR Joint Venture.
"BHR Joint Venture" means Buffington Harbor Riverboats, L.L.C., a Delaware
limited liability company, in which the Company owns a 50% membership interest.
"BHR Loss Proceeds" means any proceeds distributed to the Company from the
BHR Joint Venture which arise out of an Event of Loss with respect to the BHR
Joint Venture.
"BHR Operating Agreement" means the First Amended and Restated Operating
Agreement of Buffington Harbor Riverboats, L.L.C. made as of October 31, 1995,
as amended, by and between Trump Indiana, Inc., a Delaware corporation and the
Company.
"BHR Pledge Agreement" means that certain Pledge Agreement executed by the
Company, providing for a pledge of the Company's entire membership interest in
the BHR Joint Venture in favor of the Trustee, for the ratable benefit of the
Holders of the Senior Notes, as the same may be amended in accordance with the
terms thereof and this Indenture.
"Board of Managers" means, with respect to any person that is a limited
liability company, either the sole manager of such person or, if there is more
than one manager, the managers of such person, acting as a group, or any
committee of the managers of such Person authorized, with respect to any
particular matter, to exercise the power of the managers or, if such Person is
managed by its members, the members of such Person, or
(2)
11
any committee of the members of such Person authorized, with respect to any
particular matter, to exercise the power of the members, or any successor to
any such Person.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability
on the balance sheet in accordance with GAAP.
"Capital Stock" means (i) with respect to any corporation, any and all
shares of stock issued by that corporation and (ii) with respect to any other
Person, any partnership interest, joint venture interest, limited liability
company member interest or other form of equity sharing or participation
interest, as applicable.
"Cash Collateral" shall have the meaning set forth in the Cash Collateral
and Disbursement Agreement.
"Cash Collateral Accounts" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Company, the Trustee, and NBD Bank, a Michigan
banking association, as Disbursement Agent, substantially in the form delivered
to the Trustee on the Issuance Date.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $300 million, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
or the equivalent thereof by Moody's Investors Services, Inc. or A-1 or the
equivalent thereof by Standard & Poor's Rating Group and in each case maturing
within one year after the date of acquisition and (vi) investment funds
investing solely in securities of the types described in clauses (ii) - (v)
above.
"Change of Control" means the occurrence of any of the following: (i)
prior to the completion of a bona fide underwritten initial public offering by
the Company, the failure at any time of Excluded Persons as a group to own and
control at least 40% of the voting power of the Capital Stock of the Company;
(ii) after the completion of a bona fide underwritten initial public offering
by the Company, the acquisition, in one or more transactions, of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) by (A) any
person or entity (other than an Excluded Person) or (B) any group of persons or
entities (excluding any group in which Excluded Persons beneficially own in the
aggregate at least 75% of the equity
(3)
12
and voting interests beneficially owned by the group) who constitute a group
(within the meaning of Section 13(d)(3) of the Exchange Act), in either case,
of Capital Stock of the Company such that, as a result of such acquisition,
such person, entity or group beneficially owns (within the meaning Rule 13d-3
under the Exchange Act), directly or indirectly, 30% or more of the voting
power of the Capital Stock of the Company entitled to vote in the election of
directors, managers, general partners or other similar governing bodies of the
Company then outstanding; provided, however, that no Change of Control shall be
deemed to have occurred if (A) Excluded Persons beneficially own, in the
aggregate, at such time, a greater percentage of total voting power of the
Capital Stock of the Company entitled to vote in the election of directors,
managers, general partners or other similar governing bodies of the Company
than such other person, entity or group or (B) at the time of such acquisition,
Excluded Persons (or any of them) possess the ability (by contract or
otherwise) to elect, or cause the election, of a majority of the members of the
Company's Board of Managers; (iii) any merger or consolidation of the Company
with or into any person or any sale, transfer or other conveyance, whether
direct or indirect, of all or substantially all of the assets of the Company,
on a consolidated basis, in one transaction or series of related transactions,
if immediately after giving effect to such transaction or transactions, any
person or group (other than Excluded Persons or groups including Excluded
Persons to the extent contemplated by clause (i) or (ii) above, whichever is
then applicable) is or becomes the Beneficial Owner, directly or indirectly, of
more than the percentage of the Capital Stock of the Company contemplated by
clause (i) or (ii) above, whichever is then applicable; or (iv) during any
period of 12 consecutive months after the Issuance Date, individuals who at the
beginning of any such 12-month period constituted the Board of Managers of the
Company (together with any new managers whose election by such Board or whose
nomination for election by the members of the Company was approved by a vote of
a majority of the managers then still in office who were either managers at the
beginning of such period or whose election or nomination for election was
previously so approved), cease for any reason to constitute a majority of the
managers of the Company then in office.
"Charter" means the Charter Agreement dated as of August 17, 1995 by and
among New Yorker Acquisition Corporation, the Company and President Casinos,
Inc. providing for the leasing by the Company of the Chartered Vessel, as
amended.
"Chartered Vessel" means the riverboat casino gaming vessel, U.S.O.C. No.
538911, to be chartered by the Company pursuant to the Charter.
"Collateral Agent" means any person appointed by the Trustee as a
collateral agent hereunder.
"Collateral Documents" means, collectively, the BDI Pledge Agreement, the
BHR Pledge Agreement, the Cash Collateral and Disbursement Agreement, the
Security Agreement, the Trademark Security Agreement, the First Preferred Ship
Mortgage, the Construction Security Agreement, the Construction Contract
Assignment and any other agreements, instruments, financing statements or other
documents that evidence, set forth or limit the Lien of the Trustee in the Note
Collateral.
"Commencement Date" shall have the meaning specified in paragraph 1 of the
Notes.
(4)
13
"Completion Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to any extraordinary loss plus any net loss realized in connection with
any Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) Consolidated Interest Expense of such Person
for such period, plus (c) Consolidated Depreciation and Amortization Expense of
such Person for such period to the extent such depreciation and amortization
were deducted in computing Consolidated Net Income, in each case, on a combined
basis for such Person and its Subsidiaries and determined in accordance with
GAAP.
"Consolidated Depreciation and Amortization Expense" means with respect to
any Person for any period, the total amount of consolidated depreciation and
amortization expense and other noncash charges (excluding any noncash item that
represents an accrual, reserve or amortization of a cash expenditure for a
future period) of such Person for such period as defined in accordance with
GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of (a) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was deducted in computing Consolidated Net Income (including
amortization of original issue discount and deferred financing fees, non-cash
interest payments, the interest component of Capital Lease Obligations, and net
payments (if any) pursuant to Hedging Obligations, excluding amortization of
deferred financing fees), (b) consolidated capitalized interest of such Person
and its Subsidiaries for such period, whether paid or accrued, to the extent
such expense was deducted in computing Consolidated Net Income, (c)
commissions, discounts and other fees and charges paid or accrued with respect
to letters of credit and bankers' acceptance financing, (d) to the extent not
included above, the maximum amount of interest which would have to be paid by
such Person or its Subsidiaries under a Guarantee of Indebtedness of any other
Person if such Guarantee were called upon and (e) to the extent not included
above, Contingent Interest, whether paid or accrued, to the extent such expense
was deducted in computing Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a combined basis, determined in accordance with GAAP, provided,
however, that (i) the Net Income for such period of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting, shall
be included only to the extent of the amount of dividends or distributions paid
in cash (or to the extent converted into cash) to the referent Person or a
Wholly Owned Subsidiary thereof in respect of such period, (ii) the Net Income
of any Person acquired in a pooling of interests transaction shall not be
included for any period prior to the date of such acquisition, and (iii) the
cumulative effect of a change in accounting principles shall be excluded.
(5)
14
"Consolidated Net Worth" means, with respect to any Person at any time,
the sum of the following items, as shown on the consolidated balance sheet of
such Person and its Subsidiaries as of such date (i) the common equity or
members capital of such Person and its Subsidiaries (ii) (without duplication),
(a) the aggregate liquidation preference of Preferred Stock of such Person and
its Subsidiaries (other than Disqualified Capital Stock), and (b) any increase
in depreciation and amortization resulting from any purchase accounting
treatment from an acquisition or related financing; (iii) less any goodwill
incurred subsequent to the Issuance Date; and (iv) less any write up of assets
(in excess of fair market value) after the Issuance Date, in each case on a
consolidated basis for such Person and its Subsidiaries, determined in
accordance with GAAP, provided, that in calculating Consolidated Net Worth any
gain or loss from any Asset Sale shall be excluded.
"Construction Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Construction Budget" means itemized schedules setting forth on a line
item basis all of the costs (including financing costs) estimated to be
incurred in connection with improvements to the Chartered Vessel and the
financing, design, development, construction, equipping and opening of the
Gaming Complex and the Permanent Vessel, as the case may be, by the Company, as
such schedules are delivered to the Disbursement Agent as of the Issuance Date
and as amended from time to time in accordance with the Cash Collateral and
Disbursement Agreement.
"Construction Contract Assignment" means each Assignment of Construction
Contract to be executed by the Company, to provide for the collateral
assignment of the Company's entire interest in and to each material
construction contract relating to the construction of the Permanent Vessel, in
favor of the Trustee for the ratable benefit of the Holders of the Notes,
substantially in the form attached hereto as Annex A-1.
"Construction Security Agreement" means that certain Security Agreement to
be executed by the Company, to encumber the property comprising the Permanent
Vessel while under construction, in favor of the Trustee for the ratable
benefit of the Holders of the Notes, substantially in the form attached hereto
as Annex A-2.
"Construction Supervisor" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Contingent Interest" shall have the meaning set forth in paragraph 1 of
the Notes.
"Contingent Interest Accrual" means, at any time, the total amount of
Contingent Interest accrued and unpaid through and as of such time.
"Corporate Trust Office of the Trustee" shall be at 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 Company.
(6)
15
"Default" means any event that is or with passage of time or the giving of
notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of the Notes attached
hereto as Exhibit A-1, that do not include the information called for in
footnote 1 thereof.
"Delivery" means, with respect to the Permanent Vessel, the first time
that (i) all Liens (other than Permitted Liens) relating to the construction of
the Permanent Vessel have been paid and released, (ii) the Permanent Vessel is
in a condition (including installation of furnishing, fixtures and equipment)
so that the Permanent Vessel is fit to receive guests in the ordinary course of
business and (iii) the construction supervisor for the Permanent Vessel or an
independent construction expert appointed by the Company and acceptable to the
Trustee shall have delivered a certificate to the Trustee certifying that the
Permanent Vessel is complete in all material respects in accordance with the
Plans and Specifications therefor and in compliance with all applicable laws,
ordinances and regulations (including gaming laws and ordinances) with respect
to the physical structure, health and safety, environmental and hazardous
materials, fire, equipment, security and physical operating (gaming and other)
requirements of the Permanent Vessel.
"Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.04 hereof as the
Depository 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, "Depository" shall mean or include such successor.
"Development Agreement" means the Development Agreement dated March 26,
1996 between the Company and the City of Gary.
"Disbursement Agent" means NBD Bank, a Michigan banking association, as
the Disbursement Agent under the Cash Collateral and Disbursement Agreement.
"Disqualified Capital Stock" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to May
15, 2003.
"Dollars" and "$" mean lawful money of the United States of America.
"Eligible Institution" means (a) the Trustee, (b) an affiliate of the
Trustee or (c) a commercial banking institution that is federally chartered or
organized under the laws of any state, is not affiliated with the Company, has
combined capital and surplus in excess of $500 million, and whose debt is rated
"A" (or higher) according to Standard & Poor's Rating Group or Moody's
Investors Service.
(7)
16
"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 Loss" means, with respect to any property or asset (tangible or
intangible, real or personal), any of the following: (A) any loss, destruction
or damage of such property or asset; (B) any institution of any proceedings for
the condemnation or seizure of such property or asset or for the exercise of
any right of eminent domain; (C) any actual condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such property or asset,
or confiscation of such property or asset or the requisition of the use of such
property or asset; or (D) any settlement in lieu of clause (B) or (C) above.
"Event of Loss Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the registration by the Company under the
Securities Act of the Senior Exchange Notes pursuant to a registration
statement pursuant to which the Company is obligated to offer the Holders of
all outstanding Transfer Restricted Securities the opportunity to exchange all
such outstanding Transfer Restricted Securities held by such Holders for Senior
Exchange Notes in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.
"Excluded Persons" means (a) the Company or any Subsidiary of the Company,
(b) any employee benefit plan of the Company or any trustee or similar
fiduciary holding Capital Stock of the Company for or pursuant to the terms of
any such plan, (c) BDI, (d) Barden Management, Inc., (e) Don H. Barden or his
spouse, (f) the estate of Don H. Barden, (g) any descendant of Don H. Barden or
the spouse of any such descendant, (h) the estate of any such descendant or the
spouse of any such descendant, (i) any trust or other arrangement for the
benefit of the spouse of Don H. Barden or any such descendant or the spouse of
any such descendant and (j) any charitable organization or trust established by
Don H. Barden.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness (other than Capital Lease Obligations) of the Company or its
Subsidiaries in existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of sale of the Senior Notes as described
in the Company's Offering Memorandum dated May 16, 1996, until such amounts are
repaid.
"First Preferred Ship Mortgage" means the first preferred ship mortgage on
the Permanent Vessel to be dated as of the date of Delivery of the Permanent
Vessel between the Company and the Trustee substantially in the form attached
hereto as Annex A-3.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Subsidiaries incurs,
(8)
17
assumes, guarantees or redeems any Indebtedness (other than working capital
financing) or issues Preferred Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated given pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable four-quarter
period. For purposes of making the computation referred to above,
acquisitions, dispositions and discontinued operations (as determined in
accordance with GAAP) that have been made by the Company or any of its
Subsidiaries, including all mergers, consolidations and dispositions, during
the four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date shall be calculated on a pro forma basis
assuming that all such acquisitions, dispositions, discontinued operations,
mergers, consolidations (and the reduction of any associated fixed charge
obligations resulting therefrom) had occurred on the first day of the
four-quarter reference period.
"Fixed Charges" means with respect to any Person for any period, the sum
of (a) the Consolidated Interest Expense (excluding, solely for purposes of
this definition, Contingent Interest paid or accrued) and (b) the product of
(i) all dividend payments on any series of Preferred Stock of such Person, and
(ii) a fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory income
tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Interest" shall have the meaning specified in paragraph 1 of the
Notes.
"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 have been approved by a significant segment of the accounting
profession.
"Gaming Complex" means the facilities to be constructed, owned and
operated by the BHR Joint Venture including, without limitation, all related
berthing and parking facilities, as well as any hotel or other ancillary
structures and facilities and all furniture, fixtures and equipment at any time
contained therein.
"Gaming License" means every license, franchise or other authorization
required to own, lease, operate or otherwise conduct gaming activities of the
Company, or any of its Subsidiaries, including without limitation, all such
licenses granted under the Indiana Riverboat Gambling Act, and the regulations
promulgated pursuant thereto, and other applicable federal, state, foreign or
local laws.
"Gaming Regulatory Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision, whether now or hereafter existing, or any officer
or official thereof, including, without limitation,
(9)
18
the IGC or any other agency with authority to regulate any gaming operation (or
proposed gaming operation) owned, managed or operated by the Company or any of
its Subsidiaries.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 to the form of the Note attached hereto as Exhibit A-1.
"Government Securities" means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of America
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Security
or a specific payment of principal of or interest on any such Government
Security held by such custodian for the account of the holder of such
depository receipt; provided, however, that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the custodian
in respect of the Government Security or the specific payment of principal of
or interest on the Government Security evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Harbor Lease" means the Harbor Lease Agreement dated as of June 29, 1995
by and between Trump Indiana, Inc. and Lehigh Portland Cement Company, as
assigned by Trump Indiana, Inc. to the BHR Joint Venture pursuant to the
Assignment of Harbor Lease Agreement dated as of October 31, 1995 by and
between Trump Indiana, Inc. and the BHR Joint Venture.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates.
"Holder" or "Noteholder" means a Person in whose name a Note is
registered.
"IGC" means the Indiana Gaming Commission, or any successor Gaming
Regulatory Authority thereto.
"Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money,
including accrued and unpaid Contingent Interest, (ii) evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof), (iii) representing the
(10)
19
balance deferred and unpaid of the purchase price of any property (including
Capital Lease Obligations), except any such balance that constitutes an accrued
expense or trade payable, or (iv) representing any Hedging Obligations, if and
to the extent any of the foregoing indebtedness (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP, (b) to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as
obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business) and (c) to the extent not otherwise included, Indebtedness
of another Person secured by a Lien on any asset of the referent Person
(whether or not such Indebtedness is assumed by such referent Person).
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
judgment of the Company's Board of Managers, (i) qualified to perform the task
for which it has been engaged and (ii) disinterested and independent with
respect to the Company and each Affiliate of the Company.
"Interest Reserve Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
Guarantees), advances or capital contributions (excluding commissions, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions by such Person of Equity Interests
or other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the closing date for the sale and original issuance
of the Notes.
"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 on the Notes 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 on the interest that was due for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
(11)
20
"Majestic Star Casino" means, prior to Delivery of the Permanent Vessel,
the Chartered Vessel and the Gaming Complex proposed to be constructed at
Buffington Harbor in Gary, Indiana with respect to which the Company has
applied for a Gaming License, and after Delivery of the Permanent Vessel, the
Permanent Vessel and such Gaming Complex.
"Manager of the Company" means BDI.
"Maximum Contingent Interest" shall have the meaning specified in
paragraph 1 of the Notes.
"Minimum Facilities" means, with respect to the Majestic Star Casino
Project, at least 800 operating slot machines, 40 operating table games, 2,300
usable parking spaces, adequate access to the local highway system and all
banking, coin, token, security and other ancillary equipment and facilities
necessary to operate the Majestic Star Casino on a 20 hour per day, seven days
a week basis.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries, and (ii) excluding any extraordinary
gain (but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company in respect of any Event of Loss, including, without limitation,
insurance proceeds, condemnation awards or damages awarded by any judgment, net
of the direct costs in recovery of such proceeds (including, without
limitation, legal, accounting, appraisal and insurance adjuster fees) and any
taxes paid or payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company
in respect of any Asset Sale, net of the direct costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
or brokerage fees, and sales commissions), and any relocation expenses incurred
as a result thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions), amounts required to be
applied to the repayment of Indebtedness secured by a Lien (other than the
Notes) on the asset or assets that are the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets.
"Note Collateral" means (i) a pledge of the Company's 50% membership
interest in the BHR Joint Venture pursuant to the BHR Pledge Agreement, (ii) a
pledge of BDI's entire membership interest in the Company pursuant to the BDI
Pledge Agreement, (iii) a collateral assignment of the Company's interest in
the Berthing Agreement pursuant to the Security Agreement, (iv) a pledge of all
funds in the Cash Collateral Accounts into which the proceeds from the Offering
will be placed pending their use pursuant to the Cash Collateral and
(12)
21
Disbursement Agreement, (v) a first lien on certain other assets now owned or
hereafter acquired by the Company after the Issuance Date pursuant to the
Security Agreement (other than any assets which if pledged, hypothecated or
given as collateral security would require the Trustee or a holder or
beneficial holder of the Senior Notes to be licensed, qualified or found
suitable and other than certain assets to the extent such assets are permitted
to be financed by Indebtedness permitted to be incurred pursuant to Section
4.09 and such Indebtedness is permitted to be secured pursuant to Section
4.13), (vi) a collateral assignment of the Company's rights to the service mark
"Majestic Star Casino" pursuant to the Trademark Security Agreement and (vii)
any security interest to be granted to the Trustee in accordance with Section
10.13 hereof.
"Note Custodian" means IBJ Schroder Bank & Trust Company, as custodian for
the Depository with respect to the Notes in global form, or any successor
entity thereto.
"Note to Principal Manager" means the outstanding Indebtedness of the
Company due and owing to BDI pursuant to the promissory note dated March 31,
1996 in the aggregate principal amount of $10,759,355, plus any interest
accrued thereon.
"Notes" means, collectively, the Senior Notes and, when issued under the
Exchange Offer, the Senior Exchange Notes.
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Manager of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Manager of the Company that meets the
requirements of Section 11.05 hereof.
"Operating" means, with respect to the Majestic Star Casino, the first
time that (i) all material Gaming Licenses have been granted and have not been
revoked or suspended, (ii) all Liens (other than Liens created by the
Collateral Documents or Permitted Liens) related to the construction of the
Majestic Star Casino have been paid or, if payment is not yet due or if such
payment is contested in good faith by the Company, sufficient funds remain in
the Collateral Account to discharge such Liens, (iii) the Construction
Supervisor of the Majestic Star Casino shall have delivered a certificate to
the Trustee certifying that the Majestic Star Casino is complete in all
material respects in accordance with the Plans and Specifications therefor and
all applicable building laws, ordinances and regulations, (iv) the Majestic
Star Casino is in a condition (including installation of furnishings, fixtures
and equipment) to
(13)
22
receive guests in the ordinary course of business, and (v) gaming and other
operations in accordance with applicable law are open to the general public and
are being conducted at the Majestic Star Casino with respect to at least the
Minimum Facilities for such Majestic Star Casino.
"Operating Expenses" means all operating expenses of the Company with
respect to any commercial enterprise, determined in accordance with GAAP
consistently applied. Operating Expenses shall include, without limitation:
(i) all accrued interest expense (whether or not distributed and whether or not
deposited) with respect to the Notes; (ii) depreciation and amortization and
(iii) any bond premium under this Indenture.
"Opinion of Counsel" means an opinion from legal counsel, that meets the
requirements of Section 11.05 hereof. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Payment Default" means any failure to pay when due, any principal,
premium or interest on the Notes, whether at stated maturity, upon
acceleration, upon redemption or in connection with a Repurchase Offer, in each
case, without giving effect to any grace period.
"Permanent Vessel" means the riverboat gaming vessel to be constructed by
the Company subsequent to the Offering and containing at least 36,000 square
feet of gaming space.
"Permitted Investments" means (a) any Investments in Cash Equivalents, (b)
other Investments in any Person that do not exceed in the aggregate $50,000 at
any time outstanding and (c) any Investments in a tax-exempt money market
mutual fund meeting the requirements of 17 C.F.R. Section 270.2a-7.
"Permitted Liens" means (a) existing Liens; (b) Liens created by the
Notes, the Indenture and the Collateral Documents; (c) Liens incurred in the
ordinary course of business including Liens incurred pursuant to Section 4.09
hereof; (d) Liens securing Acquired Indebtedness; provided that such Liens (i)
are not incurred in connection with, or in contemplation of the acquisition of
the property or assets acquired and (ii) do not extend to or cover any property
or assets of the Company or any Subsidiary other than the property or assets so
acquired; (e) Liens to secure certain Indebtedness that is otherwise permitted
under the Indenture and that are used to finance the cost of the property
subject thereto; provided that (i) any such Lien is created solely for the
purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including sales and excise taxes, installation
and delivery charges and other direct costs of, and other direct expenses paid
or charged in connection with, such purchase or construction) of the property
subject thereto, (ii) such Lien does not extend to or cover any other property
other than such item of property and any improvements on such item; (f)
additional Liens on assets and properties of the Company securing indebtedness
permitted to be incurred pursuant to the Indenture in an amount not to exceed
$6.0 million; (g) Liens in favor of the Trustee; (h) any replacement, extension
or renewal, in whole or in part, of any Lien described in the foregoing clauses
provided that to the extent any such clause limits the amount secured or the
assets subject to such Liens, no extension or renewal shall increase the amount
or the assets subject to such Liens; (i) Liens
(14)
23
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 or in the construction of the Majestic Star Casino
and which obligations are not expressly prohibited by the Indenture; (j)(1)
Liens for taxes, assessments or governmental charges or claims or (2) statutory
Liens of landlords, and carriers', warehousemen's, mechanics', suppliers',
materialmen's, repairmen's, crew wages, maritime or other similar Liens arising
in the ordinary course of business or in the construction of the Majestic Star
Casino, in the case of (1) and (2), with respect to amounts that either (A) are
not yet delinquent or (B) are being contested in good faith by appropriate
proceedings as to which appropriate reserves or other provisions have been made
in accordance with GAAP; and (k) easements, rights of way, navigational
servitudes, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances which do not interfere in any material respect
with the ordinary conduct of business of the Company and its Subsidiaries.
"Permitted Proceed Uses" means (i) to fund improvements to the Majestic
Star Casino in accordance with the Construction Budget, (ii) to fund capital
contributions to the BHR Joint Venture in accordance with the BHR Operating
Agreement, (iii) to fund the construction of the Permanent Vessel, (iv)
repayment of the Note to Principal Member, (v) to fund the Interest Reserve
Account in an amount equal to the first two scheduled fixed interest payments
with respect to the Notes and (vi) to fund certain other disbursements as
permitted by the Cash Collateral and Disbursement Agreement, each to be
disbursed in accordance with the Cash Collateral and Disbursement Agreement.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Plans and Specifications" means all drawings, plans and specifications
prepared by or on behalf of the Company, as the same may be amended or
supplemented from time to time, and, if required, submitted to and approved by
the appropriate Gaming Regulatory Authorities, which describe and show the
Majestic Star Casino and the labor and materials necessary for construction or
purchase thereof.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution or winding up.
"Principal Business" means the casino gaming business and any activity or
business incidental, directly related or similar thereto, or any business or
activity that is a reasonable extension, development or expansion thereof or
ancillary thereto, including any hotel, entertainment, recreation or other
activity or business designed to promote, market, support, develop, construct
or enhance the casino gaming business operated by the Company and any business
or activity that is required to meet the commitments of the Company pursuant to
the Development Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issuance Date, by and among the Company and the other party or
parties named on
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24
the signature pages thereof, substantially in the form delivered to the Trustee
on the Issuance Date.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means that certain Security Agreement to encumber
certain assets of the Company in favor of the Trustee, for the ratable benefit
of the Holders of the Notes, as the same may be amended in accordance with the
terms thereof and the Indenture.
"Semiannual Period" shall have the meaning specified in paragraph 1 of the
Notes.
"Senior Exchange Notes" means Indebtedness of the Company identical in all
material respects to the Senior Notes that are issued by the Company in
exchange for the Senior Notes pursuant to the Exchange Offer in the form
attached hereto as Exhibit A-2, as amended or modified from time to time in
accordance with the terms thereof and this Indenture.
"Senior Notes" means the Company's Senior Secured Notes due May 15, 2003
to be issued pursuant to this Indenture in the form attached hereto as Exhibit
A-1, as amended or modified from time to time in accordance with the terms
thereof and this Indenture.
"Subordinated Indebtedness" means any other Indebtedness of the Company
which is expressly by its terms subordinated in right of payment to the Notes.
"Subsidiary" means (i) any instrumentality or subdivision or subunit of
the Company that has a separate legal existence or status or whose property and
assets would not be bound by the terms of this Indenture or the Collateral
Documents or (ii) with respect to any Person, any corporation, association or
other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
(16)
25
"Trademark Security Agreement" means that certain Trademark Security
Agreement executed by the Company to encumber the "Majestic Star Casino"
service mark in favor of the Trustee, for the ratable benefit of the Holders of
the Notes, as the same may be amended in accordance with the terms thereof and
this Indenture.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Uncompleted Project Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Capital Stock, as the case may be, at any date,
the number of years obtained by dividing (a) the sum of the products obtained
by multiplying (x) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (y) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (b) the then outstanding principal amount of such
Indebtedness, as the case may be.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
"Working Capital Account" shall have the meaning set forth in the Cash
Collateral and Disbursement Agreement.
SECTION 1.02 OTHER DEFINITIONS.
Defined
Term in Section
- ------------------------------------------ ----------
"Affiliate Transaction" 4.12
"Asset Sale Offer" 4.10
"Cash Collateral Account" 10.12
"Change of Control Offer" 4.16
"Change of Control Payment" 4.16
"Collateral Investments" 10.12
"Covenant Defeasance" 8.03
"Event of Default" 6.01
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"Event of Loss Offer" 4.11
"Excess Loss Proceeds" 4.11
"Excess Proceeds" 4.10
"Exchange Offer Registration 4.17
"Lease Transaction" 4.27
"Legal Defeasance" 8.02
"Liquidated Damages" 4.17
"New Notes" 4.17
"Offer Amount" 3.10
"Offer Period" 3.10
"Paying Agent" 2.03
"Payment Cross Default" 6.01
"Project Liquidation" 4.28
"Purchase Date" 3.10
"Refinancing Indebtedness" 4.09
"Registrar" 2.03
"Registration Default" 4.17
"Repurchase Offer" 3.10
"Restricted Payments" 4.07
"Shelf Registration Statement" 4.17
"Surviving Person" 5.01
"Uncompleted Project Offer" 4.28
"Uncompleted Vessel Offer" 4.29
"Willful Default" 6.02
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.
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 the Company, and any successor obligor upon
the Notes as the case may be.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
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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 and any accounting term with respect to any Person
shall be determined on a consolidated or combined basis of such Person and all
of its Subsidiaries, 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 or the
Exchange Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time;
(7) the term "redeem" and the correlative terms "redemption" and
"redeemed" shall not include any Repurchase Offer; and
(8) unless otherwise expressly provided, the term "interest" shall
include all Fixed Interest, Contingent Interest and Liquidated Damages, if any.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-1 hereto which is incorporated in and
made a part of this Indenture. Subject to 2.07 hereof, the Senior Notes shall
be in an aggregate principal amount of $105,000,000; provided, that in the
event Senior Exchange Notes are issued hereunder pursuant to the Exchange
Offer, the principal amount of Senior Notes shall be reduced by the principal
amount of Senior Exchange Notes so issued. The Senior Exchange Notes, when and
if issued, and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A-2 hereto which is incorporated in and
made a part of this Indenture. Subject to Section 2.07 hereof, the Senior
Exchange Notes shall be in a principal amount of $105,000,000 less the
principal amount of Senior Notes that are not exchanged for Senior Exchange
Notes in the Exchange Offer. The Notes may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
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The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture, and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
The Senior Notes will initially be issued in global form, substantially in
the form of Exhibit A-1 hereto, except for those Senior Notes that will be
issued in definitive form in the name of various institutional accredited
investors. The Senior Exchange Notes also will initially be issued in global
form, substantially in the form of Exhibit A-2, except for those Senior
Exchange Notes that will be issued in definitive form in the name of various
institutional accredited investors. Such Global Notes shall be registered in
the name of the Depository for such Global Notes or the nominee of such
Depository and shall be delivered by the Trustee to such Depository or pursuant
to such Depository's instructions. So long as the Depository or its nominee is
the registered owner of such Global Notes it will be deemed the sole owner and
holder of such Global Notes for all purposes hereunder and under such Global
Notes. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made by the
Depository on account of beneficial interests in such Global Notes. Such
Global Notes 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 principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions and repurchases. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the principal 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.
Subject to the terms and conditions of this Indenture, payment of the
principal of and any interest on any Note, as the case may be, in global or
definitive form shall be made to the Holder thereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION
Two Officers of the Manager of the Company shall sign the Notes for the
Company 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 the Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers of the Manager of the Company, authenticate Notes for original issue
up to the aggregate principal amount stated in Section 2.01 of the Indenture.
The aggregate principal amount of Notes
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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 Company
to authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as
an Agent to deal with the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The office or agency where Notes may be presented for registration of
transfer or for exchange ("Registrar") and the office or agency where Notes may
be presented for payment ("Paying Agent") shall be the Corporate Trust Office
of the Trustee. The Registrar shall keep a register of the Notes and of their
transfer and exchange.
SECTION 2.04. DEPOSITORY.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depository with respect to the Global 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 Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes;
or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for registration 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
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(ii) in the case of a Definitive 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 Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a
Global Note. A Definitive Note may 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
Definitive Note, duly endorsed or accompanied by appropriate
instruments of transfer in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer
Restricted Security, a certification from the Holder
thereof (in substantially the form delivered to the
Trustee on the Issuance Date) to the effect that such
Definitive 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 Definitive 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,
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in which case the Trustee shall cancel such Definitive 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 Depository 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 Company shall issue and the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture
and the procedures of the Depository therefor, which shall include
restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a
Global Note may upon request exchange such beneficial interest
for a Definitive Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest
in a Global Note, together with, 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 Depository 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 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 Company
and to
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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
Depository and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and
the Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive 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 Depository, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes 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
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or
by the Depository or any such nominee to a successor Depository or a
nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at
any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as
Depository for the Global Notes and a successor Depository for
the Global Notes is not appointed by the Company within 90
days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of
Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall authenticate
and deliver, Definitive 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 Definitive Notes (and all Notes issued in exchange
therefor or substitution thereof) shall bear legends in
substantially the following form:
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"THE NOTE (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 NOTE 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 NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE 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 COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE 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 OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1)
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 Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security; and
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(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
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 Definitive Note that
does not bear the 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 Company shall issue and, upon
receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate Senior Exchange
Notes in exchange for Senior Notes accepted for exchange in
the Exchange Offer, which Senior Exchange Notes shall not bear
the legend set forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of such Notes, in each
case unless the Holder of such Senior Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution
of the Senior Notes or (C) a Person who is an affiliate (as
defined in rule 144) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in Global Notes have been exchanged for
Definitive 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 Definitive 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 Notes Custodian, at the direction
of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall
authenticate Definitive Notes and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant to Sections
3.07, 4.10, 4.16 and 9.05 hereto).
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(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 Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes
or Global Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global Notes
surrendered upon such registration of transfer or exchange.
(v) The Company 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 Company
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 Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section
2.02 hereof.
(j) Exchange of Senior Notes for Senior Exchange Notes. The
Senior Notes may be exchanged for Senior Exchange Notes pursuant to
the terms of the Exchange Offer. The Trustee and Registrar shall
make the exchange as follows:
(i) the Company shall present the Trustee with an
Opinion of Counsel (which may rely on an Officer's Certificate
with respect to matters of fact) to the effect that upon
issuance of the Senior Exchange Notes, the transactions
contemplated by the Exchange Offer have been consummated; and
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(ii) the Company shall present the Trustee with an
Officers' Certificate certifying that the principal amount of
Senior Notes properly tendered in the Exchange Offer which are
represented by a Global Note and the principal amount of
Senior Notes properly tendered in the Exchange Offer which are
represented by Definitive Notes (together with such Definitive
Notes), the name of each Holder of such Definitive Notes, the
principal amount properly tendered in the Exchange Offer by
each such Holder and the name and address to which Definitive
Notes for Senior Exchange Notes shall be registered and sent
for each such Holder.
(iii) The Trustee, upon receipt of such Opinion of
Counsel and Officers' Certificate and a written order signed
by two Officers of the Manager of the Company shall
authenticate (A) a Global Note for Senior Exchange Notes in
principal amount equal to the principal amount of Senior Notes
represented by a Global Note indicated in such Officers'
Certificate as having been properly tendered and (B)
Definitive Notes representing Senior Exchange Notes registered
in the names of, and in the principal amounts indicated in
such Officers' Certificate.
(iv) The Trustee shall deliver such Global Note for
Senior Exchange Notes to the Note Custodian who shall deliver
to the Trustee the Global Note for the Senior Notes for
cancellation pursuant to Section 2.11, or if the principal
amount of the Global Note for the Senior Exchange Notes is
less than the principal amount of the Global Note for Senior
Notes, the Trustee shall direct the Note Custodian to make an
endorsement on such Global Note for Senior Notes indicating a
reduction in the principal amount represented thereby.
(v) The Trustee shall deliver such Definitive Notes
for Senior Exchange Notes to the Holders thereof as indicated
in such Officers' Certificate.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Manager of the Company,
shall authenticate a replacement Note if the Trustee's requirements are met.
If required by the Trustee or the Company, an indemnity bond must be supplied
by the Holder that is sufficient in the judgment of the Trustee and the Company
to protect the Company, the Trustee, any Agent and any authenticating agent
from any loss that any of them may suffer if a Note is replaced. The Company
may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
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SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the 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.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest (including Contingent
Interest, if any) on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate 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 (including
Contingent Interest, if any).
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered
as though not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes that a Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that are to be acquired by the Company or
an Affiliate of the Company pursuant to an exchange offer, tender offer or
other agreement shall not be deemed to be owned by the Company or an Affiliate
of the Company until legal title to such Notes passes to the Company or
Affiliate of the Company, as the case may be.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two officers of the Manager of the Company. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.
Until such exchange, Holders of temporary Notes shall be entitled to all
of the benefits of this Indenture.
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SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act), unless the Company directs cancelled Notes to be returned to it. The
Company may not issue new Notes to replace Notes that is has redeemed or paid
or that have been delivered to the Trustee for cancellation. All cancelled
Notes held by the Trustee shall be destroyed and certification of their
destruction delivered to the Company at its request, unless by a written order,
signed by two Officers of the Manager of the Company, the Company shall direct
that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest (including Contingent
Interest, if any) on the Notes, the Company shall pay to the Trustee for
distribution to the Holders, the defaulted interest (including Contingent
Interest, if any), 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 Company shall notify the Trustee in writing of the amount of such
defaulted interest proposed to be paid on each Note and the date of the
proposed payment. The Company 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 Trustee in the
name and at the expense of the Company 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 (including Contingent Interest, if any) to be
paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders
entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided in TIA Section
316(c).
ARTICLE 3
OFFERS TO PURCHASE OR REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
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If the Company is required to make an offer to purchase Notes pursuant to
the provisions of Section 4.10, 4.11, 4.16, 4.28 or 4.29, it shall furnish to
the Trustee, at least 45 days before the scheduled purchase date, an Officers'
Certificate setting forth (i) the Section of this Indenture pursuant to which
the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase
price, (iv) the principal amount of the Notes to be purchased, and (v) further
setting forth a statement to the effect that (a) the Company has made an Asset
Sale and there are Excess Proceeds aggregating more than $3.0 million and the
amount of such Excess Proceeds, (b) the Company has suffered an Event of Loss
and there are Excess Loss Proceeds aggregating more than $3.0 million and the
amount of such Excess Loss Proceeds, (c) a Change of Control has occurred, (d)
that the Majestic Star Casino was not Operating by December 31, 1996 and
whether the offer to purchase is (x) an Initial Uncompleted Project Offer or
(y) a Final Uncompleted Project Offer and, in the case of clause (x), there are
funds in the Cash Collateral Accounts aggregating more than $5.0 million or (e)
that the Permanent Vessel was not Delivered by June 30, 1998.
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
shall select the Notes to be redeemed among the Holders of the Notes by lot or
in accordance with any other method the Trustee considers fair and appropriate
(and in such manner as complies with applicable legal requirements). In the
event of partial redemption in the manner provided above, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously purchased or called for redemption.
In the event that less than all of the Notes properly tendered in an Asset
Sale Offer, Event of Loss Offer, Uncompleted Project Offer or Uncompleted
Vessel Offer are to be purchased, the particular Notes to be purchased shall be
determined pro rata among Holders tendering their Notes in any such Asset Sale
Offer, Event of Loss Offer, Uncompleted Project Offer or Uncompleted Vessel
Offer promptly upon the expiration of such Asset Sale Offer, Event of Loss
Offer, Uncompleted Project Offer or Uncompleted Vessel Offer.
The Trustee shall promptly notify the Company in writing of the Notes to
be purchased or redeemed and, in the case of any Note to be partially purchased
or redeemed, the principal amount thereof to be purchased or redeemed. Notes
and portions of Notes selected shall be in amounts of $1,000 or whole multiples
of $1,000; except that if all of the Notes of a Holder are to be purchased or
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000 shall be purchased or redeemed. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes
purchased or called for redemption also apply to portions of Notes purchased or
called for redemption.
In the event the Company is required to make an Asset Sale Offer, an Event
of Loss Offer, a Change of Control Offer, an Uncompleted Project Offer or an
Uncompleted Vessel Offer pursuant to Section 4.10, 4.11, 4.16, 4.28 or 4.29
hereof, respectively, and the amount of money in the Cash Collateral Accounts
or the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be,
to be applied to such purchase would result in the purchase of a principal
amount of Notes which is not evenly divisible by $1,000, the Trustee shall
promptly
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refund to the Company the portion of such money in the Cash Collateral Accounts
or the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be,
that is not necessary to purchase the immediately lesser principal amount of
Notes that is so divisible.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Trustee shall mail or cause to be mailed, by first class mail, at the expense
of the Company, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address; provided, however, that the Company shall
have delivered to the Trustee, at least 45 days prior to the redemption date,
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
following paragraph.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
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.
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SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE.
Not later than 12:00 noon on any purchase date with respect to an offer to
purchase the Notes required hereunder or redemption date, the Company shall
deposit with the Trustee money sufficient to pay the purchase or redemption
price of, and accrued and unpaid interest, if any, on all Notes to be purchased
or redeemed on that date. The Trustee shall promptly return to the Company any
money deposited with the Trustee by the Company in excess of the amounts
necessary to pay the purchase or redemption price of, and accrued and unpaid
interest, if any, on, all Notes to be purchased or redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the purchase or redemption date, interest shall cease to accrue on
the Notes or the portions of Notes purchased or called for redemption. If a
Note is purchased or 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 Notes tendered for purchase
or called for redemption shall not be so paid upon surrender for such tender or
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the purchase or
redemption date until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case at the rate provided
in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES PURCHASED OR REDEEMED IN PART.
Upon surrender of a Note that is purchased or redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unpurchased or unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
Except as set forth herein and in Section 3.08 hereof, the Company shall
not have the option to redeem the Notes pursuant to this Section 3.07 prior to
May 15, 2000. From and after May 15, 2000, the Company shall have the option
to redeem the Notes, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth in the chart immediately below
the first paragraph of paragraph 5 of the Notes, plus accrued and unpaid
interest (including Contingent Interest and Liquidated Damages, if any),
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 15 of the years indicated in such chart.
The Company shall also have the option to redeem up to $12.0 million
principal amount of the Notes on and after May 15, 1997 and prior to May 15,
1998 solely out of any amounts remaining in the Interest Reserve Account at the
redemption price (expressed at a percentage of principal amount) set forth in
the second paragraph of paragraph 5 of the Notes, plus accrued and unpaid
interest (including Contingent Interest and Liquidated Damages, if any), to the
applicable redemption date.
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Any redemption pursuant to this Section 3.07 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW.
(a) Notwithstanding any other provisions of this Article 3, if any Gaming
Regulatory Authority requires that a Holder or beneficial owner of the Notes
must be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, at its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
by such Holder of such finding by the applicable Gaming Regulatory Authority
(or such earlier date as may be required by the applicable Gaming Regulatory
Authority) or (ii) to call for redemption of the Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the price at which such Holder or beneficial owner acquired
the Notes, together with, in either case, accrued and unpaid interest
(including Contingent Interest and Liquidated Damages, if any), to the earlier
of the date of redemption or the date of the finding of unsuitability by such
Gaming Regulatory Authority, which may be less than 30 days following the
notice of redemption if so ordered by such Gaming Regulatory Authority.
(b) In connection with any redemption pursuant to this Section 3.08, and
except as may be required by a Gaming Regulatory Authority, the Company shall
by required to comply with Sections 3.01 through 3.06 hereof, except that such
redemption shall be made only as to such Holder.
(c) The Company shall not be required to pay or reimburse any Holder or
beneficial owner of Notes who is required to apply for any such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expenses
shall be the obligation of such Holder or beneficial owner.
SECTION 3.09. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or sinking
fund payments prior to maturity with respect to the Notes.
SECTION 3.10. REPURCHASE OFFERS.
In the event that, pursuant to Section 4.10, 4.11, 4.16, 4.28 or 4.29
hereof, the Company shall be required to commence an offer to all Holders to
purchase Notes (a "Repurchase Offer"), it shall follow the procedures specified
below.
The Repurchase Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by
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applicable law (the "Offer Period"). No later than five Business Days after
the termination of the Offer Period (the "Purchase Date"), the Company shall
purchase at the Purchase Price (as determined in accordance with Section 4.10,
4.11, 4.16, 4.28 or 4.29 hereof, as the case may be) the principal amount of
Notes required to be purchased pursuant to Section 4.10, 4.11, 4.16, 4.28 or
4.29 hereof, as the case may be (the "Offer Amount"), or, if less than the
Offer Amount has been properly tendered, all Notes properly tendered in
response to the Repurchase Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest, if
any, shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to the Holders who tender Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of the Repurchase Offer, shall state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.10
and Section 4.10, 4.11, 4.16, 4.28 or 4.29 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not properly tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Repurchase Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary, if appointed by the Company, or Paying
Agent at the address specified in the notice at least three days before the
Purchase Date;
(f) that Holders shall be entitled to withdraw their tendered Notes and
their election if the Company, the depositary or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his tendered Notes and his election
to have such Note purchased; and
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(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Notes shall be selected for purchase
pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes were
purchased only in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, pursuant to the terms of Section 3.02 hereof, the Offer
Amount of Notes or portions thereof properly tendered pursuant to the
Repurchase Offer, or if less than the Offer Amount has been properly tendered,
all Notes properly tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.10. The
Company, the Depository or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Purchase Date) mail or
deliver to each tendering Holder an amount equal to the purchase price of the
Notes properly tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Notes surrendered. Any Notes not accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company shall
publicly announce the results of the Repurchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Section 3.01 through 3.06 hereof to the extent applicable.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid to the Trustee for the benefit
of the Holders of the Notes the principal of, premium, if any, and interest on
the Notes on the dates and in the manner provided in the Notes and this
Indenture. Principal, premium, if any, and interest shall be considered paid
on the date due if the Trustee holds as of 12:00 noon Eastern Time, on the due
date, money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. If interest payable on the Notes includes Contingent
Interest, the Company shall provide a calculation of such Contingent Interest
in reasonable detail to the Trustee in the form of an Officer's Certificate at
the time of depositing the amount of such Contingent Interest with the Trustee.
If interest payable on the Notes does not include Contingent Interest, the
Company shall provide notice to the Trustee to that effect.
The Company 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; it shall pay interest
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(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest (without regard to any applicable grace
period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain the Corporate Trust Office of the Trustee in
the Borough of Manhattan, the City of New York, as the office or agency where
Notes may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served.
SECTION 4.03. REPORTS.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the SEC all information, documents and reports specified in Section 13 or
15(d) of the Exchange Act.
The Company shall file with the Trustee and provide Holders of Notes,
within 15 days after it files them with the SEC (or, if the SEC does not permit
such filings, within 15 days after it would have been required to make such
filings had the Company been subject to such filing requirements), copies of
its annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rule or
regulation prescribe) which the Company is required to file (or would have been
required to file if the Company was subject to such requirements) with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and
quarterly basis on forms provided for such annual and quarterly reporting
pursuant to rules and regulations promulgated by the SEC, the Company shall be
required to continue to file with the SEC (unless the SEC will not accept such
reports) and, at the Company's expense, provide the Trustee, the Holders,
securities analysts and prospective investors (upon request) with copies of the
following: (a) within 90 days after the end of each fiscal year, annual
reports on Form 10-K (or any successor or comparable form) containing the
information required to be contained therein (or required in such successor or
comparable form); (b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or
comparable form); and (c) promptly from time to time after the occurrence of an
event required to be therein reported, such other reports on Form 8-K (or any
successor or comparable form) containing the information required to be
contained therein (or required in any successor or comparable form); provided,
however, that the Company shall not be so obligated to file such reports with
the SEC if the SEC does not permit such filings. The Company shall also
include in such reports the anticipated initial completion date of the Majestic
Star Casino and the anticipated date of Delivery of the Permanent Vessel and,
in the case of quarterly reports, the Contingent Interest paid, the Contingent
Interest Accrual amount and Consolidated Cash Flow with respect to the most
recently ended fiscal quarter of the Company, and in the case of annual
reports, the audited Contingent Interest paid, the Contingent Interest Accrual
amount and audited Consolidated Cash Flow for the most recently ended fiscal
year and for each of the Semiannual Periods ending in such fiscal year.
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Within 15 days after receiving notice that the IGC has commenced any
proceeding seeking the suspension or revocation of the Company's owner license
or seeking the imposition of a civil penalty against the Company exceeding
$100,000, the Company shall file with the Trustee and provide to Holders of
Notes, copies of any such notice unless such proceeding against the Company is
terminated by the IGC without imposition of any material sanction within such
15-day period.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company during the preceding fiscal year has been made under
the supervision of the signing Officers of the Company with a view to
determining whether the Company and each obligor on the Notes under this
Indenture is in compliance with this Indenture and each Collateral Document and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company and each such obligor is in compliance
with each and every covenant contained in this Indenture and each Collateral
Document and is not in default in the performance or observance of any other
terms, provisions and conditions of this Indenture or any Collateral Document
(or, if a Default or Event of Default shall exist, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action the
Company or such obligor, as the case may be, is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred that remains in existence by reason of which payments on account of
the principal of or interest (including Contingent Interest, if any) on the
Notes is prohibited or if such event exists, a description of the event and
what action the Company or such obligor, as the case may be, is taking or
proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company is in
violation of any provisions of Article Four or Article Five hereof or, if any
such violation exists, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, within five Business Days upon any Officer becoming
aware of any Default or Event of Default or any event of default under any
document, instrument or agreement representing Indebtedness of the Company, an
Officers' Certificate specifying such Default or Event of Default and what
actions the Company is taking or proposes to take with respect thereto.
(d) Immediately upon the Majestic Star Casino becoming Operating, the
Company shall deliver promptly to the Trustee an Officers' Certificate which
shall state that (i) the
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Majestic Star Casino is Operating and (ii) the date on which the Majestic Star
Casino became Operating.
(e) Immediately upon Delivery of the Permanent Vessel, the Company shall
deliver promptly to the Trustee an Officers' Certificate which shall state that
(i) the Permanent Vessel is Delivered and (ii) the date on which the Permanent
Vessel was Delivered.
SECTION 4.05. TAXES.
The Company shall 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 payments is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company 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 where
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it 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) Except as set forth in paragraph (b) below, the Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly: (i) declare
or pay any dividend or make any distribution in either case on account of the
Company's or any of its Subsidiaries' Equity Interests (other than (A)
dividends or distributions payable in Equity Interests (other than Disqualified
Capital Stock) or (B) dividends or distributions by a Subsidiary of the
Company, provided that to the extent that a portion of such dividend or
distribution is paid to a holder other than the Company or a Subsidiary, such
portion of such dividend or distribution is not greater than such holder's pro
rata aggregate equity interest in such Subsidiary); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or
any of its Subsidiaries or any other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Wholly Owned Subsidiary);
(iii) purchase, redeem or otherwise acquire or retire any Subordinated
Indebtedness of the Company or any of its Subsidiaries; or (iv) make any
Restricted Investment (all such dividends, distributions, purchases,
redemptions or Investments being collectively referred to as "Restricted
Payments"); if, at the time of such actions, or after giving effect thereto:
(1) an Event of Default or Default shall have occurred and be continuing
or would occur as a consequence thereof;
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(2) at the time of such Restricted Payment and upon giving pro forma
effect thereto as if such Restricted Payment had been made at the beginning of
the applicable four-quarter period, the Company could not incur at least $1.00
of additional Indebtedness under the first paragraph of Section 4.09; and
(3) the aggregate amount of Restricted Payments made by the Company and
its Subsidiaries, including Restricted Payments permitted by the following
paragraph, shall be no greater than the sum of (x) 50% of cumulative
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the first day that the Majestic Star Casino is Operating to the
end of the Company's most recently ended fiscal quarter for which internal
financial statements are available, less all distributions in respect of any
such period under clause (i) of paragraph (b) of this Section 4.07 (or, in the
event that such Consolidated Net Income for such period is a deficit, minus
100% of such deficit), plus (y) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale of Equity Interests or debt
securities of the Company that have been converted into such Equity Interests
of the Company (other than Equity Interests or convertible debt securities of
the Company sold to a Subsidiary of the Company and other than Disqualified
Capital Stock or debt securities that have been converted into Disqualified
Capital Stock) or capital contributions to the Company subsequent to the
issuance of the Senior Notes.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Subsidiary in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than any
Disqualified Capital Stock); (iii) the redemption, repurchase, retirement or
other acquisition of any Subordinated Indebtedness of the Company or any
Subsidiary in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Company) of Subordinated
Indebtedness of the Company or Equity Interests of the Company (other than
Disqualified Capital Stock), provided, however, that (x) the principal amount
of such Subordinated Indebtedness shall not exceed the principal amount of the
Subordinated Indebtedness so redeemed, repurchased, retired or otherwise
acquired (plus the amount of reasonable expenses incurred and any premium paid
in connection therewith), (y) the Subordinated Indebtedness shall have a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of the Subordinated Indebtedness being redeemed, repurchased,
retired or otherwise acquired, and (z) such Subordinated Indebtedness is
subordinate in right of payment to the Senior Notes and on terms at least as
favorable to the holders of the Senior Notes as the terms set forth in the
documentation governing the Subordinated Indebtedness being redeemed,
repurchased, retired or otherwise acquired; and (iv) any redemption or purchase
by the Company or any Subsidiary of Equity Interests of the Company required by
a Gaming Regulatory Authority in order to preserve a material Gaming License,
provided, that so long as such efforts do not jeopardize any material Gaming
Regulatory License, the Company or such Subsidiary shall have diligently tried
to find a third-party purchaser for such Equity Interests and no third-party
purchaser acceptable to the applicable Gaming Regulatory Authority was willing
to purchase such Equity Interests within a time period acceptable to such
Gaming Regulatory Authority; provided, further, that at the time of, and after
giving effect to, any
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Restricted Payment permitted under clauses (ii) and (iii), no Default or Event
of Default shall have occurred and be continuing or would occur as a
consequence thereof.
(b) Notwithstanding anything in paragraph (a) to the contrary, from and
after the Issuance Date (and for so long as no Event of Default shall have
occurred and shall be continuing), the Company will be permitted to (i) make
quarterly distributions to the members of the Company in an amount not to
exceed, with respect to any fiscal year, an amount equal to the good faith
estimate of maximum federal and state income tax liability of the Company in
such period if it were a taxable Person at the highest effective federal and
state income tax rate of any member of the Company; provided, that each such
quarterly distribution shall not exceed the estimated federal and state tax
liability calculated on such basis; provided further that the Company may make
one annual tax distribution in respect of any difference between the annual tax
liability so calculated and the estimated quarterly distributions made and that
any distribution of estimated tax payments that exceeds the annual tax
liability so calculated will be applied to reduce the distributions in the
following year, (ii) make capital contributions to the BHR Joint Venture to the
extent required by the BHR Operating Agreement in an aggregate amount not to
exceed $56.1 million; (iii) make capital contributions to the BHR Joint Venture
to pay for harbor improvements required by the Harbor Lease and other
improvements ancillary to such harbor improvements; (iv) make capital
contributions, loans or advances to the BHR Joint Venture for additional
development or expansion costs in an aggregate amount not exceeding $5.0
million; (v) from and after the Commencement Date and so long as clause (a)(2)
of this Section 4.07 shall be satisfied, make capital contributions, loans or
advances to the BHR Joint Venture for additional development or expansion costs
in an aggregate amount not exceeding $50.0 million less any capital
contributions, loans or advances made by the Company pursuant to clause
(b)(iii) or clause (b)(iv) hereof; (vi) repay the Note to Principal Member and
(vii) make payments to the City of Gary or any other person in accordance with
the Development Agreement.
For purposes of determining the amount of Restricted Investments
outstanding at any time, all Restricted Investments shall be valued at their
fair market value at the time made (in each case as determined in good faith by
the Company's Board of Managers), and no adjustments shall be made for
subsequent changes in fair market value.
Not later than the date of filing of quarterly or annual report, the
Company shall deliver to the Trustee an Officers' Certificate stating that each
Restricted Payment made in the prior fiscal quarter was permitted and setting
forth the basis upon which the calculations required by this Section 4.07 were
computed, which calculations may be based upon the Company's latest available
financial statements.
SECTION 4.08. RESTRICTIONS ON JOINT VENTURE.
The Company will not consent to the issuance of Indebtedness by the BHR
Joint Venture except: (a) Indebtedness incurred pursuant to Section 4.3(c) of
the BHR Operating Agreement; (b) Indebtedness incurred for the purpose of
acquiring, constructing or improving property owned by the BHR Joint Venture in
an aggregate principal amount not to exceed $4.0 million; and (c) the
refinancing of any such Indebtedness. The Company will not consent
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to the creation, incurrence, assumption or existence of any Lien by the BHR
Joint Venture, except Permitted Liens.
SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK.
The Company will not, and will not permit any of its Subsidiaries, to
directly or indirectly, create, incur, issue, assume, guaranty, or otherwise
become directly or indirectly liable with respect to any Indebtedness
(including Acquired Indebtedness) or issue any shares of Disqualified Capital
Stock; provided, however, that the Company and its Subsidiaries may incur
Indebtedness or issue shares of Disqualified Capital Stock if (i) the Majestic
Star Casino is Operating, (ii) the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been at least 2.5 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Capital Stock had
been issued, as the case may be, and application of proceeds had occurred at
the beginning of such four-quarter period and (iii) such Indebtedness or
Disqualified Capital Stock, as the case may be, does not have a Weighted
Average Life to Maturity less than the Weighted Average Life to Maturity of the
Notes.
The foregoing limitations will not apply to:
(a) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in an aggregate principal amount not to exceed at any one time
$6.0 million for working capital purposes;
(b) the incurrence by the Company or any of its Subsidiaries of any
Existing Indebtedness;
(c) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by the Senior Notes;
(d) the incurrence by the Company or any of its Subsidiaries of
Indebtedness (the "Refinancing Indebtedness") issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, or refund
Indebtedness referred to in the first paragraph of this covenant or in clauses
(a), (b), (c) or this clause (d), provided, however, that (1) the principal
amount of such Refinancing Indebtedness shall not exceed the principal amount
of Indebtedness so extended, refinanced, renewed, replaced, substituted or
refunded (plus the amount of reasonable expenses incurred and any premium paid
in connection therewith), (2) the Refinancing Indebtedness shall, if
applicable, be subordinate in right and priority of payment to the Notes to the
same extent such Indebtedness being refinanced is, and (3) the Refinancing
Indebtedness shall have a Weighted Average Life to Maturity equal to or greater
than the Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted or refunded;
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(e) intercompany Indebtedness between or among the Company and any Wholly
Owned Subsidiary; provided, however, the obligations to pay principal, interest
or other amounts under such intercompany Indebtedness is subordinated to the
payment in full of the Notes;
(f) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations or purchase money
obligations, in each case incurred for the purpose of financing or refinancing
all or any part of the purchase or lease of personal property or equipment used
in the business of the Company or such Subsidiary, in an aggregate principal
amount pursuant to this clause (f) not to exceed $8.0 million outstanding at
any time prior to Delivery of the Permanent Vessel and (ii) $12.0 million
outstanding at any time in connection with the equipping of the Permanent
Vessel; and
(g) to the extent that such incurrence does not result in the incurrence
by the Company or any Subsidiary of any obligation for the payment of borrowed
money of others, Indebtedness incurred solely in respect of performance bonds,
completion guarantees, standby letters of credit or bankers' acceptance,
provided, that such Indebtedness was incurred (i) to comply with a requirement
of a Gaming Regulatory Authority or (ii) in the ordinary course of business, in
amounts and for purposes customary for gaming operations similar to the
Company's or such Subsidiary's, and in an aggregate principal amount
outstanding under this clause (g)(ii) at any one time of less than $2.0
million.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Subsidiaries to,
cause, make or suffer to exist an Asset Sale, unless
(a) no Default or Event of Default exists or is continuing immediately
prior to or after giving effect to such sale;
(b) the Company or its Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined by the Board of Managers and set forth in the Officers'
Certificate delivered to the Trustee) of the assets sold or otherwise disposed
of; and
(c) at least 80% of such consideration is in the form of cash or Cash
Equivalents; provided, however, that the amount of any liabilities (as shown on
the Company's or such Subsidiary's, as the case may be, most recent balance
sheet or in the notes thereto) of the Company or any Subsidiary, as the case
may be (other than any liabilities that are by their terms expressly
subordinated to the Notes), that are assumed by the transferee of any such
assets and any notes or other obligations received by the Company or any
Subsidiary, as the case may be, from such transferee that are converted by the
Company or such Subsidiary, as the case may be, into cash (to the extent of the
cash received) within 10 Business Days following the closing of such Asset
Sale, shall be deemed to be cash only for purposes of satisfying this clause
(c).
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Within 180 days after the Company's receipt of the Net Proceeds of any
Asset Sale, the Company may apply the Net Proceeds from such Asset Sale to (1)
an investment in the Principal Business or in tangible long-term assets used or
useful in the Principal Business or (2) permanently reduce Indebtedness that is
not Subordinated Indebtedness. Any Net Proceeds from the Asset Sale will be
promptly and without commingling deposited in the Asset Sale Account and
pledged to the Holders of the Notes as collateral on the Notes until applied or
released as herein provided. When the aggregate amount of Net Proceeds from
the Asset Sale that are not invested as provided in the first sentence to this
paragraph ("Excess Proceeds") exceeds $3.0 million, the Company shall make an
offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes, that is an integral multiple of $1,000, that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in Section 3.10. The Company shall
commence an Asset Sale Offer with respect to Excess Proceeds within 10 Business
Days after the date that the aggregate amount of Excess Proceeds exceeds $3.0
million by mailing the notice required in Section 3.10 hereof to the Holders.
To the extent that the aggregate amount of Notes properly tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, such remaining Excess
Proceeds shall be released to the Company and the Company may use any such
remaining Excess Proceeds so released for any lawful purpose permitted under
this Indenture. If the aggregate principal amount of Notes properly tendered
pursuant to an Asset Sale Offer by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased in the manner
described in Section 3.02 hereof. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero. The Net Proceeds
of all Asset Sales of assets constituting Note Collateral (other than Permitted
Investments), as well as Excess Proceeds, shall be promptly and without
commingling deposited with the Trustee in an Asset Sale Account pursuant to the
terms of the Cash Collateral and Disbursement Agreement until applied as
permitted pursuant to this paragraph. The Company shall grant to the Trustee,
on behalf of the Holders, a first priority Lien on any properties or assets
acquired with the Net Proceeds of any such Asset Sale on the terms set forth in
this Indenture and the Collateral Documents.
SECTION 4.11. EVENT OF LOSS.
(a) Within 360 days after any Event of Loss with respect to Note
Collateral with a fair market value (or replacement cost, if greater) in excess
of $1.0 million, the Company may apply the Net Loss Proceeds from such Event of
Loss to the rebuilding, repair, replacement or construction of improvements to
the Majestic Star Casino, with no concurrent obligation to make any purchase of
any Notes, provided that (i) the Company delivers to the Trustee within 60 days
of such Event of Loss a written opinion from a reputable architect that the
Majestic Star Casino with at least the Minimum Facilities can be rebuilt,
repaired, replaced or constructed and Operating within 360 days of such Event
of Loss, (ii) an Officers' Certificate certifying that the Company has
available from Net Loss Proceeds or cash on hand sufficient funds to complete
such rebuilding, repair, replacement or construction, and (iii) the Net Loss
Proceeds are less than $15.0 million. Any BHR Loss Proceeds and any Net Loss
Proceeds from an Event of Loss that are not reinvested or are not permitted to
be reinvested as provided in the first sentence of this paragraph will be
deemed "Excess Loss Proceeds."
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When the aggregate amount of "Excess Loss Proceeds" exceeds $3.0 million, the
Company shall promptly make an offer to all Holders of Notes (an "Event of Loss
Offer") to purchase the maximum principal amount of Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Loss Proceeds at an
offer price in cash in an amount equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in Section 3.10. To
the extent that the aggregate amount of Notes properly tendered pursuant to an
Event of Loss Offer is less than the Excess Loss Proceeds, such remaining
Excess Loss Proceeds shall be released to the Company and the Company may use
any such remaining Excess Loss Proceeds so released for any lawful purpose
permitted under this Indenture. If the aggregate principal amount of Notes
properly tendered pursuant to an Event of Loss Offer exceeds the amount of
Excess Loss Proceeds, the Trustee shall select the Notes to be purchased in the
manner described in Section 3.02 hereof. Upon completion of any such Event of
Loss Offer, the amount of Excess Loss Proceeds shall be reset at zero. Pending
any permitted rebuilding, repair or construction or the completion of any
Excess Loss Offer, the Company shall promptly and without commingling deposit
in the Event of Loss Account and pledge to the Trustee as additional Note
Collateral any Net Loss Proceeds or other cash on hand required for such
permitted rebuilding, repair or construction pursuant to the Cash Collateral
and Disbursement Agreement. Such pledged funds will be released to the Company
to pay for such permitted rebuilding repair or construction or such Event of
Loss Offer pursuant to the Cash Collateral and Disbursement Agreement. The BHR
Loss Proceeds and the Net Loss Proceeds of all Events of Loss with respect to
assets constituting Note Collateral (other than Permitted Investments), as well
as Excess Loss Proceeds, shall be promptly and without commingling deposited
with the Trustee in an Event of Loss Account pursuant to the terms of the Cash
Collateral and Disbursement Agreement until applied as permitted pursuant to
this paragraph. The Company shall grant to the Trustee, on behalf of the
Holders of the Notes, a first priority lien on any properties or assets
rebuilt, repaired or constructed with such Net Loss Proceeds on the terms set
forth in this Indenture and the Collateral Documents.
(b) With respect to any Event of Loss pursuant to clause (D) of the
definition of "Event of Loss" that has a fair market value (or replacement
cost, if greater) in excess of $2.0 million, the Company will be required to
receive consideration at least (i) equal to the fair market value (as
determined by an Independent Financial Advisor) of the assets subject to an
Event of Loss and (ii) 90% of which is in the form of cash or Cash Equivalents;
provided, however, that the amount of (A) any liabilities (as shown on the
Company's most recent balance sheet or in the Notes thereto) of the Company
(other than liabilities that are by their terms expressly subordinated to the
Notes), that are assumed by the transferee of any such assets and (B) any notes
or other obligations received by the Company from such transferee that are
converted by the Company into cash (to the extent of the cash received) within
10 Business Days following the closing of such sale of the assets subject to
such Event of Loss, shall be deemed to be cash only for purposes of satisfying
clause (ii) of this Section 4.11(b) and for no other purpose.
(c) With respect to any Event of Loss with respect to Note Collateral with
a fair market value (or replacement cost, if greater) of $1.0 million or less,
the Net Loss Proceeds therefrom shall be released to the Company.
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SECTION 4.12. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its assets, properties or
securities to, or purchase any assets, properties or securities from, or enter
into or make any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Company in which the Company
or any Subsidiary owns, directly or indirectly, an equity interest (each of the
foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction
is on terms that are no less favorable to the Company or the relevant
Subsidiary than those that would have been obtained in a comparable transaction
by the Company or such Subsidiary with an unrelated Person and (b) the Company
delivers to the Trustee (i) with respect to any Affiliate Transaction involving
aggregate payments in excess of $350,000, a resolution adopted by the Board of
Managers of the Company approving such Affiliate Transaction and set forth in
an Officers' Certificate certifying that such Affiliate Transaction complies
with clause (a) above and (ii) with respect to any Affiliate Transaction
involving aggregate payments in excess of $4.0 million, a written opinion as to
the fairness to the Company from a financial point of view issued by an
Independent Financial Advisor with assets in excess of $1.0 billion. The
foregoing provisions shall not apply to the following: (1) Restricted Payments
permitted by Section 4.07 hereof; (2) capital contributions required to be made
by the Company pursuant by the BHR Operating Agreement; (3) the Berthing
Agreement; (4) the provision of certain services to the City of Gary or to any
other Person in the State of Indiana on behalf of the City of Gary by an
Affiliate or Affiliates of the Company to satisfy certain obligations of the
Company under the Development Agreement; (5) the licensing of any service mark
of the Company to an Affiliate or Affiliates of the Company; or (6) the
extension or renewal of any terms of any Affiliate Transaction in effect on the
Issuance Date so long as such extension or renewal is accompanied by an
Officer's Certificate stating that such extension or renewal complies with
clause (i) above.
Notwithstanding the foregoing, the Company shall not enter into an
employment or consulting agreement with any individual who directly or
indirectly controls the Company, which agreement provides for annual
compensation to such individual in excess of $350,000.
SECTION 4.13. LIENS.
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly create, incur, assume or suffer to exist any Lien, except Permitted
Liens, on any asset owned as of the Issuance Date or thereafter acquired by the
Company or any such Subsidiary, or any income or profits therefrom, or assign
or convey any right to receive income therefrom.
SECTION 4.14. LINE OF BUSINESS.
For so long as any Notes are outstanding, the Company (i) shall not, and
shall not permit any Subsidiary to, engage in any business or activity other
than the Principal Business and (ii) shall not permit the BHR Joint Venture to
engage in any business or activity other than businesses or activities that
relate to the Principal Business.
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SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, as the case may be, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its existence as a limited liability company and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time
to time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence
of any of its Subsidiaries, if the Board of Managers of the Company shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Subsidiaries, taken as a whole, and that
the loss thereof is not adverse in any material respect to the Holders of the
Notes.
SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, the Company shall promptly
make an offer to each Holder to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of the Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a price in cash (the "Change
of Control Payment") equal to 101% of the aggregate principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase, provided,
that the Company shall not be required to make such an offer to purchase if
such event deemed to be a Change of Control ceases to exist prior to the
Purchase Date. Such Change of Control Offer shall be made in accordance with
the procedures set forth in Article 3 hereof. The Company shall commence such
Change of Control Offer by mailing the notice set forth in Section 3.10 hereof
to Holders. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act, and any other securities laws and regulations thereunder to
the extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to any Repurchase Offer.
SECTION 4.17. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement, the Company will file a
registration statement (the "Exchange Offer Registration Statement") with
respect to an offer to exchange the Senior Notes for a new issue of Senior
Exchange Notes of the Company (the "New Notes") registered under the Securities
Act, with terms identical to those of the Senior Notes. If (i) the Exchange
Offer is not permitted by applicable law or (ii) any holder of Senior Notes
notifies the Company that (A) it is prohibited by law or SEC policy from
participating in the Exchange Offer, (B) that it may not resell the New Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) that it is a
broker-dealer and holds Notes acquired directly from the Company or an
affiliate of the Company, the Company will be required to provide a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the Notes by the holders thereof.
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If (i) the Company fails to file within 30 days, or fails to cause to
become effective within 120 days after filing, the Exchange Offer Registration
Statement, or (ii) the Company is obligated to provide a Shelf Registration
Statement and such Shelf Registration Statement is not filed within 30 days, or
declared effective within 120 days after filing, or (iii) the Company fails to
consummate the Exchange Offer within 30 days of the date on which the Exchange
Offer Registration Statement was required to be declared effective by the
Commission or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but shall thereafter cease to be
effective or usable in connection with resales of the Notes for the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (i) through (iv) above a "Registration Default"), then the Company
shall pay to each holder of Notes, with respect to the first 90-day period
following such Registration Default, liquidated damages ("Liquidated Damages")
in an amount equal to $.05 per week per $1,000 in principal amount of Notes
held by such holder. The amount of such Liquidated Damages will increase by an
additional $.05 per week per $1,000 in principal amount of Notes held by such
holders for each subsequent 90-day period until such Registration Default has
been cured, up to a maximum of $.35 per week.
SECTION 4.18. USE OF PROCEEDS.
The Company shall use the net proceeds from the sale of the Notes only for
Permitted Proceed Uses. The Company shall cause the net proceeds from the sale
of the Notes to be deposited into the Cash Collateral Accounts and disbursed
only in accordance with the Cash Collateral and Disbursement Agreement.
SECTION 4.19. CASH COLLATERAL AND DISBURSEMENT AGREEMENT.
The Company shall place all of the net proceeds of the Offering (to the
extent provided below) into the Cash Collateral Accounts to be held in escrow
and invested in cash or Cash Equivalents by the Disbursement Agent until needed
from time to time to fund (i) the equipping of the Chartered Vessel, (ii) the
Company's obligations with respect to the construction of the Gaming Complex,
(iii) the construction of the Permanent Vessel, (iv) the repayment of the Note
to Principal Member, (v) the first two scheduled fixed interest payments with
respect to the Senior Notes and (vi) certain other disbursements as permitted
by the Cash Collateral and Disbursement Agreement, each pursuant to the terms
of the Cash Collateral and Disbursement Agreement. On or prior to the Issuance
Date, the Company shall have entered into the Cash Collateral and Disbursement
Agreement. The Trustee, for the ratable benefit of the Holders, shall have an
exclusive, and perfected security interest in the Cash Collateral Accounts.
The Disbursement Agent will make disbursements out of the Cash Collateral
Accounts in accordance with the disbursement conditions set forth in the Cash
Collateral and Disbursement Agreement.
SECTION 4.20. GAMING LICENSES.
The Company covenants to use its best efforts to obtain and retain in full
force and effect at all times all Gaming Licenses necessary for the operation
of the Majestic Star Casino, provided, that, if the Company is required by any
Gaming Regulatory Authority to suspend or revoke any consent, permit or license
or close or suspend any operation of any
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part of the Majestic Star Casino as a result of any noncompliance with law, the
Company will use its best efforts to promptly and diligently correct such
noncompliance or replace any personnel causing such noncompliance so that the
Majestic Star Casino will be opened and fully Operating.
SECTION 4.21. CONSTRUCTION.
The Company shall cause the Chartered Vessel to be equipped and refitted
for gaming and shall use its best efforts to cause the construction by the BHR
Joint Venture of the Gaming Complex, including the furnishing, fixturing and
equipping thereof, to be prosecuted with diligence and continuity in a good and
workmanlike manner substantially in accordance with the Plans and
Specifications and within the Construction Budget. At such time that the
Company commences construction of the Permanent Vessel, the Company shall cause
such construction to be prosecuted with diligence and continuity in a good and
workmanlike manner substantially in accordance with the Plans and
Specifications for such construction and within the construction budget
therefor and shall use its best efforts to cause the Permanent Vessel to be
Delivered no later than June 30, 1998.
SECTION 4.22. MAINTENANCE OF INSURANCE.
Until the Notes have been paid in full, the Company and its Subsidiaries
shall maintain insurance with responsible carriers against such risks and in
such amounts as is customarily carried by similar businesses with such
deductibles, retentions, self insured amounts and coinsurance provisions as are
customarily carried by similar businesses of similar size, including, without
limitation, property and casualty, and shall have provided insurance
certificates evidencing such insurance to the Trustee prior to the Issuance
Date and shall hereafter provide such certificates prior to the anniversary or
renewal date of each such policy, which certificate shall expressly state the
expiration date for each policy listed. The Company shall furnish or cause to
be furnished certified copies of the policies to the Trustee.
Customary insurance coverage shall be deemed to include the following: (i)
workers' compensation insurance to the extent required to comply with all
applicable state, territorial, or United States laws and regulations, or the
laws and regulations of any other applicable jurisdiction, (ii) comprehensive
general liability insurance with minimum limits of $1.0 million, (iii) umbrella
or excess liability insurance providing excess liability coverages over and
above the foregoing underlying insurances up to a minimum limit of $25.0
million, and (iv) property insurance protecting the property against loss or
damage by fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane, and such other
risks and hazards as are from time to time covered by an "all-risk" policy or a
property policy covering "special" causes of loss (such insurance shall provide
coverage in not less than the lesser of 120% of the outstanding principal
amount of the Notes plus accrued and unpaid interest and 100% of actual
replacement value (as determined at each policy renewal based on the F.W. Dodge
Building Index or some other recognized means) of any improvements and with a
deductible no greater than 2% of the insured value of the Majestic Star Casino
Project and the Permanent Vessel or such greater amount as is available on
commercially reasonable terms (other than earthquake insurance, for which the
deductible may be up to 10% of such replacement value)). All insurance
required under this
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Indenture (except worker's compensation) shall name the Company as insured and
the Trustee as an additional insured, with loss proceeds in excess of $1.0
million payable jointly to the Company and the Trustee (unless a Default or
Event of Default has occurred and is then continuing, in which case all loss
proceeds are payable solely to the Trustee), with no recourse against the
Trustee for the payment of premiums, deductibles, commissions or club calls,
and for at least 30 days notice of cancellation. All such loss proceeds in
excess of $1.0 million shall be deposited in the Event of Loss Account to be
established pursuant to Section 10.12 hereof and the Cash Collateral and
Disbursement Agreement and shall be pledged to the Trustee until released in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
All such insurance policies shall be issued by carriers having an A.M. Best &
Company, Inc. rating of "A" or higher and a financial size category of not less
than XII, or if such carrier is not rated by A.M. Best & Company, Inc., having
the financial stability and size deemed appropriate by an opinion from a
reputable insurance broker. The Company shall deliver to the Trustee on the
Issuance Date and each anniversary hereafter a certificate of an insurance
agent stating that the insurance policies obtained by the Company comply with
this Section 4.22 and the related applicable provisions of the Collateral
Documents.
SECTION 4.23. LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Company shall not become an Investment Company subject to registration
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended), or from otherwise becoming subject to regulation
under the Investment Company Act of 1940.
SECTION 4.24. COLLATERAL DOCUMENTS.
The Company will not, and will not permit any of its Subsidiaries to,
amend, waive or modify, or take or refrain from taking any action that has the
effect of amending, waiving or modifying, any provision of the Collateral
Documents to the extent that such amendment, waiver, modification or action
could have an adverse effect in any material respect on the rights of the
Trustee or the Holders, provided, that: (i) the Note Collateral may be released
or modified as expressly provided in this Indenture and in the Collateral
Documents; (ii) the Construction Budget may be amended as expressly provided in
the Cash Collateral and Disbursement Agreement; and (iii) this Indenture and
any of the Collateral Documents may be otherwise amended, waived or modified as
set forth under Article 9 hereof.
SECTION 4.25. FURTHER ASSURANCES.
The Company shall (and shall cause each of its Subsidiaries to) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignments,
transfers, certificates, assurances and other instruments as may be required
from time to time in order (i) to carry out more effectively the purposes of
the Collateral Documents, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests required to be
encumbered thereby, (iii) to perfect and maintain
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the enforceability, validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, (iv) to
enter into the First Preferred Ship Mortgage upon Delivery of the Permanent
Vessel, and (v) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Trustee any of the rights granted or now or
hereafter intended by the parties thereto to be granted to the Trustee, the
Holders of the Notes or under any other instrument executed in connection
therewith or granted to the Company under the Collateral Documents or under any
other instrument executed in connection therewith.
SECTION 4.26. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any such Subsidiary
to (a)(i) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
Indebtedness owed to the Company or any of its Subsidiaries, (b) make loans or
advances to the Company or any of its Subsidiaries or (c) sell, lease, or
transfer any of its properties or assets to the Company or any of its
Subsidiaries, except (in each case) for such encumbrances or restrictions
existing under or by reason of (1) contractual encumbrances or restrictions in
effect on the Issuance Date, (2) the Indenture, the Senior Notes and the
Collateral Documents, (3) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any Subsidiary as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred
in connection with or in contemplation of such acquisition), which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Cash Flow of such Person is not taken
into account in determining whether such acquisition was permitted by the terms
of the Indenture, (4) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with past
practices, (5) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in clause
(c) above on the property so acquired, (6) applicable law or any applicable
rule or order of any Gaming Regulatory Authority, or (7) any encumbrances or
restrictions imposed by any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
contracts, instruments or obligations referred to in clauses (1) through (6)
above, provided, that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are, in the
good faith judgment of the Company's Board of Managers, no more restrictive
with respect to such dividend and other payment restrictions than those
contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.
SECTION 4.27. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY.
The Company shall not, and shall not permit any Subsidiary to, lease,
sublease, or grant a license, concession or other agreement to occupy, manage
or use any Note Collateral
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owned or leased by the Company (each, a "Lease Transaction"), other than the
following Lease Transactions, provided that (1) no Default or Event of Default
has occurred or is continuing immediately after entering into such Lease
Transaction (or immediately after any extension or renewal of such Lease
Transaction made at the option of the Company or any Subsidiary) and (2) no
gaming or casino operations may be conducted on any Note Collateral that is
the subject of such Lease Transaction other than by the Company or any
Subsidiary:
(a) the Company may enter into a Lease Transaction with respect to any
space on or within the Majestic Star Casino with any Person, provided that (i)
such Lease Transaction will not interfere with, impair or detract from the
operations of the Majestic Star Casino and will, in the opinion of the Company,
enhance the value and operations of the Majestic Star Casino, (ii) such Lease
Transaction is at a fair market rent (in light of other similar or comparable
prevailing commercial transactions) and contains such other terms such that the
Lease Transaction, taken as a whole, is commercially reasonable and fair to the
Company in light of prevailing or comparable transactions in other casinos,
hotels, attractions or shopping venues and (iii) such Lease Transaction
complies with all applicable laws, including obtaining any consent or license
of the IGC if required; and
(b) the Company may enter into a management or operating agreement with
respect to any Note Collateral (other than any Note Collateral or space used
for any casino or gaming operations) with any Person, provided that (i) the
manager or operator has experience in managing or operating similar operations,
(ii) such management or operating agreement is on commercially reasonable and
fair terms to the Company and (iii) such management or operating agreement is
terminable without penalty to the Company upon no more than 90 days written
notice.
The Company will notify the Trustee of any Lease Transaction and request
that the Trustee enter into a leasehold non-disturbance agreement (acceptable
to the Trustee) with respect to any Lease Transaction permitted under clause
(a) above, in the event that the Trustee, on behalf of the Holders of Notes,
forecloses or takes possession of any Note Collateral. Such an agreement shall
provide, among other things, that any action taken with respect to any Note
Collateral, including any sale of Note Collateral, will be subject to the terms
of the Lease Transaction and will permit the lessee to cure certain defaults
under such Lease Transaction. No Lease Transaction may provide that the
Company may subordinate its leasehold or fee interest to any lessee or any
financing party of any lessee.
SECTION 4.28. UNCOMPLETED PROJECT OFFER
If the Majestic Star Casino is not Operating by December 31, 1996 (the
"Uncompleted Project"), then the Company shall be required (a) within 30 days
of such date to offer to purchase Notes up to an amount equal to funds
remaining in the Cash Collateral Accounts, provided that such funds exceed $5.0
million (the "Initial Uncompleted Project Offer") and (b) within one year after
such date (but no later than 30 days after receipt of the proceeds from the
Project Liquidation), to offer to purchase Notes up to an amount equal to the
net proceeds from the liquidation of the remaining assets of the Uncompleted
Project ("Project Liquidation"), plus any funds remaining in the Cash
Collateral Accounts (a "Final Uncompleted Project
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Offer"; and, together with the Initial Uncompleted Project Offer, an
"Uncompleted Project Offer"), in each case at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
purchase date.
The Company shall also be required to proceed promptly after December 31,
1996 with an orderly liquidation of the remaining assets related to the
Uncompleted Project and without commingling to deposit the proceeds thereof
with the Disbursement Agent in the Uncompleted Project Account pursuant to the
Cash Collateral and Disbursement Agreement subject to a lien in favor of the
Trustee for the benefit of the Holders. Failure to complete such liquidation
and commence the Final Uncompleted Project Offer within one year shall be an
Event of Default.
Within 30 days after December 31, 1996, if applicable, the Company will
mail to all Holders of Notes a notice apprising such Holders of the Initial
Uncompleted Project Offer and of the Holders' rights arising as a result
thereof. Within 30 days after the completion of the Project Liquidation, the
Company will mail to all Holders of Notes a notice apprising such Holders of
the Final Uncompleted Project Offer and of the Holders' rights arising as a
result thereof.
If the aggregate principal amount of Notes surrendered pursuant to any
such Uncompleted Project Offer exceeds the amount of funds available to
repurchase such Notes, the Trustee shall select the Notes to be purchased in
the manner described in Section 3.02 hereof.
Any offer to purchase Notes pursuant to this Section 4.28 shall be made in
accordance with the procedures set forth in Section 3.10 hereof.
SECTION 4.29. UNCOMPLETED VESSEL OFFER
If the Delivery of the Permanent Vessel has not occurred by June 30, 1998,
then the Company will be required within 30 days of such date to offer to
purchase Notes up to an amount equal to funds remaining in the Cash Collateral
Accounts (the "Uncompleted Vessel Offer") at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any.
Within 30 days after June 30, 1998, the Company will mail to all Holders
of Notes a notice apprising such Holders of the Uncompleted Vessel Offer and of
the Holders' rights arising as a result thereof.
If the aggregate principal amount of Notes surrendered pursuant to any
such Uncompleted Vessel Offer exceeds the amount of funds available to
repurchase such Notes, the Trustee shall select the Notes to be purchased in
the manner described in Section 3.02 hereof.
Any offer to purchase Notes pursuant to this Section 4.29 shall be made in
accordance with the procedures set forth in Section 3.10 hereof.
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SECTION 4.30. ADDITIONAL SUBSIDIARIES.
Upon the formation of any Subsidiary of the Company, the Company shall
pledge to the Trustee the stock or other evidences of ownership of such
Subsidiary and, in any event, any intercompany notes held by the Company, as
Note Collateral pursuant to the Pledge Agreement substantially in the form of
the existing Pledge Agreement, subject to such amendments or modifications as
may be appropriate to reflect the nature of the Subsidiary and the jurisdiction
in which such Subsidiary is formed or operates; provided, however that (i)
Capital Stock of a Subsidiary hereafter owned by the Company need not be
pledged if any such pledge would in any way jeopardize the obtaining or
maintenance of a Gaming License or would require the Trustee or a Holder or
beneficial holder of Notes to be licensed, qualified or found suitable by an
applicable Gaming Regulatory Authority and (ii) if such Subsidiary is a
partnership, such pledge of Capital Stock need only be pledged to the extent of
distributions received from such partnership.
SECTION 4.31. RATING.
The Company shall be required, within 90 days of the date of this
Indenture, to make presentations to Moody's Investors Service and Standard &
Poor's Ratings Group, for the purpose of obtaining a rating for the Notes.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company, in a single transaction or through a series of related
transactions, shall not consolidate with or merge with or into any other
Person, or transfer (by lease, assignment, sale or otherwise) all or
substantially all of its properties and assets unless (1) either the Company is
the continuing Person, or the Person (if other than the Company) formed by or
surviving such consolidation or into which the Company is merged or to which
all or substantially all of the properties and assets of the Company are
transferred (the Company or such other Person hereinafter referred to as the
"Surviving Person") is a corporation or limited liability company organized and
validly existing under the laws of the United States, any state thereof or the
District of Columbia, and shall expressly assume, by a supplemental indenture,
all the obligations of the Company under the Notes, the Indenture and the
Collateral Documents; (2) immediately after and giving effect to such
transaction and the assumption contemplated by clause (1) above and the
incurrence or anticipated incurrence of any Indebtedness to be incurred in
connection therewith, (A) the Surviving Person shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction, and (B) the Surviving Person could incur
$1.00 of additional Indebtedness under the Fixed Charge Coverage Ratio; (3)
immediately before and immediately after and giving effect to such transaction
and the assumption of the obligations as set forth in clause (1) above and the
incurrence or anticipated incurrence of any Indebtedness to be incurred in
connection therewith, no Default or Event of Default shall have
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occurred and be continuing and (4) such transactions would not require any
Holder of Notes to obtain a gaming license or be qualified under the laws of
any applicable gaming jurisdiction, provided that such Holder would not have
been required to obtain a Gaming License or be qualified under the laws of any
applicable gaming jurisdiction in the absence of such transactions.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the Surviving
Person formed by such consolidation or into or with which the Company is merged
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the Surviving Person and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such Surviving Person had been named as the Company herein; provided,
however, that (A) the Surviving Person shall (i) assume all of the obligations
of the acquired Person under this Indenture, the Notes, and if applicable, the
Collateral Documents, (ii) acquire and own and operate, directly or through
Wholly Owned Subsidiaries, all or substantially all of the properties and
assets then constituting the assets of the Company or any of its Subsidiaries,
as the case may be, (iii) have been issued, or have a consolidated Subsidiary
which has been issued, Gaming Licenses to operate the acquired casino
operations and entities substantially in the manner and scope operated prior to
such transaction, which Gaming Licenses are in full force and effect, and (iv)
comply fully with Section 5.01 hereof and (B) the predecessor Company shall
have delivered to the Trustee an Officers' Certificate and Opinion of Counsel,
subject to customary assumptions and exclusions, stating that the proposed
transaction complies with this Indenture; provided further, however, that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest (including Contingent Interest, if any) on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on the
Notes and such default continues for a period of 30 days; provided that
payments of Contingent Interest that are permitted to be deferred as
provided in the Notes shall not become due for this purpose until such
payment is required to be made pursuant to the terms of the Notes;
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(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same become due and payable at
maturity, upon redemption (or in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply, within any applicable cure periods,
with any of the provisions of Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16,
4.18, 4.28, 4.29, 4.31 or 5.01 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes
or the Collateral Documents for 30 days after written notice to the
Company by the Trustee or to the Company and the Trustee from Holders of
at least 25% in principal amount of the Notes then outstanding;
(e) for any reason, other than due to the act of the Trustee, the
Disbursement Agent or the Holders and other than the satisfaction in full
and discharge of all obligations secured thereby, to the extent permitted
by this Indenture or any Collateral Document, any Collateral Document
ceases to be in full force and effect or any Lien intended to be
perfected thereby ceases to be or is not a valid and perfected Lien
having the ranking or priority contemplated thereby, except for Permitted
Liens, and such condition continues for a period of 30 days after the
Company receives notice of such condition;
(f) prior to Delivery of the Permanent Vessel, the Charter ceases to
be in full force and effect or the Company defaults in the performance of
any covenant set forth in the Charter or any of the Collateral Documents
(which default is not waived or cured);
(g) a default occurs under any mortgage, indenture or instrument
under which there is issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
or the payment of which is guaranteed by the Company or any of its
Subsidiaries, whether such Indebtedness or guarantee now exists, or is
created after the Issuance Date, which default (a) is caused by a failure
to pay when due principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
indebtedness (a "Payment Cross-Default") or (b) results in the
acceleration of such Indebtedness prior to its express maturity or would
constitute a default in the payment of such issue of Indebtedness at
final maturity of such issue and, in each case, the principal amount of
such Indebtedness, together with the principal amount of any other such
Indebtedness under which a Payment Cross-Default then exists or with
respect to which the maturity thereof has been so accelerated or which
has not been paid at maturity, aggregates $1.0 million or more;
(h) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any of its Subsidiaries or any of their assets and such
judgment or judgments remain unpaid,
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undischarged, unbonded or unstayed for a period of 60 days, provided
that the aggregate of all such undischarged judgments exceeds $1.0
million;
(i) the Company or any of its Subsidiaries breaches in a material
respect any representation or warranty set forth in the Charter, the
Berthing Agreement or any of the Collateral Documents, or the Company or
any of its Subsidiaries repudiates any of its obligations under, or any
judgment or decree by a court or government agency of competent
jurisdiction declaring the unenforceability of the Charter, the Berthing
Agreement or any of the Collateral Documents and such repudiation
materially impairs the benefits to the Trustee or the Holders of the
Notes thereunder;
(j) the Company pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) makes a general assignment for the benefit of its
creditors, or
(iv) generally is not paying its debts as they become due; or
(k) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case; or
(ii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 30 consecutive
days;
(l) there is any revocation, termination, suspension or other
cessation of effectiveness of any Gaming License which results in the
cessation or suspension of gaming operations for a period of more than 90
consecutive days at the Majestic Star Casino;
(m) there is a cessation of gaming operations for a period of more
than 90 consecutive days at the Majestic Star Casino (other than as a
result of casualty loss) after the Majestic Star Casino becomes
Operating;
(n) there is a cessation of gaming operations for a period of more
than 180 consecutive days as a result of a casualty loss after the
Majestic Star Casino becomes Operating, except if the Company is
diligently pursuing reconstruction and opening of the Majestic Star
Casino and such reconstruction and opening can be accomplished with the
funds available to the Company;
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(o) the Majestic Star Casino Project is not Operating by December
31, 1996 and continues to be not Operating; or
(p) the Permanent Vessel has not been Delivered by June 30, 1998.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (j) or (k) of Section 6.01 hereof with respect to the Company), occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare the principal, premium, if
any, interest (including Contingent Interest and Liquidated Damages, if any)
and any other monetary obligations on all of the Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified
in clause (j) or (k) of Section 6.01 hereof occurs with respect to the Company,
the principal, premium, if any, interest (including all Contingent Interest and
Liquidated Damages, if any) and any other monetary obligations on all of the
outstanding Notes shall be due and payable immediately without further action
or notice. The Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of all of the
Holders rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
Notwithstanding the foregoing, the Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not
in the best interest of the Holders of the Notes.
If an Event of Default occurs on or after May 15, 2000 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof (a "Willful Default"), 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 May 15, 2000 by reason of any Willful Default 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 May 15 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount that would otherwise be due but for the provisions of this sentence):
Year %
---- -------
1996 112.750
1997 112.750
1998 110.625
1999 108.500
2000 106.375
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The Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may notify the Company in writing, no later than 60 days
following the acceleration of the Notes, that the Trustee or such Holders
believe in good faith that a Willful Default has occurred. If the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
fail to notify the Company of a Willful Default within such 60-day period, the
Company shall not be required to pay such Willful Default premium.
If the Company objects to a written notice by the Trustee or such Holders
that a Willful Default has occurred, the Company may so notify the Trustee in
writing within 15 days of its receipt of such notice. Upon receipt of the
Company's notice of objection, the Trustee shall promptly submit the issue of
whether a Willful Default has occurred to binding arbitration under the
Commercial Rules of the American Arbitration Association. The arbitration
shall be a non-administered arbitration in that all administrative functions
will be performed by the parties and the arbitrators rather than the American
Arbitration Association and no fees will be paid to the American Arbitration
Association for such arbitration. To the extent that there are any conflicts
between the Commercial Rules of the American Arbitration Association and this
Section 6.02, this Section 6.02 shall govern.
The arbitration proceeding contemplated in the preceding paragraph shall
be conducted by three arbitrators, with one selected by the Company, one
selected by the Trustee and one selected by the mutual agreement of the Company
and the Trustee. If the Trustee and the Company are unable to agree to the
selection of a third arbitrator within seven (7) days of the selection of the
other two arbitrators, the arbitrators selected by the Trustee and the Company
shall select the third arbitrator. The arbitration shall take place in
Detroit, Michigan, and judgment upon any award rendered by the arbitrators may
be entered by any court having jurisdiction thereon. The arbitration shall be
governed by the laws of the State of New York. The arbitrators shall not be
empowered to award damages, but shall only be empowered to determine whether a
Willful Default has occurred. No interest on any premium determined to be
payable by the Company to the Holders shall accrue prior to the decision of the
arbitrators. The procedures set forth in this paragraph and the preceding
paragraph shall be the sole and exclusive method of determining whether a
Willful Default has occurred hereunder.
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, this Indenture or the Collateral Documents, including, without
limitation, any remedy available pursuant to the Cash Collateral and
Disbursement Agreement.
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.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than 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 an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it, including the exercise of any remedy under the Collateral
Documents. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from the
Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request; provided, however, that such provision does not
affect the right of a Holder to sue for enforcement of any overdue payment
thereon.
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A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, and interest
on the Notes, on or after the respective due dates expressed in the Notes
(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 Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, 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, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: (i) with respect to any other money, to the Company or to such
party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. MANAGEMENT OF CASINOS.
Notwithstanding any provision of this Article 6 to the contrary, following
an Event of Default that permits the taking of possession of the Majestic Star
Casino by the Trustee, the Trustee shall be authorized, to recommend that the
Company retain one or more experienced operators of casinos to manage the
casino located at the Majestic Star Casino on behalf of the Holders of Notes;
provided, however, that any such operator shall have all necessary legal
qualifications, including all material Gaming Licenses and/or approvals of the
IGC to manage the casino located at the Majestic Star Casino.
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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
the Collateral Documents, and use the same degree of care and skill in its
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of Default, the duties of
the Trustee shall be determined solely by the express provisions of this
Indenture and the Collateral Documents and the Trustee need perform only those
duties that are specifically set forth in this Indenture and the Collateral
Documents and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee.
(c) 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 in all material respects to the requirements of this Indenture and
the Collateral Documents. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform in all material respects
to the requirements of this Indenture and the Collateral Documents. The
permissive right of the Trustee to take actions enumerated in this Indenture
shall never be construed as a duty.
(d) The Trustee may not be relieved from liabilities for its own gross
negligent action, its own gross negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph (d) does not limit the effect of paragraphs (b)
and (c) of this Section;
(ii) the Trustee shall not be liable to the Company, any holder of
the Notes or any other Person for any error of judgment made in good
faith by a Responsible Officer, unless it is proved that the Trustee was
grossly negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable to the Company, any holder of
the Notes or any other Person 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.
(e) 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), (c) and (d) of this Section.
(f) All moneys received by the Trustee shall, until used or applied or
invested as herein provided, be held in trust for the purposes of which they
were received but need not be
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segregated from other funds except to the extent required by law or as provided
in this Indenture. The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
as provided in this Indenture.
(g) 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
before or following the occurrence of any Event of Default 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.
(h) The Trustee shall not be individually liable for any debt contracted
or for damages to persons or to personal property injured or damaged, or for
salaries or non-fulfillment of contracts during any period in which it may be
in the possession of or managing any real and tangible personal property as
anywhere in the Indenture provided.
(i) At any and all reasonable times the Trustee and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives shall
have the right fully to inspect any and all of the books, papers and records of
the Company pertaining to the Notes, and to make such copies from and in regard
thereto as may be desired.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
reasonable care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such
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Holders shall have requested such action in accordance with this Indenture and
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.
(g) Except with respect to Section 4.01 hereof, the Trustee shall have no
duty to inquire as to the performance of the Company's covenants in Article
Four hereof. In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Section 6.01(a) or 6.01(b) or (ii) any Default or Event of Default
of which the Trustee shall have received written notification or obtained
actual knowledge.
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 the Company 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, the Collateral Documents or the
Notes or as to the adequacy of the security for the Notes; it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of
this Indenture or the Collateral Documents; it shall not be responsible for the
use or application of any money received by the Disbursement Agent, and it
shall not be responsible for any statement or recital herein or any statement
in the Notes or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICES 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 the Holders of Notes and the
Disbursement Agent notices of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in
payment of principal of, premium, if any, or interest (including Contingent
Interest, if any) on any Note, the Trustee may withhold the notices if and so
long as the Trustee in good faith determines that withholding the notices is in
the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
On 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 Section 313(a) (but if no event
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described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange
on which the Notes are listed in accordance with TIA Section 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
At the expense of the Company, the Trustee or, if the Trustee is not the
Registrar, the Registrar, shall report the names of record holders of the Notes
to any Gaming Regulatory Authority when requested to do so by the Company.
At the express direction of the Company and at the Company's expense, the
Trustee will provide any Gaming Regulatory Authority with:
(i) copies of all notices, reports and other written communications
which the Trustee gives to Holders;
(ii) a list of all of the Holders promptly after the original
issuance of the Notes and periodically thereafter if the Company so
directs;
(iii) Notice of any Default or Event of Default under this
Indenture, any acceleration of the indebtedness evidenced hereby, the
institution of any legal actions or proceedings before any court or
governmental authority in respect of a Default or Event of Default
hereunder;
(iv) notice of the removal or resignation of the Trustee within five
Business Days of the effectiveness thereof;
(v) notice of any transfer or assignment of rights under this
Indenture known to the Trustee within five Business Days thereof; and
(vi) a copy of any amendment to the Notes or this Indenture within
five Business Days of the effectiveness thereof.
To the extent requested by the Company and at the Company's expense, the
Trustee shall cooperate with any Gaming Regulatory Authority in order to
provide such Gaming Regulatory Authority with the information and documentation
requested and as otherwise required by applicable law.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder in
accordance with a written schedule provided by the Trustee to the Company. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the
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Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company hereby indemnifies the Trustee and its officers, directors,
agents and employees against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture or the Collateral Documents,
including the costs and expenses of enforcing this Indenture or the Collateral
Documents against the Company (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company or any Holder or any
other person) or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent any such loss,
liability or expense may be attributable to its gross negligence or willful
misconduct. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company'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
(including Contingent Interest, if any) 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(j) or (k) 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 provision of TIA Section 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment and taking of office as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. For up to one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may by
written action appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If any Gaming Regulatory Authority requires a Trustee to be approved,
licensed or qualified and the Trustee fails or declines to do so, such
approval, license or qualification shall be obtained upon the request of, and
at the expense of, the Company unless the Trustee declines to do so, or, if the
Trustee's relationship with the Company may, in the Company's discretion,
jeopardize any material gaming license or franchise or right or approval
granted thereto, the Trustee shall resign, and, in addition, the Trustee may at
its option resign if the Trustee in its sole discretion determines not to be so
approved, licensed or qualified.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of the Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee at any time fails to comply with Section 7.10, any Holder
of a Note for at least six months may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's 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
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further act shall be the successor Trustee; provided such corporation shall be
otherwise eligible and qualified under this Article.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The Trustee hereby waives any right to set off any claim that it may
have against the Company in any capacity (other than as Trustee, Paying Agent
or Collateral Agent hereunder or under the Collateral Documents) against any of
the assets of the Company held by the Trustee, including in any of the Cash
Collateral Accounts; provided, however, that if the Trustee is or becomes a
lender of any other indebtedness permitted hereunder to be pari passu with the
Notes, then such waiver shall not apply to the extent of such Indebtedness.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Managers evidenced by a
resolution set forth in an Officers' Certificate delivered to the Trustee, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
(a) When (i) the Company delivers to the Trustee all outstanding Notes
(other than Notes replaced pursuant to Section 2.07) for cancellation or (ii)
all outstanding Notes have become due and payable and the Company irrevocably
deposits with the Trustee funds sufficient to pay at maturity all outstanding
Notes, including interest thereon (other than Notes replaced pursuant to
Section 2.07), and if in either case the Company pays all other sums payable
hereunder by it, then this Indenture shall, subject to Sections 8.02(b) and
8.07 cease
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to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on the Company's demand accompanied by an Officers'
Certificate and an Opinion of Counsel and at the Company's cost and expense.
(b) Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company 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 (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes and cured all existing Events of Default, 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 (i) and (ii)
below, and to have satisfied all its other obligations under such Notes and
this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
(including Contingent Interest, if any) on such Notes when such payments are
due, (ii) the Company's obligations with respect to such Notes under Article 2
and Section 4.02 hereof, (iii) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (iv) this Article Eight. Subject to compliance with this Article
Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company 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 4.03, 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.24,
4.25, 4.26, 4.27, 4.28, 4.29, 4.30, and 5.01, and the Events of Default
specified under Sections 6.01(c), 6.01(d), 6.01(e), 6.01(h), 6.01(k), 6.01(l),
6.01(m), 6.01(n), 6.01(o) or 6.01(p) hereof with respect to the outstanding
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant listed in this Section
8.03, 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.
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SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants as evidenced by a certificate delivered to the Trustee, to
pay the principal of, premium, if any, and interest (including the maximum
amount payable as Contingent Interest and Liquidated Damages, if any) due on
the outstanding Notes on the stated maturity date or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the
Issuance 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, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Legal Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such Covenant Defeasance and will be subject to U.S. 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
pursuant to Section 6.01(a), 6.01(b), 6.01(j), or 6.01(k) hereof on the date of
such 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 the Company is a party or by
which the Company is bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit and as of the date
of such opinion and subject to customary assumptions and exclusions following
the deposit, the trust funds will not
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be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under any
applicable United States law;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which Opinion of Counsel may be subject
to customary assumptions and exclusions, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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 the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest
(including the maximum amount of Contingent Interest payable), but such money
need not be segregated from other funds except to the extent required by law.
The Company 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 Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable 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 Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter,
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as an unsecured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture 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 time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be, provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest
(including Contingent Interest, if any) on any Note following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
SECTION 8.08. NOTE COLLATERAL.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to either Section 8.02 or 8.03, the Note Collateral, except the
funds in the trust fund described in Section 8.04 hereof, shall be released
pursuant to Section 10.03 hereof.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Notes or the Collateral
Documents without the consent of any Holder of a Note, and provided that any
required governmental approval, including that of the IGC, is obtained:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to comply with Article 5 hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of a Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA;
(f) to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 hereof; or
(g) to secure the Notes with additional collateral.
Upon the request of the Company accompanied by a resolution of the Board
of Managers of the Company authorizing the execution of any such amended or
supplemental Indenture, Notes or Collateral Documents, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of any amended or supplemental
Indenture, Notes or Collateral Documents 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, Notes or
Collateral Documents 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 or elsewhere in this
Indenture, the Company and the Trustee may amend or supplement this Indenture,
the Notes or the Collateral Documents 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 tender offer or exchange offer for the
Notes), provided that any required governmental approval is obtained, including
that of the IGC, 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 (including Contingent
Interest and Liquidated Damages, if any) on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance with any
provision of this Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange
offer for the Notes). Without the consent of at least 66-2/3% in principal
amount of the Notes then outstanding (including consents obtained in a tender
offer or exchange offer for such Notes), no waiver or amendment to this
Indenture may make any change to Section 4.16 hereof.
Upon the request of the Company accompanied by a resolution of the Board
of Managers of the Company authorizing the execution of any such amended or
supplemental Indenture, Notes or Collateral Documents, 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 7.02 hereof, the Trustee shall join with the Company in
the execution of such amended or supplemental Indenture, Notes or
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Collateral Documents, unless any such amended or supplemental Indenture, Notes
or Collateral Documents affects the Trustee's own rights, duties or immunities
under this Indenture, the Notes, the Collateral Documents or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture, Notes or Collateral
Documents.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture, Notes or Collateral Documents or waiver. Subject to Sections 6.04
and 6.07 hereof, the Holders of a majority in aggregate principal amount of the
Notes then outstanding may waive compliance in a particular instance with any
provision of this Indenture, the Notes or the Collateral Documents. However,
without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the optional or mandatory
redemption provisions of the Notes (provided, however, that this clause (b)
does not apply to any provision with respect to any Repurchase Offer);
(c) reduce the rate of or change the time for payment of interest
including Contingent Interest, if any, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal
amount of then outstanding Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past monetary Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest (including Contingent
Interest and Liquidated Damages, if any) on the Notes;
(g) release all or substantially all of the Note Collateral from the Lien
of this Indenture or the Collateral Documents; or
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(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Notes and the
Collateral Documents shall be set forth in an amended or supplemental Indenture
or Collateral Document that complies with the TIA as then in effect, if
applicable.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture, Note or
Collateral Document, if necessary, authorized pursuant to this Article Nine if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an
amendment or supplemental indenture, Note or Collateral Document until the
Board of Managers approves it. In executing any amended or supplemental
indenture, Note or Collateral Document, if necessary, 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, which Opinion
of Counsel may be subject to customary assumptions and exclusions, stating that
the execution of such amended or supplemental indenture, Note or Collateral
Document is authorized or permitted by this Indenture.
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ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. SECURITY.
The due and punctual payment of the principal of, premium, if any, and
interest on the Notes when and as the same shall be due and payable, whether on
an interest payment date, at maturity, by acceleration, repurchase, redemption
or otherwise, and interest on the overdue principal of, premium, if any, and
interest on the Notes and performance of all other obligations of the Company
to the Holders of Notes or the Trustee under this Indenture and the Notes,
according to the terms hereunder or thereunder, shall be secured by a first
lien on the Note Collateral as provided herein and in the Collateral Documents
which the Company has entered into simultaneously with the execution of this
Indenture for the benefit of the Holders of Notes. Each Holder of Notes, by
its acceptance thereof, consents and agrees to the terms of the Collateral
Documents (including, without limitation, the provisions providing for
foreclosure and release of Note Collateral and to the remedies available
therefor) as the same may be in effect or may be amended from time to time in
accordance with its terms and authorizes and directs the Trustee to enter into
the Collateral Documents and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of all documents executed pursuant to this Indenture and the Collateral
Documents and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Collateral
Documents to assure and confirm to the Trustee the security interest in the
Note Collateral contemplated hereby, by the Collateral Documents or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company shall take
any and all actions reasonably required to cause the Collateral Documents to
create and maintain, as security for the obligations of the Company hereunder,
a valid and enforceable perfected first priority Lien in and on all the Note
Collateral, in favor of the Trustee for the ratable benefit of the Holders,
superior to and prior to the rights of all third Persons and subject to no
other Liens than Permitted Liens.
SECTION 10.02. RECORDING AND OPINIONS.
The Company will cause the applicable Collateral Documents and any
financing statements, all amendments or supplements to each of the foregoing
and any other similar security documents as necessary, to be registered,
recorded and filed and/or re-recorded, re-filed and renewed in such manner and
in such place or places, if any, as may be required by law or reasonably
requested by the Trustee in order fully to preserve and protect the Lien
securing the obligations under the Notes pursuant to the Collateral Documents.
The Company will use its best efforts to obtain any required approval of the
IGC of any of the Collateral Documents, this Indenture or any Note.
The Company and any other obligor shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture, and
promptly after the execution and delivery of any other instrument of further
assurance or amendment, an
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Opinion of Counsel in the United States either (i) stating that, subject to
customary assumptions and exclusions, in the opinion of such counsel, this
Indenture and other applicable Collateral Documents and all other instruments
of further assurance or amendment have been properly recorded, registered and
filed to the extent necessary to make effective the Lien intended to be created
by such Collateral Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such details are given, and
stating that, subject to customary assumptions and exclusions, as to such
Collateral Documents and such other instruments such recording, registering and
filing are the only recordings, registerings and filings necessary to give
notice thereof and that no re-recordings, re-registerings or re-filings are
necessary to maintain such notice, and further stating that all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the rights of the Holders of Notes and
the Trustee hereunder and under the Collateral Documents or (ii) stating that,
subject to customary assumptions and exclusions, in the opinion of such
counsel, no such action is necessary to make any other Lien created under any
of the Collateral Documents effective as intended by such Collateral Documents;
(b) within 30 days after January 1, in each year beginning with the year
1997, an Opinion of Counsel, dated as of such date, either (i) stating that,
subject to customary assumptions and exclusions, in the opinion of such
counsel, such action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and re-filing of this Indenture and all
supplemental indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of this
Indenture and the Collateral Documents until the next Opinion of Counsel is
required to be rendered pursuant to this paragraph and reciting the details of
such action or referring to prior Opinions of Counsel in which such details are
given, and stating that all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the rights of the Holders and the Trustee hereunder and under the Collateral
Documents or (ii) stating that, subject to customary assumptions and
exclusions, in the opinion of such counsel, no such action is necessary to
maintain such Lien, until the next Opinion of Counsel is required to be
rendered pursuant to this paragraph;
(c) upon Delivery of the Permanent Vessel, an Opinion of Counsel, dated as
of such date, stating that, subject to customary assumptions and exclusions, in
the opinion of such counsel, the Permanent Vessel has been duly documented in
the name of the Company under the laws of the United States and the First
Preferred Ship Mortgage has been duly recorded in the Office of Officer in
Charge, Marine Inspection, U.S. Coast Guard, at the home port of the Permanent
Vessel (the only office in which such recording is necessary), has been duly
endorsed on the Vessel's documents and constitutes a first "preferred mortgage"
under the Ship Mortgage Act of 1920, as amended, having the effect and with the
priority provided in said Act and that no periodic re-recording or periodic
refiling of the First Preferred Ship Mortgage is necessary under existing law
to continue the lien on the First Preferred Ship Mortgage.
(d) the Company shall furnish to the Trustee the certificates or opinions,
as the case may be, required by TIA Section 314(d). Such certificates or
opinions will be subject to the terms of TIA Section 314(e).
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SECTION 10.03. RELEASE OF NOTE COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03, Note
Collateral may be released from the Lien and security interest created by this
Indenture and the Collateral Documents at any time or from time to time upon
the request of the Company pursuant to an Officers' Certificate certifying that
all terms for release and conditions precedent hereunder and under any
applicable Collateral Document have been met and specifying (i) the identity of
the Note Collateral to be released and (ii) the provision of this Indenture
which authorizes such release.
The Trustee shall release (at the sole cost and expense of the Company)
(a) Note Collateral that is the subject of an Asset Sale or which is sold,
transferred or disposed of; provided, such transaction is or will be in
accordance with the provisions of this Indenture or the applicable Collateral
Document, including, without limitation, the requirement that the Net Proceeds
from such Asset Sale are or will be applied in accordance with Section 4.10
hereof; (b) Note Collateral that is condemned, seized or taken by the power of
eminent domain or otherwise confiscated pursuant to an Event of Loss; provided
that the Net Loss Proceeds from such Event of Loss are or will be applied in
accordance with Section 4.11 hereof; (c) Note Collateral which may be released
with the consent of Holders pursuant to Article 9 hereof; (d) all Note
Collateral (except as provided in Article 8 hereof and, in particular, the
funds in the trust fund described in Section 8.04 and any funds in any accounts
established under Section 10.12 hereof) upon discharge or defeasance of this
Indenture in accordance with Article 8 hereof; (e) all Note Collateral upon the
payment in full of all obligations of the Company with respect to the Notes;
(f) any cash or Cash Equivalents held as security for the Notes may be released
pursuant to the terms of this Indenture, the Cash Collateral and Disbursement
Agreement or any other relevant Collateral Document; and (g) collateral under
the Security Agreement may be released in accordance with the terms of the
Security Agreement. Upon receipt of such Officers' Certificate the Trustee
shall execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Note
Collateral permitted to be released pursuant to this Indenture or the
Collateral Documents.
(b) No Note Collateral shall be released from the Lien and security
interest created by the Collateral Documents pursuant to the provisions of the
Collateral Documents unless there shall have been delivered to the Trustee the
certificate required by this Section 10.03 (or the applicable certificate
called for by the Cash Collateral and Disbursement Agreement).
(c) The Trustee may release Note Collateral from the Lien and security
interest created by this Indenture and the Collateral Documents upon the sale
or disposition of Note Collateral pursuant to the Trustee's powers, rights and
duties with respect to remedies provided under any of the Collateral Documents.
(d) The release of any Note Collateral from the terms of this Indenture
and the Collateral Documents shall not be deemed to impair the security under
this Indenture in contravention of the provisions hereof if and to the extent
the Note Collateral is released pursuant to the terms hereof. To the extent
applicable, the Company shall cause TIA Section
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313(b), relating to reports, and TIA Section 314(d), relating to the release
of property or securities from the Lien and security interest of the Collateral
Documents and relating to the substitution therefor of any property or
securities to be subjected to the Lien and securities interest of the
Collateral Documents to be complied with. Any certificate or opinion required
by TIA Section 314(d) may be made by an Officer of the Company except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by
an independent Person, which Person shall be an independent engineer, appraiser
or other expert selected or approved by the Trustee in the exercise of
reasonable care.
SECTION 10.04. PROTECTION OF THE TRUST ESTATE.
Upon prior written notice to the Company, the Trustee shall have the power
(i) to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Note Collateral under any of the
Collateral Documents; and (ii) to enforce the obligations of the Company, under
this Indenture or the Collateral Documents, to institute and maintain such
suits and proceedings as may be expedient to prevent any impairment of the Note
Collateral under the Collateral Documents and in the profits, rents, revenues
and other income arising therefrom; including the power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance
with, such enactment, rule or order would impair any Note Collateral or be
prejudicial to the interests of the Holders of Notes or the Trustee, to the
extent permitted thereunder.
SECTION 10.05. CERTIFICATES OF THE COMPANY.
The Company shall furnish to the Trustee, prior to each proposed release
of Note Collateral pursuant to the Collateral Documents (i) all documents
required by TIA Section 314(d) and (ii) and Opinion of Counsel in the United
States, which may be rendered by internal counsel to the Company, to the effect
that, subject to customary assumptions and exclusions, such accompanying
documents constitute all documents required by TIA Section 314(d). The Trustee
may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as
conclusive evidence of compliance with the foregoing provisions the appropriate
statements contained in such documents and such Opinion of Counsel.
SECTION 10.06. CERTIFICATES OF THE TRUSTEE.
In the event that the Company wishes to release Note Collateral in
accordance with the Collateral Documents and has delivered the certificates and
documents required by the Collateral Documents and Sections 10.03 and 10.05
hereof, the Trustee shall determine whether it has received all documentation
required by TIA Section 314(d) in connection with such release and, based on
such determination and the Opinion of Counsel delivered pursuant to Section
10.05, shall deliver a certificate to the Trustee setting forth such
determination.
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SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of Notes on
behalf of the Holders of Notes take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Collateral
Documents and (b) collect and receive any and all amounts payable in respect of
the Obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Note Collateral by any acts that may be unlawful
or in violation of the Collateral Documents or this Indenture, and such suits
and proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of Notes in the Note Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the security interest hereunder or be prejudicial to the interest of the
Holders of Notes or of the Trustee).
SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Upon an Event of Default and so long as such Event of Default continues,
the Trustee may exercise in respect of the Note Collateral, in addition to the
other rights and remedies provided for herein, in the Collateral Documents or
otherwise available to it, all of the rights and remedies of a secured party
under the Uniform Commercial Code or other applicable law, and the Trustee may
also upon obtaining possession of the Note Collateral as set forth herein,
without notice to the Company, except as specified below, sell the Note
Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of the Trustee's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Trustee may deem commercially reasonable. The Company
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such a sale were a public
sale. The Company agrees that, to the extent notice of sale shall be required
by law, at least 10 days' notice to the Company of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. The Trustee may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
Any cash that is Note Collateral held by the Trustee and all cash proceeds
received by the Trustee in respect of any sale of, collection from, or other
realization upon all or any part of the Note Collateral shall be applied
(unless otherwise provided for in the Collateral Documents and after payment of
any and all amounts payable to the Trustee pursuant to the Indenture), as the
Trustee shall determine or as the Holders of the Notes shall direct pursuant to
Section 6.05 hereof, (i) against the Obligations for the ratable benefit of the
Holders of the Notes, (ii) to maintain, repair or otherwise protect the Note
Collateral or (iii) to take such other action to protect the other rights of
the Holders of the Notes. Any surplus of such cash or
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cash proceeds held by the Trustee and remaining after payment in full of all
the Obligations of the Company under this Indenture, the Notes or the
Collateral Documents shall be paid over to the Company or to whomsoever may be
lawfully entitled to receive such surplus or as a court of competent
jurisdiction may direct.
SECTION 10.09. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Company under this
Indenture, the Notes and the Collateral Documents, or upon Legal Defeasance,
the Trustee shall, at the request of the Company, deliver a certificate to the
Collateral Agent stating that such Obligations have been paid in full, and
instruct the Collateral Agent to release the Liens pursuant to this Indenture
and the Collateral Documents.
SECTION 10.10. COOPERATION OF TRUSTEE.
In the event the Company pledges or grants a security interest in
additional Note Collateral, the Trustee shall cooperate with the Company in
reasonably and promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security interest in
the Note Collateral to be so substituted or pledged. To the extent
practicable, the terms of any security agreement or other instrument or
document necessitated by any such substitution or pledge shall be comparable to
the provisions of the existing Collateral Documents. Subject to, and in
accordance with the requirements of this Article 10 and the terms of the
Collateral Documents, in the event that the Company engages in any transaction
pursuant to Section 10.03, the Trustee shall cooperate with the Company in
order to facilitate such transaction in accordance with any reasonable time
schedule proposed by the Company, including by delivering and releasing the
Note Collateral in a prompt and reasonable manner.
SECTION 10.11. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more Collateral Agents
hereunder. Each of such Collateral Agents may be delegated any one or more of
the duties or rights of the Trustee hereunder or under the Collateral Documents
or which are specified in any Collateral Documents, including without
limitation, the right to hold any Note Collateral in the name of, registered
to, or in the physical possession of, such Collateral Agent, for the rateable
benefit of the Holders of the Notes. Each such Collateral Agent shall have
such rights and duties as may be specified in an agreement between the Trustee
and such Collateral Agent. The Trustee and any Collateral Agent shall be
authorized hereunder to give any acknowledgment reasonably requested by any
party to confirm the rights and obligations of the parties.
SECTION 10.12. CASH COLLATERAL ACCOUNTS.
(a) As security for the payment of the Obligations under the Indenture,
the Notes and the Collateral Documents, the Company hereby pledges to the
Trustee and grants to the Trustee for the ratable benefit of the Holders of the
Notes a duly perfected first priority security interest in the Construction
Account, the Working Capital Account, the Completion Reserve
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Account, the Interest Reserve Account, the Asset Sale Account and the Event of
Loss Account (collectively, the "Cash Collateral Accounts"), together with all
amounts in, and investments of amounts in, each and every such account. The
Company also agrees not to further pledge or grant other security interests in
the foregoing Note Collateral to any Person, except as otherwise provided in
this Indenture. The Company shall establish the Cash Collateral Accounts in
the name of the Trustee pursuant to the terms of the Cash Collateral and
Disbursement Agreement. The Cash Collateral Accounts shall be maintained with
an Eligible Institution, which initially shall be the Disbursement Agent, and
all funds therein may only be invested in accordance with Section 10.12(e)
below.
(b) Cash in any Cash Collateral Account may be withdrawn pursuant to the
terms of the Cash Collateral and Disbursement Agreement. The Company further
covenants to maintain each Cash Collateral Account in existence so long as any
Obligations under the Notes are outstanding.
(c) The Company agrees to do or cause to be done all things, and to make
all filings, and to enter into any agreements or instruments reasonably
requested by the Eligible Institution at which any Cash Collateral Account is
located, to evidence and perfect the first priority security interest in favor
of the Trustee for the ratable benefit of the Noteholders granted therein, the
rights and interest hereunder of the Trustee, for the ratable benefit of the
Holders of the Notes, in such Cash Collateral Account and to otherwise effect
the intention and purposes of the parties hereunder with respect to such Cash
Collateral Account.
(d) In its discretion, the Company may request the Disbursement Agent to,
and, provided that no Event of Default or Default shall exist, the Disbursement
Agent shall, (i) invest any Cash Collateral in the Cash Collateral Accounts in
Cash Equivalents and (ii) invest interest paid on the Cash Equivalents referred
to in clause (i) above, and reinvest other proceeds of any such Cash
Equivalents that may mature or be sold in the name of the Trustee as the
Company may select (the Cash Equivalents referred to in clauses (i) and (ii)
above being, collectively, the "Collateral Investments"), provided, that the
Trustee shall retain an exclusive, valid and perfected security interest in the
proceeds of the funds so invested. Interest and proceeds that are not invested
or reinvested in Collateral Investments as provided in the immediately
preceding sentence shall be deposited and held in the Cash Collateral Accounts
to which such initial investments were allocated. The Trustee shall have no
liability for investments made in accordance with the Company's written
instructions.
(e) The Company shall establish each Cash Collateral Account in the name
of the Trustee and the Trustee shall have sole dominion and control thereof and
in all amounts in, and investments of amounts in, such accounts, to the full
extent necessary to ensure the validity, effectiveness, perfection, priority
and enforceability of the foregoing pledge and security interest in favor of
the Trustee.
SECTION 10.13. ADDITIONAL COLLATERAL.
At such time that the Company commences construction of a new vessel to
function as the Permanent Vessel, the Company hereby agrees to execute and
deliver (i) pending construction of such Permanent Vessel, a Construction
Assignment with respect to each
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material construction contract in the form attached hereto as Annex A-1 and the
Construction Security Agreement in the form attached hereto as Annex A-2, each
with such changes or modifications as are deemed appropriate by the Company and
the Trustee at the time of execution, including any such changes or
modifications relating to the law of the state of the site of construction of
the Permanent Vessel and (ii) upon Delivery of such Permanent Vessel, the First
Preferred Ship Mortgage in the form attached hereto as Annex A-3, with such
changes or modifications as are deemed appropriate by the Company and the
Trustee at the time of execution.
SECTION 10.14. GAMING LAWS.
(a) Each of the provisions of this Indenture is subject to, and shall be
enforced in compliance with, the provisions of any applicable laws, including
without limitation, the rules and regulations of the IGC (together with the
Indiana Riverboat Gambling Act, the "Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that the Gaming Laws
may impose certain licensing or transaction approval requirements prior to the
exercise of the rights and remedies granted to it under this Indenture with
respect to the Note Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in connection with
the taking of any of the actions which may be taken by the Trustee in the
exercise of its rights hereunder, then the Company agrees to use its reasonable
best efforts to secure such consent and to cooperate with the Trustee in
obtaining any such consent. Upon the occurrence and during the continuation of
any Event of Default, the Company shall promptly execute and/or cause the
execution of all applications, certificates, instruments, and other documents
and papers that the Trustee may be required to file in order to obtain any
necessary approvals under the Gaming Laws, and if the Company fails or refuses
to execute such documents, the Trustee or the clerk of the court with
jurisdiction may execute such documents on behalf of the Company.
(d) Notwithstanding any other provision of this Indenture to the contrary,
nothing in this Indenture shall (i) effect any transfer of any ownership
interest (within the meaning of 68 Indiana Administrative Code 5) in the
Company or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including the
Company, under any of the Gaming Laws, including Indiana Code 4-33.
(84)
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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 Section 318(C), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
The Majestic Star Casino, LLC
c/o Barden Development, Inc.
400 Renaissance Center - Suite 2400
Detroit, Michigan 48243
Attention: Vice President
Telecopy:
(313) 259-0154
With a copy to:
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243-1668
Attention: Frank K. Zinn, Esq.
Telecopy:
(313) 568-6915
(85)
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If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Administration
Telecopy:
(212) 858-2952
With a copy to:
Miller, Canfield, Paddock and Stone, P.L.C.
150 West Jefferson
Detroit, Michigan 48226
Attention: Charles L. Burleigh, Jr., Esq.
Telecopy:
(313) 496-8450
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives
it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
(86)
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SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 11.04. CERTIFICATE AND OPTIONS AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 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, subject to customary assumptions and exclusions, in the
opinion of such counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he 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.
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SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
MEMBERS.
No officer or office holder, employee, agent, representative, or member of
the Company as such, shall have any liability for any obligations of the
Company under the Notes, this Indenture or the Collateral Documents, as
applicable, 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.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW (EXCLUSIVE OF CHOICE OF LAWS PRINCIPLES) OF THE STATE OF
NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES,
EXCEPT TO THE EXTENT THAT THE LAWS OF OTHER JURISDICTIONS ARE MANDATORILY
APPLICABLE WITH RESPECT TO THE SECURITY INTERESTS CONTEMPLATED BY ARTICLE 10
HEREOF.
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 the Company 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 Company in this Indenture and the Notes, as
applicable, shall bind their respective 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.
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.
(88)
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SIGNATURES
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
Dated as of May 22, 1996
By: Kenneth L. Kramer
----------------------------
Name: Kenneth L. Kramer
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
Dated as of May 22, 1996 By: Nancy R. Besse
----------------------------
Name: Nancy R. Besse
Title: Vice President
(89)
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ANNEX A-1
ASSIGNMENT OF CONSTRUCTION CONTRACTS
THIS ASSIGNMENT OF CONSTRUCTION CONTRACTS ("Assignment") is
made and entered into as of this ____ day of ________, 199_, by THE MAJESTIC
STAR CASINO, LLC, an Indiana limited liability company("Assignor"), in favor of
IBJ SCHRODER BANK & TRUST COMPANY as trustee ("Assignee" or "Trustee") for the
benefit of the holders from time to time of those certain Senior Secured Notes
due 2003 of The Majestic Star Casino, LLC (the "Holders"). Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Indenture (as hereinafter defined).
FOR VALUE RECEIVED, Assignor does hereby assign, transfer, and
set over to Assignee, for the equal and ratable benefit of the Holders, all of
its right, title and interest in and to the contracts and agreements listed on
Exhibit A attached hereto along with all amendments, modifications, general
conditions, change orders and addenda thereto (the "Contracts")by and between
the Assignor and the contractors parties thereto (the "Contractors") entered
into in connection with the construction and development (the "Construction")
of the vessel more particularly described on Exhibit B attached hereto (the
"Vessel") and certain personal property located on the Vessel.
A. THIS ASSIGNMENT IS MADE FOR THE PURPOSE OF SECURING:
1. the payment of (i) the maximum principal sum of
$105,000,000, in the aggregate plus all accrued interest thereon to be
paid pursuant to the provisions of that certain Indenture, dated as of
May __, 1996 (the "Indenture"), by and between Assignor and Assignee
for the benefit of the Holders and the promissory notes of Assignor
issued pursuant to said Indenture (said Indenture and the promissory
notes being hereinafter collectively referred to as the "Loan
Agreement"), (ii) any and all other sums due or to become due under
the Loan Agreement, the Collateral Documents, or any other Financing
Document (hereinafter defined), (iii) any further or subsequent
advances made under the Loan Agreement, the Collateral Documents or
any other Financing Document, and (iv) any amendments, extensions,
renewals, replacements, modifications, restatements or supplements of
the Loan Agreement or any other Financing Document (the items set
forth in clauses (i) through (iv) hereof being hereinafter
collectively referred to as the "Indebtedness"); and
99
2. the performance of all of the terms, covenants,
conditions, agreements, obligations and liabilities of Assignor
(collectively the "Obligations") under (i) the Loan Agreement (ii) the
Collateral Documents, (iii) any supplemental agreements, undertakings,
instruments, documents or other writings executed by Assignor as a
condition to advances under the Loan Agreement or otherwise in
connection with the Loan Agreement, (iv) all chattel mortgages,
pledges, powers of attorney, consents, assignments, notices, leases
and financing statements heretofore, now or hereafter executed by or
on behalf of Assignor or any other Person (hereinafter defined) in
connection with the Loan Agreement or the transactions contemplated
thereby, and (v) any extensions, renewals, replacements or
modifications of any of the foregoing (all of the foregoing documents
being hereinafter collectively referred to as the "Financing
Documents").
B. Concurrently herewith Assignor has granted to Assignee a
security interest in the Contracts pursuant to the Construction Security
Agreement.
C. ASSIGNOR AGREES:
(1) To faithfully abide by, perform and discharge each and
every material obligation, covenant and agreement of the Contracts to be
performed by Assignor thereunder, at no cost or expense to Assignee, and (a)
to enforce or secure the performance of each and every material obligation,
covenant, condition and agreement contained in the Contracts and to be
performed by Contractors to the extent reasonably necessary to effect the
purposes of the Contracts; and (b) not to modify, extend or in any way alter
the terms of the Contracts in any way which would materially and adversely
affect the security of Assignee's interest therein or accept a surrender
thereof, or to waive, excuse, condone or in any manner release or discharge
Contractors of or from the material obligations, covenants, conditions and
agreements to be performed by Contractors in the manner and at the place and
time specified therein. Assignor hereby expressly releases, relinquishes and
surrenders unto Assignee all its right, power and authority to amend or modify
the Contracts in any way which would materially and adversely affect the
security of Assignee's interest therein and all its right, power and authority
to cancel or terminate the Contracts without the prior written consent of
Assignee.
(2) That at no cost or expense to Assignee, Assignor shall
appear in and defend any action or proceeding arising under, growing out of or
in any manner connected with the Contracts or the obligations, duties or
liabilities of Assignor thereunder, and shall pay all reasonable costs and
expenses of Assignee, including reasonable attorneys' fees and expenses,
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except to the extent that such fees and expenses arise as a result of a
wrongful act of Assignee, in any action or proceeding concerning the Contracts
in which Assignee may appear.
(3) That if Assignor fails to make any payment or to do any
act as herein provided or fails to do so promptly upon demand by Assignee, then
Assignee shall have the right, but not the obligation, (i) to make such payment
or do such act in such manner and to such extent as Assignee may deem necessary
to protect the security hereof, including, without limiting the generality of
the foregoing, the right to appear in and defend any action or proceeding
purporting to affect the security hereof or the rights or powers of Assignee,
and (ii) to perform and discharge each and every obligation, covenant and
agreement of Assignor contained in the Contracts. In exercising any such
rights or powers, Assignee may employ counsel and Assignor shall pay such
reasonable costs and expenses as Assignee shall incur, including, without
limitation, reasonable attorneys' fees. Notwithstanding the foregoing,
Assignor shall not be released from any obligation hereunder.
(4) To pay immediately upon demand all sums expended by
Assignee under the authority hereof, together with interest thereon at a rate
equal to the sum of the fixed rate of interest set forth in the Loan Agreement
and 1.00% (the "Interest Rate").
D. THE PARTIES HERETO MUTUALLY AGREE THAT:
(1) As long as no Event of Default has occurred and is
continuing under the Loan Agreement (as Event of Default is defined therein),
Assignor shall have the right to exercise all of its rights (other than its
rights to amend, modify, cancel, terminate or in any way alter the terms of the
Contracts except as aforesaid) under the Contracts.
(2) Assignor agrees that Assignee does not assume any of
Assignor's obligations or duties concerning the Contracts until and unless
Assignee shall exercise its rights hereunder. Assignor, and Contractors by
execution of the Consent to this Assignment, further agree that no increase in
the cost of the Contracts shall be effective without Assignee's prior written
consent.
(3) Assignee shall not exercise its rights under this
Assignment until the occurrence of an Event of Default. Upon the occurrence of
such an Event of Default, and for so long as such Event of Default continues,
Assignee may, at its option, upon written notice to Contractors, exercise all
of its rights granted under this Assignment. Upon giving such notice to
Contractors, Assignee shall thereby assume all obligations of Assignor under
the Contracts, including, without limitation, the right to receive and collect
all moneys and other payments receivable by,
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101
or payable to, Assignor under the Contracts, the right to give and receive
copies of all notices and other instruments or communications, and the right to
cure or take action with respect to a default under the Contracts. Assignor
hereby irrevocably constitutes and appoints Assignee, upon the occurrence and
during the continuation of an Event of Default, as its attorney-in-fact to
demand, receive and enforce Assignor's rights with respect to the Contracts, to
give appropriate receipts, releases and satisfactions for and on behalf of
Assignor, and to do any and all acts in the name of Assignor or in the name of
Assignee with the same force and effect as Assignor could do if this Assignment
had not been made. The exercise of any of the foregoing rights or remedies by
Assignee under this Assignment shall not cure or waive any Event of Default
under the Financing Documents, or waive, modify or affect any notice of Event
of Default under any of the foregoing, or invalidate any act done pursuant to
any such notice. Assignee may exercise its rights under this Paragraph 3 as
often as any such Event of Default may occur. The exercise of such rights
shall not constitute a waiver of any of the remedies of Assignee under the
Financing Documents, or any other document or agreement existing at law or in
equity, by statute or otherwise.
(4) Assignor shall and does hereby agree to indemnify, defend
and hold Assignee harmless from any and all liability, loss or damage, which it
may incur under the Contracts or under or by reason of this Assignment and from
any and all claims and demands whatsoever which may be asserted against it by
reason of any alleged obligation or undertaking on its part to perform or
discharge any of the terms, covenants or agreements contained in the Contracts
or under or by reason of this Assignment; provided, however, that such
indemnification shall exclude any such liability, loss, damage, claim or demand
arising out of any gross negligence or willful act or omission of Assignee, its
agents or employees. Should Assignee incur any such liability, loss or damage
under the Contracts or under or by reason of this Assignment, or in the defense
of any such claim or demand, the amount thereof, including costs, expenses and
reasonable attorneys' fees, together with interest thereon at the Interest
Rate, shall be secured hereby, and Assignor shall reimburse Assignee therefor
immediately upon demand.
(5) Until the Indebtedness secured hereby shall have been
paid in full and all of the Obligations secured hereunder shall have been
satisfied, Assignor covenants and agrees to transfer and assign to Assignee any
and all subsequent agreements which are entered into pursuant to, in
replacement of or to serve substantially the same purpose as the Contracts upon
the same or substantially the same terms and conditions as herein contained,
and to make, execute and deliver to Assignee, upon demand, any and all
instruments that may be necessary therefor.
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(6) Upon the payment in full of all of the Indebtedness and
the satisfaction of all Obligations secured hereunder, this Assignment shall
become and be void and of no effect, but the affidavit of any officer of
Assignee showing any part of said Indebtedness remaining unpaid or any
Obligation not satisfied shall be and constitute rebuttable evidence of the
validity, effectiveness and continuing force of this Assignment, and any person
may and is hereby authorized to rely thereon. Upon such termination, all the
estate, right, title, interest, claim and demand of Assignee under the
Contracts shall revert to Assignor, and Assignee shall deliver to Assignor an
instrument cancelling the Assignment and reassigning the Contracts to Assignor.
(7) Assignor warrants that the Contracts have not been
amended or modified except as set forth herein, that no default by Assignor
exists thereunder and that no event has occurred or exists which, with notice
or lapse of time or both, would constitute a default by Assignor thereunder,
and that, to the best knowledge of Assignor, no default by any of the
Contractors exists thereunder and that no event has occurred or exists which,
with notice or lapse of time or both, would constitute a default by Contractors
thereunder.
(8) All notices and other communications provided for
hereunder shall be delivered in the manner set forth in the Indenture.
(9) Assignor hereby represents and warrants to Assignee
that no previous assignment of its interest in the Contracts have been made,
and, except for transfers to Assignee, Assignor agrees not to assign, sell,
pledge, transfer, or otherwise encumber its interest in the Contracts so long
as this Assignment is in effect.
(10) This Assignment shall be binding upon and inure to
the benefit of the heirs, legal representatives, assigns or successors in
interest of the Assignor and Assignee.
(11) This Assignment and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the State
of ___________ without regard to principles of conflicts of laws, except that
the law of the State of New York (without regard to principles of conflicts of
laws) shall govern the resolution of issues arising under the Loan Agreement to
the extent that such resolution is necessary to the interpretation of this
Assignment. Whenever possible, each provision of this Assignment shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Assignment shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the
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103
extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Assignment.
(12) Unless expressly provided to the contrary herein,
Assignee agrees that in exercising any of its rights hereunder, it shall act
reasonably and without unreasonable delay.
(13) Except as otherwise provided by the Indenture, 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 tender offer
or exchange offer for Notes) shall be required to amend, modify, supplement, or
waive any provision of this Assignment. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
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104
IN WITNESS WHEREOF, Assignor has caused this Agreement to be
duly executed and delivered as of the date first above written.
"ASSIGNOR"
THE MAJESTIC STAR CASINO, LLC,
By: Barden Development, Inc.
By:_______________________
Name:
Title:
Witness:
___________________
105
EXHIBIT A
Contracts
106
EXHIBIT B
Description of Vessel
107
CONSENT TO ASSIGNMENT OF CONSTRUCTION CONTRACT
In consideration of the holders (the "Holders") from time to
time of those certain Senior Secured Notes due 2003 of The Majestic Star
Casino, LLC, an Indiana limited liability company (in such capacity, the
"Assignor"), extending financing to Assignor pursuant to the Indenture dated as
of May __, 1996 between the Assignor and IBJ Schroder Bank & Trust Company (the
"Trustee" or "Assignee") in the maximum principal sum of $105,000,000, for the
purpose, among other things, of financing the construction of certain personal
property located on the Vessel (the "Vessel") described in and to be
constructed under that certain [Standard Form of Agreement Between Owner and
Contractor] (the "Contract") dated _____________, between Assignor and
__________________, a ___________ [corporation] ("Contractor"), Contractor
hereby consents to the assignment by Assignor to the Assignee, for the benefit
of the Holders, of all of Assignor's right, title and interest in, to and under
the Contract and agrees with Assignee as follows:
1. Contractor will, at the same time it gives any written
notice of default under the Contract to Assignor, send a copy of such written
notice to Assignee, by the manner and means provided for the giving of notices
under the Contract addressed to IBJ SCHRODER BANK & TRUST COMPANY, in its
capacity as Assignee for the benefit of the Holders, at One State Street, New
York, NY 10004, Attn.: Corporate Trust Administration, with a copy to Miller,
Canfield, Paddock & Stone, 150 W. Jefferson, Suite 2500, Detroit, MI 48226,
Attn.: Charles L. Burleigh, Jr., Esq. Assignee shall have forty-five (45)
days from the receipt of such notice of default to remedy or cure said default;
provided, however, that nothing herein shall require Assignee to cure said
default but Assignee shall, in its sole discretion, have the option to do so.
2. In the event of a default by Assignor under the Contract,
Contractor, at Assignee's request, shall continue its performance under the
Contract on Assignee's behalf in accordance with the terms thereof, and in such
event, Contractor shall be paid in accordance with the Contract for all work,
labor and materials rendered.
3. Contractor will complete all construction contemplated by
the Contract, including, without limitation, construction of the building
shell, in accordance with the provisions of the Contract. Contractor covenants
and agrees to discharge or cause to be discharged all liens or claims of lien
filed or otherwise asserted against the Vessel by any of its suppliers, vendors
or subcontractors, provided Contractor has been paid in accordance with the
terms of the Contract.
4. The Contract is in full force and effect and is binding on
Contractor. No default by Contractor exists under the
108
Contract, no event has occurred which, with notice or lapse of time or both,
would constitute a default by Contractor thereunder, and all conditions to the
effectiveness or continuing effectiveness thereof required to be satisfied as
of the date hereof have been satisfied.
This Consent to Assignment of Construction Contract is made
as of this _____ day of ________, 199_.
"CONTRACTOR"
___________________,
a ______________ [corporation]
By: _______________________
Name:
Title:
109
Annex A-2
SECURITY AGREEMENT
DATED AS OF _______ __, 199_
between
THE MAJESTIC STAR CASINO, LLC
AND
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
110
TABLE OF CONTENTS
SECTION 1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 4. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 5. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 6. Perfection and Maintenance of Security Interest and Lien . . . . . . . . . . 5
SECTION 7. Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. Filing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 9. Schedule of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. [Equipment and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Partial Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 12. Release of the Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 13. General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 14. Trustee Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . 9
SECTION 15. Trustee May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 16. Trustee's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 17. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 18. Exercise of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 20. Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 21. Interpretation and Inconsistencies; Merger . . . . . . . . . . . . . . . . . 12
SECTION 22. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 23. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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SECTION 25. Continuing Security Interest; Termination . . . . . . . . . . . . . . . . . 13
SECTION 26. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 27. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL . . . . . . . . . . 14
(A) NON-EXCLUSIVE JURISDICTION . . . . . . . . . . . . . . . . . . . . 14
(B) OTHER JURISDICTIONS . . . . . . . . . . . . . . . . . . . . . . . 14
(D) WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . 15
(E) WAIVER OF BOND . . . . . . . . . . . . . . . . . . . . . . . 15
(F) ADVICE OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 29. Gaming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 30. Interaction with Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 31. Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 32. Appointment of Collateral Agent . . . . . . . . . . . . . . . . . . . . . . 17
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SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of ______ __, 199_,
is made by The Majestic Star Casino, LLC, an Indiana limited liability company
("Grantor"), in favor of IBJ SCHRODER BANK & TRUST COMPANY, as trustee (the
"Trustee"), for the benefit of the "Holders" (as defined below) who are, or may
hereafter become, parties to the "Indenture" referred to below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Indenture dated as of May 22, 1996
between Grantor and the Trustee (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Indenture"),
pursuant to which Grantor and the Trustee have agreed to certain terms for the
benefit of Grantor and the Holders. It is a condition to the Indenture that
Grantor shall grant the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Indenture are used herein as therein defined, and the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and the plural forms of the terms defined):
"Agreement" shall mean this Security Agreement, as the same may from
time to time be amended, restated, modified or supplemented, and shall refer to
this Agreement as the same may be in effect at the time such reference becomes
operative.
"Builders" shall mean ___________________, a _____________
[corporation], and ________________, a [corporation].
"Collateral" shall mean all property and rights in property now owned
or hereafter at any time acquired by Grantor in or upon which a Lien is granted
in favor of the Trustee by Grantor or a Subsidiary of Grantor under this
Agreement, including, without limitation, the property described in Section 2.
"Construction Contracts" shall mean Contracts as defined in the
Construction Contract Assignment.
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"Holders" shall mean the holders of the Secured Obligations from time
to time and shall include their respective successors, transferees and assigns.
"Secured Obligations" shall mean the Obligations under the Indenture.
"Shipyard" shall mean the Builders' construction facilities in
__________, ____________.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of ________; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Trustee's and the Holders' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of ______________, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
"Vessel" shall mean the vessel being built by the Grantor pursuant to
the Construction Contracts.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of the Secured Obligations, Grantor hereby
assigns and pledges to Trustee, for the equal and ratable benefit of the
Holders, and grants to Trustee for the equal and ratable benefit of the Holders
an exclusive first priority security interest in all of Grantor's right, title
and interest in and to the following, whether now owned or existing or
hereafter arising or acquired and wheresoever located:
(a) the Vessel, together with any and all present and future
materials, components, engines, boilers, machinery, masts, boats, anchors,
cables, chains, rigging, tackle, apparel, furniture, capstans, outfit, tools,
pumps, gear, furnishings, appliances, fittings, spare and replacement parts and
any and all manuals, materials, supplies and components in any way related to
the construction of such vessel and any and all appurtenances thereto,
appertaining or belonging to the vessel to be constructed, whether now or
hereafter acquired, and whether onboard or not onboard, together with any and
all present and future additions, improvements and replacements therefor, made
in or to said vessel, or any part or parts thereof;
(b) all materials (other than piping, cables, fittings and other
materials taken out of Builders' stock), all items of machinery and all items
of equipment (other than equipment taken out of Builders' stock), which are
purchased or acquired for use
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in the construction of the Vessel, which will, when so used, form part of the
Vessel and which have been delivered to the Shipyard;
(c) all parts and components of the Vessel which are fabricated by
the Builders for use in the construction of the Vessel, which will, when so
used, form a part of the Vessel and the fabrication of which is commenced at
the Shipyard;
(d) if the Vessel has a keel, the keel; and if the Vessel does not
have a keel, the bottom plates, and all Materials, machinery, equipment,
components, and fabrications forming a part of the Vessel when permanently
installed in place;
(e) The Construction Contracts; and
(f) all accessories, attachments, accessions, substitutions,
replacements and additions to the foregoing, whether added now or later, and
all proceeds derived or to be derived therefrom including without limitation,
any equipment purchased with proceeds, and all insurance proceeds if any, and
proceeds and refunds of insurance proceeds, if any, and any sums that may be
due from third parties who may cause damage to any of the foregoing, or from
any insurer, whether due to judgment, settlement or other process, and any and
all present and future accounts, chattel paper, instruments, notes and moneys
that may be derived from the sale, lease or other disposition of any of the
foregoing, and any rights of the Grantor to collect or enforce payment thereof,
as well as to enforce any guaranties of the foregoing and security therefore,
and all present and future general intangibles of the Grantor, in any way
related or pertaining to the acquisition, fabrication, construction,
assemblage, fitting, ownership, operation or use of the foregoing, and all
rights of the Grantor with regard thereto.
SECTION 3. Authorization. Grantor hereby authorizes Trustee to
retain and each Holder, and each Affiliate of Trustee and of each Holder, to
pay or deliver to Trustee, for the benefit of the Holders, without any
necessity on any Holder's part to resort to other security or sources of
reimbursement for the Secured Obligations, at any time following the occurrence
and during the continuance of any Event of Default, and without further notice
to Grantor (such notice being expressly waived), any sums or property held by
such Person, for application against any portion of the Secured Obligations,
irrespective of whether any demand has been made or whether such portion of the
Secured Obligations is mature. Trustee will promptly notify Grantor of
Trustee's receipt of such funds or other property for application against the
Secured Obligations, but failure to do so will not affect the validity or
enforceability thereof. Trustee may give notice of the above grant of security
interest and assignment of the aforesaid sums, and authorization, to, and make
any suitable arrangements with, any such Holder for effectuation thereof, and
Grantor hereby irrevocably appoints Trustee as its attorney to
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collect, following the occurrence and during the continuance of an Event of
Default, any and all such sums to the extent any such payment is not made to
Trustee by such Holder or Affiliate thereof.
SECTION 4. Intentionally Omitted.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter
(except for changes permitted or contemplated by this Agreement) until
termination of this Agreement pursuant to Section 25:
(a) The correct name of Grantor is set forth in the first paragraph
of this Agreement. The chief place of business and chief executive office of
Grantor are located at One Buffington Harbor, Gary, Indiana 46406-3000.
(b) This Agreement creates in favor of Trustee a legal, valid and
enforceable security interest in the Collateral. When financing statements
have been filed in the appropriate offices against Grantor in the locations
listed on Schedule 1, Trustee will have a fully perfected lien on, and security
interest in, the Collateral in which a security interest may be perfected by
such filing, subject only to Permitted Liens under the Indenture.
(c) Grantor is the legal and beneficial owner of the Collateral free
and clear of all Liens except for Permitted Liens as defined in the Indenture.
Grantor currently conducts business under the name The Majestic Star Casino,
LLC and, in certain areas and for certain operations, the trade names listed on
Schedule 2. The Grantor uses no trade names or fictitious names, except as set
forth on Schedule 2.
(d) No authorization, approval or other action by, notice to or
filing with any Governmental Authority (as defined in the Security Agreement)
that has not already been taken or made and which is in full force and effect,
or contemplated by this Agreement is required (i) for the grant by Grantor of
the security interest in the Collateral granted hereby; or (ii) the execution,
delivery or performance of this Agreement by Grantor.
SECTION 6. Perfection and Maintenance of Security Interest and
Lien. Grantor agrees that until all of the Secured Obligations have been fully
satisfied and the Indenture has been terminated, Trustee's security interests
in and Liens on and against the Collateral and all proceeds and products
thereof, shall continue in full force and effect. Grantor shall perform any
and all steps required by Trustee to perfect, maintain and protect Trustee's
security interests in and Liens on and against the Collateral granted or
purported to be granted hereby or to
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enable Trustee to exercise its rights and remedies hereunder with respect to
any Collateral, including, without limitation, (i) executing and filing
financing or continuation statements, or amendments thereof, in form and
substance reasonably satisfactory to Trustee, (ii) delivering to Trustee all
certificates, notes and other instruments (including, without limitation, all
letters of credit on which Grantor is named as a beneficiary) representing or
evidencing Collateral, which certificates, notes and other instruments have
been duly endorsed and are accompanied by duly executed instruments of transfer
or assignment, including, but not limited to, note powers, all in form and
substance satisfactory to Trustee, (iii) delivering to Trustee warehouse
receipts covering that portion of the Collateral, if any, located in warehouses
and for which warehouse receipts are issued, (iv) after the occurrence and
during the continuance of an Event of Default, transferring inventory and
equipment to warehouses designated by Trustee or taking such other steps as are
deemed reasonably necessary by Trustee to maintain Trustee's control of the
inventory and equipment, and (v) marking conspicuously each document, contract,
chattel paper and all records pertaining to the Collateral with a legend, in
form and substance satisfactory to Trustee, indicating that such document,
contract, chattel paper, or Collateral is subject to the security interest
granted hereby.
SECTION 7. Financing Statements. To the extent permitted by
applicable law, Grantor hereby authorizes Trustee to file one or more financing
or continuation statements and amendments thereto, disclosing the security
interest granted to Trustee under this Agreement without Grantor's signature
appearing thereon and Trustee agrees to notify Grantor when such a filing has
been made. Grantor agrees that a carbon, photographic, photostatic, or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. If any inventory or equipment is in the possession or
control of any warehouseman or Grantor's agents or processors, Grantor shall,
upon Trustee's request, notify such warehouseman, agent or processor of
Trustee's security interest in such inventory and equipment and, upon Trustee's
request, instruct them to hold all such inventory or equipment for Trustee's
account and subject to Trustee's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements,
including, without limitation, any filing expenses incurred by Trustee pursuant
to Section 7.
SECTION 9. Schedule of Collateral. Grantor shall furnish to
Trustee from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Trustee may reasonably request, all in reasonable detail.
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SECTION 10. Equipment and Inventory. Grantor covenants and agrees
with Trustee that from the date of this Agreement and until termination of this
Agreement pursuant to Section 25, Grantor shall:
(a) Keep any Collateral constituting equipment or inventory (other
than equipment or inventory sold in the ordinary course of business) at the
Shipyard, except for equipment and inventory (i) temporarily in transit between
such locations or (ii) temporarily stored at locations set forth on Schedule
2-A, and use its best efforts to deliver written notice to Trustee at least
thirty (30) days prior to establishing any other location at which a third
party with which it reasonably expects to maintain inventory and/or equipment
in which location or with which third party all action required by this
Agreement shall have been taken with respect to all such equipment and
inventory;
(b) Cause all property used or useful in the conduct of its business
which is included in the Collateral hereunder to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and shall cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of Grantor may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section 10(b) shall prevent Grantor from discontinuing the
operation or maintenance of any of such property if such discontinuance is, in
the judgment of Grantor, desirable in the conduct of its business and not
disadvantageous in any material respect to the Trustee or the Holders;
(c) Comply with the terms of the Indenture with respect to any
Collateral constituting equipment and inventory, including, without limitation,
the maintenance of insurance provisions set forth in Section 4.22 of the
Indenture.
SECTION 11. Partial Release of Collateral. So long as no Event of
Default has occurred and is continuing under the Indenture, Collateral may be
released from the security interest created by this Agreement at any time or
from time to time upon the request of the Grantor pursuant to an Officers'
Certificate (as defined in the Indenture) certifying that all terms for release
and conditions precedent hereunder and in the Indenture have been met and
specifying: (a) the identity of the Collateral to be released and (b) the
provision of the Indenture or this Agreement which authorizes such release.
The Trustee shall release (at the sole cost and expense of the Grantor) (w)
equipment which may have become obsolete or unfit for use or no longer useful,
necessary or profitable in the conduct of the business of the Grantor, upon
substituting other equipment not necessarily of the same character but of at
least equal value to the Grantor as the property disposed of, which shall
become
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Collateral hereunder, subject to the security interest of this Agreement and
(x) Collateral that is condemned, seized or taken by the power of eminent
domain; (y) Collateral which is destroyed or damaged in an Event of Loss (as
defined in the Indenture) provided that the net proceeds thereof are applied as
required by the Indenture or (z) as otherwise permitted by the Indenture.
SECTION 12. Release of the Collateral. The Trustee shall release
all of the Collateral hereunder upon Delivery of the Permanent Vessel and the
execution of the First Preferred Ship Mortgage on the Permanent Vessel by
Grantor and the Trustee.
SECTION 13. General Covenants. Grantor covenants and agrees with
Trustee that from and after the date of this Agreement and until termination of
this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory
and complete records of Grantor's Collateral in a manner consistent with
Grantor's current business practice, including, without limitation, a record of
all payments received and all credits granted with respect to such Collateral.
Grantor shall, for Trustee's further security, at Trustee's request deliver and
turn over to Trustee or Trustee's designated representatives at any time
following the occurrence and during the continuation of an Event of Default,
any such books and records (including, without limitation, any and all computer
tapes, programs and source and object codes relating to such Collateral in
which Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than Permitted Liens, and will defend
the right, title and interest of Trustee in and to Grantor's rights to such
Collateral, including, without limitation, the proceeds and products thereof,
against the claims and demands of all Persons whatsoever.
SECTION 14. Trustee Appointed Attorney-in-Fact. Grantor hereby
irrevocably appoints Trustee as Grantor's attorney-in-fact, with full authority
in the place and stead of Grantor and in the name of Grantor or otherwise, from
time to time in Trustee's discretion, to take any action and to execute any
instrument which Trustee may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, (a) following the
occurrence and during the continuance of an Event of Default, to:
(i) obtain and adjust insurance required to be paid to the
Trustee or any Holders pursuant to the Indenture;
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(ii) ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause
(i) or (ii) above; and
(iv) file any claims or take any action or institute any
proceedings which Trustee may deem necessary or desirable for the
collection of any of the Collateral, or otherwise to enforce the
rights of Trustee with respect to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or bureaus;
and
(ii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. Trustee May Perform. If Grantor fails to perform
any agreement contained herein or in the Indenture, Trustee may, upon three
days prior notice to the Grantor, perform, or cause performance of, such
agreement, and the expenses of Trustee incurred in connection therewith shall
be payable by Grantor under Section 22.
SECTION 16. Trustee's Duties. The powers conferred on
Trustee hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
safe custody of any Collateral in its possession and the accounting for monies
actually received by it hereunder, Trustee shall not have any duty as to any
Collateral. Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which Trustee accords its own
property, it being understood that Trustee shall be under no obligation to take
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral, but may do so at its option, and all
reasonable expenses incurred in connection therewith shall be for the sole
account of Grantor and shall be added to the Secured Obligations.
SECTION 17. Remedies. (a) If any Event of Default shall
have occurred and be continuing:
(i) Trustee shall have, in addition to other rights and remedies
provided for herein or otherwise available to it, all
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the rights and remedies of a secured party upon default under the UCC (whether
or not the UCC applies to the affected Collateral) and further, Trustee may,
without notice, demand or legal process of any kind (except as may be required
by law), all of which Grantor waives, at any time or times, (x) enter Grantor's
owned or leased premises and take physical possession of the Collateral and
maintain such possession on Grantor's owned or leased premises, at no cost to
Trustee or any of the Holders, or remove the Collateral, or any part thereof,
to such other place(s) as Trustee may desire, (y) require Grantor to, and
Grantor hereby agrees that it will at its expense and upon request of Trustee
forthwith, assemble all or any part of the Collateral as directed by Trustee
and make it available to Trustee at a place to be designated by Trustee which
is reasonably convenient to Trustee and (z) without notice except as specified
below, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof at public or private sale, at any
exchange, broker's board or at any of the offices of Trustee or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as Trustee
may deem commercially reasonable. Grantor agrees that, to the extent notice of
sale shall be required by law, at least thirty (30) days' notice to Grantor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Trustee may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned;
(ii) Trustee shall apply all cash proceeds received by
Trustee in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral (after payment of any amounts payable to
Trustee pursuant to Section 22), for the benefit of the Holders, against all or
any part of the Secured Obligations in such order as may be required by the
Indenture. Any surplus of such cash or cash proceeds held by Trustee and
remaining after payment in full of all the Secured Obligations shall be paid
over to Grantor or to whomsoever may be lawfully entitled to receive such
surplus;
(iii) to the fullest extent permitted by applicable law, the
Grantor specifically and unconditionally agrees that, upon the occurrence of
any Event of Default the Trustee shall have the right, acting on its own behalf
and on behalf of the Holders, to enter upon the Shipyard, to take possession of
the Collateral, and to continue and complete construction of the Vessel. If
the Trustee takes possession of the Vessel, it may take, but shall have no
obligation to take, any and all actions necessary in its judgment to continue
and complete construction of the Vessel, including but not limited to making
changes in the plans and specifications, as well as the right to enter into,
modify or terminate any contractual arrangement, subject to, the Trustee's
right at any time to discontinue any work without liability. If the Trustee
elects to complete the Vessel, it will not assume any liability to the Grantor
or to any other person for completing the Vessel or for the manner or quality
of the construction of the Vessel, and the Grantor expressly waives any
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such liability. The Grantor irrevocably appoints the Trustee as its
attorney-in-fact with full power of substitution, to employ third parties to
complete the Vessel, at the Trustee's option, either in the Grantor's name or
in the Trustee's name. In any event, all sums expended by the Trustee or such
third parties in completing construction of the Vessel will be considered to be
disbursed to the Grantor and will be secured in the manner provided in the
Indenture. For these purposes, the Grantor assigns to the Trustee, for the
benefit of the Holders, all of its rights, title and interest in and to the
Construction Contracts; however neither the Trustee nor the Lenders will have
any obligation under the Construction Contracts unless the Lenders expressly
thereafter agree to assume such obligations in writing. The Trustee, for the
benefit of the Holders, will have the right to exercise any rights of the
Grantor under the Construction Contracts upon the occurrence of an Event of
Default.
(b) The rights and remedies provided under this Agreement are
cumulative and may be exercised singly or concurrently and are not exclusive of
any rights and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the
exercise of its remedies pursuant to Section 17, Trustee may, (i) exchange,
enforce, waive or release any portion of the Collateral and any other security
for the Secured Obligations; (ii) apply such Collateral or security and direct
the order or manner of sale thereof as Trustee may, from time to time,
determine; and (iii) settle, compromise, collect or otherwise liquidate any
such Collateral or security in any manner following the occurrence of an Event
of Default, without affecting or impairing Trustee's right to take any other
further action with respect to any Collateral or security or any part thereof.
SECTION 19. Intentionally Omitted.
SECTION 20. Injunctive Relief. Grantor recognizes that in
the event Grantor fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Holders; therefore, Grantor agrees that the Holders,
if Trustee so determines and requests, shall be entitled to temporary and
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permanent injunctive relief in any such case without the necessity of proving
actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in
all cases, be interpreted consistently with, and shall be in addition to (and
not in lieu of), the rights and duties created by the Indenture and the other
Collateral Documents.
(b) Except as provided in subsection (a) above, this
Agreement represents the final agreement of the Grantor and the Trustee with
respect to the matters contained herein and may not be contradicted by evidence
of prior or contemporaneous agreements, or subsequent oral agreements, between
the Grantor and the Trustee or any other Holder.
SECTION 22. Expenses. Grantor will upon demand pay to
Trustee and/or the Holders the amount of any and all reasonable fees and
expenses, including the reasonable fees and expenses of their counsel and
agents, as provided in Section 7.07 of the Indenture.
SECTION 23. Amendments, Etc. Except as otherwise provided by
the Indenture, 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 tender offer or exchange offer for Notes) shall be required to amend,
modify, supplement, or waive any provision of this Agreement. Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 24. Notices. All notices and other communications
provided for hereunder shall be delivered in the manner set forth in Section
11.02 of the Indenture.
SECTION 25. Continuing Security Interest; Termination. (a)
Except as provided in Section 25(b), this Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until the later of the payment or satisfaction in full of the Secured
Obligations (other than contingent indemnity obligations) and the termination
of the Indenture, (ii) be binding upon Grantor, its successors and
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assigns and (iii) except to the extent that the rights of any transferor, or
assignor are limited by the terms of the Indenture, inure, together with the
rights and remedies of Trustee hereunder, to the benefit of Trustee and any of
the Holders. Nothing set forth herein or in any other Collateral Document is
intended or shall be construed to give any other Person any right, remedy or
claim under, to or in respect of this Agreement or any other Collateral
Document or any Collateral. Grantor's successors and assigns shall include,
without limitation, a receiver, trustee or debtor-in-possession thereof or
therefor.
(b) Upon the payment in full in cash of the Secured
Obligations (other than contingent indemnity obligations) and the termination
of the Indenture, this Agreement and the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Grantor. Upon any
such termination of security interest, Grantor shall be entitled to the return,
upon its request and at its expense, of such of the Collateral held by Trustee
as shall not have been sold or otherwise applied pursuant to the terms hereof
and Trustee will, at Grantor's expense, execute and deliver to Grantor such
other documents as Grantor shall reasonably request to evidence such
termination. In connection with any sales of assets permitted under the
Indenture, the Trustee will release and terminate the liens and security
interests granted under this Agreement with respect to such assets.
SECTION 26. Severability. It is the parties' intention that
this Agreement be interpreted in such a way that it is valid and effective
under applicable law. However, if one or more of the provisions of this
Agreement shall for any reason be found to be invalid or unenforceable, the
remaining provisions of this Agreement shall be unimpaired.
SECTION 27. GOVERNING LAW. ANY DISPUTE BETWEEN THE GRANTOR
AND THE TRUSTEE OR ANY HOLDER ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ____________.
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SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY
TRIAL.
(A) NON-EXCLUSIVE JURISDICTION. THE GRANTOR HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM,
BUT THE GRANTOR ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE TRUSTEE OR
ANY HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION
OVER THE GRANTOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PERSON. GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. GRANTOR WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON
HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS; INCONVENIENT FORUM. THE GRANTOR
WAIVES PERSONAL SERVICE OF PROCESS UPON IT AND AS ADDITIONAL SECURITY FOR THE
SECURED OBLIGATIONS, IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, WHOSE ADDRESS
IS ONE NORTH CAPITOL AVENUE, INDIANAPOLIS, INDIANA 46204, AS GRANTOR'S AGENT
FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. THE
GRANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN NEW YORK,
NEW YORK.
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125
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF
THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
SECURED OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO
EACH OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY,
THE PROVISIONS OF THIS SECTION 28, WITH ITS COUNSEL.
SECTION 29. Gaming Laws. (a) Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming Commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
(b) The Trustee acknowledges, understands and agrees that
the Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of the rights and remedies granted to it
under the Agreement with respect to the Collateral subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in
connection with the taking of any of the actions which may be taken by the
Trustee in the exercise of its rights hereunder, then Grantor agrees to use its
reasonable best efforts to secure
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such consent and to cooperate with the Trustee in obtaining any such consent.
Upon the occurrence and during the continuation of any Event of Default,
Grantor shall promptly execute and/or cause the execution of all applications,
certificates, instruments, and other documents and papers that the Trustee may
be required to file in order to obtain any necessary approvals under the Gaming
Laws, and if Grantor fails or refuses to execute such documents, the Trustee or
the clerk of the court with jurisdiction may execute such documents on behalf
of Grantor.
(d) Notwithstanding any other provision of this Agreement to
the contrary, nothing in this Agreement shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Grantor or (ii) effect any transfer, sale, purchase, lease or hypothecation of,
or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including
Grantor, under any of the Gaming Laws, including Indiana Code 4-33.
SECTION 30. Interaction with Indenture. All terms,
covenants, conditions, provisions and requirements of the Indenture are
incorporated by reference in this Security Agreement. In the event of any
conflict or inconsistency between the provisions of this Security Agreement and
those of the Indenture, including, without limitation, any conflicts or
inconsistencies in any definitions herein or therein, the provisions or
definitions of the Indenture shall govern.
SECTION 31. Trust Indenture Act. If any provision of this
Agreement conflicts with any provision of the Trust Indenture Act, the
provisions of the Trust Indenture Act shall control.
SECTION 32. Appointment of Collateral Agent. The Trustee
may, solely at its discretion, appoint a collateral agent to enforce the
rights and remedies available to the Trustee under this Agreement.
SECTION 33. Interaction with Assignment. Concurrently
herewith the Grantor is also executing and delivering to the Trustee, for the
benefit of the Holders, an Assignment of
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127
Construction Contract (the "Assignment") pursuant to which the Grantor is
assigning to the Trustee, for the benefit of the Holders, an assignment of the
Grantor's rights under the Construction Contracts. The provisions of the
Assignment are supplemental to this Agreement and nothing contained therein
shall derogate from any rights or remedies of the Trustee or any of the Holders
hereunder nor shall anything contained in the Assignment be deemed to prevent
or extend the time of attachment or perfection of any security interest in such
Collateral created hereby.
SECTION 34. Excluded Property. Notwithstanding anything
contained in this Agreement, the security interest granted pursuant to this
Agreement shall not include any personal property or equipment which has been
financed or refinanced by Indebtedness permitted to be incurred pursuant to
clause (f) of Section 4.09 of the Indenture to the extent that a Permitted Lien
has been incurred with respect to such financing.
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128
IN WITNESS WHEREOF, Grantor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
THE MAJESTIC STAR CASINO, LLC
as the GRANTOR
By: Barden Development, Inc.
By:_______________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as TRUSTEE
By:_______________________________
Name:
Title:
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129
SCHEDULE 1
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
None, except:
130
SCHEDULE 2
TO
SECURITY AGREEMENT
Trade Names:
Majestic Star
Majestic Star Casino
M-Star Slot Club
131
SCHEDULE 2A
TO
SECURITY AGREEMENT
Third Party Locations:
Corporate Name of Description of Maximum
Third Party Address Relationship Amount
----------------- ------- -------------- -------
132
Annex A-3
------------------------------
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF
THE MAJESTIC STAR
(Official Number _______)
$105,000,000
------------------------------
THE MAJESTIC STAR CASINO, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
Owner and Mortgagor
In Favor of
IBJ SCHRODER
BANK & TRUST COMPANY
One State Street
New York, NY 10004
in its capacity as trustee under
that certain Indenture dated as of
May 22, 1996 by and between
The Majestic Star Casino, LLC and
IBJ Schroder Bank & Trust Company
Mortgagee
------------------------------
Dated ________, 199___
------------------------------
Discharge Amount: $105,000,000 Together
With Interest and Performance
of Mortgage Covenants
133
TABLE OF CONTENTS
Page
----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
WHEREAS CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
VESSEL MORTGAGED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.02. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 3.01. Status of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02. Outstanding Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.03. Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.04. Operation of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.05. Payment of Taxes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.06. Notice of Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.07. Release From Arrest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.08. Maintenance of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.09. Access to Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.10. Documentation of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.11. Sale, Charter or Mortgage of Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3.13. Requisition of Title to Vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.14. Requisition of Vessel but not Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.15. Execution of Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.02. Sale of Vessel by Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.03. Mortgagee to Sign for Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.04. Mortgagee to Collect Hire, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.05. Mortgagee's Right to Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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134
Page
----
SECTION 4.07. Right of Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.08. Cure of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.09. Restoration of Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.10. Proceeds of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.11. Repairs to Vessel and Sale of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
ASSIGNMENT OF WARRANTIES OF TITLE
SECTION 5.01. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VVI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.02. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.03. Interest of Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.04. Survivorship of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.05. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.06. Discharge of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.07. Incorporation into Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.09. Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.10. Gaming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SIGNATURE PAGE
ACKNOWLEDGMENT
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135
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE executed on _______, 199__,
is granted by:
THE MAJESTIC STAR CASINO, LLC
c/o Barden Development, Inc.
400 Renaissance Center
Suite 2400
Detroit, MI 48243
Attn: Vice President and Chief Financial Officer
a limited liability company organized and existing under and by virtue of the
laws of the State of Indiana (the "Mortgagor") in favor of:
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, NY 10004
Attn: Corporate Trust Administration
as trustee under that certain Indenture (the "Indenture") dated as of May 22,
1996 by and between Mortgagor and IBJ Schroder Bank & Trust Company, as trustee
(the "Mortgagee").
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the vessel
identified and described in the Granting Clause of this Preferred Ship Mortgage
(this "Mortgage").
B. Pursuant to the terms and conditions of the Indenture,
Mortgagor has duly authorized the creation of an issue of up to $105,000,000
aggregate principal amount of its Senior Secured Notes due ____, 2003 (the
"Notes") of substantially the tenor and amount set forth in the Indenture, and
in order to secure the due and punctual payment of the principal of and
interest on the Notes and the performance of the Obligations under the
Indenture (the "Secured Obligations") of the Mortgagor, the Mortgagor has
agreed to execute and deliver this Mortgage as follows:
GRANTING CLAUSE
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional
covenants herein contained and for other good and valuable consideration, the
receipt and adequacy of which are
136
hereby acknowledged, and for the purpose of securing as a first priority lien
in favor of the Mortgagee (1) the due and punctual payment of the indebtedness
evidenced by the Notes, (2) the payment and performance of all other amounts
and obligations due or to become due under or in connection with the Indenture
and all other Secured Obligations, and (3) the performance of the covenants and
agreement of the Mortgagor contained herein (hereinafter, sometimes referred to
collectively as the "Obligations"), THE MORTGAGOR HAS granted, conveyed,
mortgaged, pledged, hypothecated, set over and confirmed AND THE MORTGAGOR DOES
BY THESE PRESENTS grant, convey, mortgage, pledge, hypothecate, set over and
confirm UNTO AND IN FAVOR OF THE MORTGAGEE, for the equal and ratable benefit
of the Holders, the whole of the following named and described vessel (referred
to hereinafter as the "Vessel") to wit:
OFFICIAL HOME
NAME NUMBER PORT
---- -------- ----
______________ __________ ________
TOGETHER WITH all of its boilers, engines, machinery, masts, spars, boats,
cables, motors, tools, anchors, chains, booms, cranes, rigs, pumps, pipe,
tanks, tackle, apparel, furniture, fixtures, rigging, supplies, fittings and
gaming machinery, equipment and accessories relating to the gaming operations,
including but not limited to communication systems, visual and electronic
surveillance systems and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies,
fuel, all gaming equipment and devices, computer equipment, calculators, adding
machines, video game and slot machines, and any other electronic equipment of
every nature used in connection with the operation of the Vessel, all
machinery, equipment, engines, appliances and fixtures for generating or
distributing air, water, heat, electricity, light, fuel or refrigeration, or
for ventilating or sanitary purposes, or for the exclusion of vermin or
insects, or for the removal of dust, refuse or garbage, all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers,
partitions, doorstops, vaults, motors, elevators, dumb-waiters, awnings, window
shades, venetian blinds, light fixtures, fire hoses and brackets and boxes for
the same, fire sprinklers, alarm, surveillance and security systems, computers,
drapes, drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets
and carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water
closets, laundry equipment, washers, dryers, ice-boxes and heating units, all
kitchen and restaurant equipment, including but not limited to
silverware, dishes, menus, cooking utensils, stoves, refrigerators, ovens,
ranges, dishwashers, disposals, water heaters, incinerators, furniture,
fixtures and furnishings, all cocktail lounge supplies, including but not
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137
limited to bars, glassware, bottles and tables used in connection with the
Vessel, all recreational equipment (computerized and otherwise), beauty and
barber equipment, and maintenance supplies used in connection with the Vessel,
all specifically designed installations and furnishings, and all furniture,
furnishings and personal property of every nature whatsoever now or hereafter
owned by Mortgagor or in which Mortgagor has any rights or interest and located
in or on, or attached to, or used or intended to be used or which are now or
may hereafter be appropriated for use on or in connection with the operation of
the Vessel, or in connection with any construction being conducted or which may
be conducted thereon, and all extensions, additions, accessions, improvements,
betterments, renewals, substitutions, and replacements to any of the foregoing,
all of which (to the fullest extent permitted by law) shall be conclusively
deemed appurtenances to the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made
in or to the Vessel. Mortgagor and Mortgagee acknowledge that significant
structures, improvements, additions, equipment and other appurtenances will be
added to the Vessel after the execution of this Mortgage, and the Mortgagor
specifically affirms and agrees that all such appurtenances to the Vessel shall
be subject to this Mortgage.
Notwithstanding the foregoing, the security interest granted
pursuant to this Mortgage shall not include any personal property or equipment
not part of the Vessel which has been financed or refinanced by Indebtedness
permitted to be incurred pursuant to clause (f) of Section 4.09 of the
Indenture to the extent that a Permitted Lien has been incurred with respect to
such financing.
TO HAVE AND HOLD the same unto Mortgagee, its successors and
assigns, forever upon the terms herein set forth to secure the performance and
observance of and compliance with the covenants, terms and conditions in the
Secured Obligations.
PROVIDED, only, and the condition of these presents is such,
that if the Secured Obligations shall be paid and performed in full, then these
presents and the rights hereunder shall cease, terminate and be void; otherwise
to be and remain in full force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND
DECLARE that the Vessel is to be held subject to the following covenants,
conditions, provisions, terms and uses:
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138
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
For all purposes of this Mortgage, unless the context
otherwise requires:
SECTION 1.01. Definition of Terms.
(a) Act shall mean Chapter 313 of Title 46 United States Code.
(b) Office of the Documentation Officer shall mean the Office
of the Documentation Officer of the United States Coast Guard, at
__________________.
(c) Capitalized terms used herein and not otherwise defined
herein but defined in the Indenture shall have the definitions provided in the
Indenture, substituting "Mortgagor" for "Company" and "Mortgagee" for
"Trustee," as the case may be.
SECTION 1.02. Rules of Construction. Unless the context
otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the
plural include the singular;
(d) All references herein to particular articles or sections,
unless otherwise provided, are references to articles or sections of this
Mortgage.
(e) The headings herein are solely for convenience of
reference and shall not constitute a part of this Mortgage nor shall they
affect its meaning, construction or effect.
(f) References to the Notes, the Indenture and any Collateral
Documents and other instruments shall be deemed to refer to such Notes, the
Indenture, Collateral Documents and any other related instruments as the same
may from time to time be amended, supplemented or modified by the parties
hereto in accordance with the terms thereof.
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139
ARTICLE II
GENERAL MORTGAGE PROVISIONS
SECTION 2.01. General. For purposes of this Mortgage and in
order to comply with Title 46, Section 31321(b)(3), the parties to this
Mortgage hereby declare that the indebtedness which is now or may in the future
be owed under the Secured Obligations hereby secured is an amount up to the sum
of $105,000,000, together with interest and performance of the covenants of the
Secured Obligations. The discharge amount is the same as the total amount,
together with interest and performance of the covenants of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
The Mortgagor represents, warrants, covenants and agrees with
Mortgagee as follows:
SECTION 3.01. Status of Mortgagor. The Mortgagor is a
limited liability company in good standing organized and existing under and by
virtue of the laws of the State of Indiana and is and will remain a citizen of
the United States of America within the meaning of Title 46, Section 802, of
the United States Code, entitled to own and document the Vessel under the laws
of the United States of America.
SECTION 3.02. Outstanding Liens. The Mortgagor lawfully owns
and is lawfully possessed of the Vessel free and clear of all liens, mortgages,
taxes and encumbrances except liens accrued in the ordinary course of business
which are not yet past due; Permitted Liens (as defined in the Indenture); and
those liens created by the Indenture and the Collateral Documents and the
Mortgagor will and does hereby warrant and defend the title and possession
thereto and to every part thereof for the benefit of Mortgagee against the
claims and demands of all persons whomsoever.
SECTION 3.03. Compliance With Law. The Mortgagor will comply
with and satisfy all applicable formalities and provisions of the laws and
regulations of the United States of America including causing the filing of the
Mortgage with the United States Coast Guard, Office of Documentation at the
home port of the Vessel, in order to perfect, establish and maintain this
Mortgage, and any supplement or amendment thereto as a first preferred mortgage
upon the Vessel and upon all additions, improvements and replacements made in
or to the same. The Mortgagor shall promptly pay and discharge all United
States
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Coast Guard fees and expenses in connection with the recordation of this
Mortgage and any supplement or amendment thereto.
SECTION 3.04. Operation of Vessel. The Mortgagor will not
cause or permit the Vessel to be operated in any manner contrary to law and the
Mortgagor will not engage in any unlawful trade or violate any law or expose
the Vessel to penalty or forfeiture, and will not do, or suffer or permit to be
done, anything which can or may injuriously affect the registration or flag of
the Vessel under the laws and regulations of the United States of America.
Mortgagor will never operate the Vessel outside the navigation limits of the
insurance carried pursuant to Section 3.12 of this Mortgage.
SECTION 3.05. Payment of Taxes, etc. The Mortgagor will,
subject to Section 4.07 of the Indenture, pay or cause to be paid before the
same shall become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Vessel and (ii) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become
a Lien upon the Vessel; provided, however, that the Mortgagor shall not be
required to pay or to discharge or to cause to be paid or discharged, any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and, if required by
GAAP, for which adequate provision has been made.
SECTION 3.06. Notice of Mortgage. The Mortgagor will place,
and at all times will retain a properly certified copy of this Mortgage and a
Notice of this Mortgage with the Certificate of Documentation of the Vessel on
board the Vessel.
SECTION 3.07. Release From Arrest. If the Vessel is
attached, arrested, levied upon or taken into custody by virtue of any legal
proceeding in any court, the Mortgagor will immediately notify Mortgagee
thereof by telephone facsimile, confirmed by letter, and within seven (7)
business days will cause the Vessel to be released by posting security in the
form of a Letter of Undertaking or a Release Bond, and will promptly notify
Mortgagee thereof in the manner aforesaid.
SECTION 3.08. Maintenance of Vessel. The Mortgagor will at
its own expense at all times maintain, preserve and keep the Vessel in good
repair and condition and will from time to time make all needful and proper
repairs, renewals, replacements, betterments and improvements, including
without limitation those replacements required by Section 4.11 of Article IV.
The Vessel shall, and the Mortgagor covenants that it will, at all times comply
with all applicable laws, treaties and covenants and rules and regulations
issued thereunder. Except as permitted by the Indenture, the Mortgagor will
not make, or permit to be made, any
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substantial change in the structure, type, name or rig of the Vessel without
first receiving written approval thereof from Mortgagee.
SECTION 3.09. Access to Vessel. The Mortgagor at all
reasonable times will afford Mortgagee or its authorized representatives full
and complete access to the Vessel for the purpose of inspecting the same and
its papers and records, upon reasonable notice of Mortgagee's desire to do so.
SECTION 3.10. Documentation of Vessel. The Mortgagor will
keep the Vessel duly documented as a vessel of the United States of America,
under the flag of the United States of America, entitled to engage in the
operations conducted by the Mortgagor.
SECTION 3.11. Sale, Charter or Mortgage of Vessel. The
Mortgagor will not mortgage, transfer, demise charter or change the flag or
port of documentation of the Vessel without the written consent of Mortgagee
first had and obtained, which consent shall be at the sole discretion of
Mortgagee; and any such written consent to any one mortgage, transfer, or
demise charter shall not be construed to be a waiver of this provision in
respect of any subsequent proposed mortgage, transfer, or demise charter. Any
such mortgage, transfer, or demise charter of the Vessel shall be subject to
the provisions of this Mortgage and the lien it creates, unless released
therefrom by the Mortgagee.
SECTION 3.12. Insurance.
(a) The Mortgagor shall, without cost to the Mortgagee,
maintain insurance on the Vessel (and all additions, improvements and
replacements made in and to the Vessel, or any part thereof) as set forth in
Section 4.22 of the Indenture, which insurance shall include coverage for such
risks as are generally covered by marine hull and machinery insurance, marine
protection and indemnity insurance and public or general liability insurance.
Such marine hull and machinery insurance shall cover against all loss or damage
caused by or resulting from fire, lightning, windstorm, tornado, hail and such
other further additional hazards of whatever kind or nature as now or hereafter
may be covered by standard extended coverage "all risk" endorsements
(including, without limitation, and specifically, piracy, barratry and water
damage) of whatsoever kind. Mortgagor shall have the right to procure
insurance coverage for such risks with such types or forms of insurance
coverage as are recommended by an independent insurance broker appointed by the
Mortgagor and reasonably satisfactory to the Mortgagee as to type and form of
insurance and identity of broker. In any event, for purposes of insurance
against total loss, the Vessel, its equipment,
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appurtenances, etc. shall be insured for a declared value in an amount not less
than the replacement value thereof as valued by an independent appraiser
appointed by the Mortgagor and reasonably acceptable to Mortgagee as to amounts
and identity of appraiser, and for purposes of insurance against liability,
such coverage shall be in the highest amount from time to time commercially
reasonable for similar vessels engaged in the business of passenger cruising
and gaming in northern Indiana. Protection and indemnity insurance (as well as
any required insurance against liability for pollution) in respect of the
Vessel shall be in the highest amount from time to time obtainable for vessels
of the same type, size, age and flag as the Vessel, but in any event, shall be
in an amount for each occurrence of not less than the declared value of the
Vessel under its hull and machinery insurance.
(b) The Mortgagor, at its own expense, shall furnish to the
Mortgagee simultaneously with the execution and delivery hereof, and thereafter
at intervals of every 12 calendar months, a detailed report, in form and
substance satisfactory to the Mortgagee (which shall set forth, without
limitation, with respect to each type of insurance coverage, each policy or
certificate of entry, its form, its number, its amount, each direct or indirect
or participating insurer or underwriter, the type of risk covered and the
expiration date), signed by a firm of independent insurance brokers appointed
by the Mortgagor and reasonably acceptable to the Mortgagee as to type and form
of insurance and identity of broker, with respect to the insurance carried and
maintained in respect of the Vessel, together with the written opinion of such
brokers, in form and substance reasonably satisfactory to the Mortgagee, as to
the compliance of such insurance with the provisions of this Section 3.12.
(c) At all times when any construction is in progress the
Mortgagor shall, without cost to the Mortgagee, maintain insurance for (i)
worker's compensation insurance covering all persons employed by Mortgagor in
connection with the construction, in an amount at least equal to the minimum
amount of such insurance required by law, and (ii) builder's risk insurance,
completed value form, covering all physical loss, in an amount reasonably
satisfactory to Mortgagee.
(d) All insurance provided hereunder (except workman's
compensation) shall name Mortgagee as a named insured under a standard
"non-contributory mortgagee" endorsement or its equivalent, which shall be
acceptable to Mortgagee, shall provide for loss payable to Mortgagee as its
interest may appear and shall be provided by insurance companies acceptable to
Mortgagee in its reasonable discretion. Mortgagor shall use best efforts to
assure that every policy of insurance referred to in this Paragraph 3.12(d)
shall contain an agreement by the insurer that
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it will not cancel such policy except after thirty (30) days prior written
notice to Mortgagee and that any loss payable thereunder shall be payable
notwithstanding any act or negligence, breach of warranty or otherwise.
Mortgagor shall assign and deliver to Mortgagee all such policies of insurance,
or duplicate originals thereof or cover notes, binders or certificates of
insurance, certified to Mortgagee by the insurer as being true copies, as
collateral and further security for payment of the Indebtedness and performance
of the Secured Obligations. If any insurance required to be provided hereunder
shall expire, be withdrawn, become void by breach of any condition thereof by
Mortgagor, or become void or questionable by reason of the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
any such insurance shall become unsatisfactory to Mortgagee, Mortgagor
immediately shall obtain new or additional insurance which shall be
satisfactory to Mortgagee in its sole discretion. Mortgagor shall not take out
any separate or additional insurance which is contributing in the event of loss
unless it is properly endorsed and otherwise satisfactory to Mortgagee in all
respects.
(e) Mortgagor shall (i) pay as they become due all premiums
for the insurance required hereunder, and (ii) not later than thirty (30) days
prior to the expiration of each such policy, deliver a renewal policy or a
duplicate original thereof and a certificate of insurance certified to
Mortgagee by the insurer as being a true copy evidencing the insurance required
to be provided hereunder, marked "premium paid," or accompanied by such other
evidence of payment as shall be satisfactory to Mortgagee in its sole
discretion.
(f) If Mortgagor shall be in default of its obligation to so
insure or deliver any such prepaid policy or policies of insurance to Mortgagee
in accordance with the provisions hereof, Mortgagee, at its option and without
notice, may effect such insurance from year to year, and pay the premium or
premiums therefor, and, in such event, the amount of all such premium or
premiums (i) shall be deemed to be Indebtedness secured hereby and (ii) shall
be immediately due and payable, on demand, together with interest thereon at
the rate of interest which is equal to sum of the fixed interest rate payable
on the Notes and 1.00% (the "Interest Rate"), from the date of any such payment
by Mortgagee to the date of repayment to Mortgagee.
(g) Mortgagor promptly shall comply with, and shall cause the
Vessel to comply with, (i) all of the provisions of each such insurance policy
and (ii) all of the requirements of the insurers thereunder applicable to
Mortgagor or to the Vessel or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair of the Vessel, even if such
compliance would necessitate structural changes or improvements
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or would result in interference with the use or enjoyment of the Vessel or any
portion thereof. If Mortgagor shall use the Vessel or any portion thereof in
any manner which would permit the insurer to cancel any insurance required to
be provided hereunder, Mortgagor immediately shall obtain a substitute policy
which shall be satisfactory to Mortgagee and which shall be effective on or
prior to the date on which any such other insurance policy shall be canceled.
(h) If the Vessel or any portion thereof shall be damaged,
destroyed or injured by fire or any other casualty (whether insured or
uninsured) in an amount in excess of $500,000, Mortgagor shall give immediate
notice thereof to Mortgagee.
(i) In the case of any Event of Loss relating to the Vessel,
any Net Loss Proceeds with respect to the Vessel shall be applied as provided
for in the Indenture and the Cash Collateral Disbursement Agreement.
(j) In the event that any claim or Lien is asserted against
the Vessel for loss, damage or expense which is covered by insurance required
hereunder, and it is necessary for the Mortgagor to obtain a bond or supply
other security to prevent arrest of the Vessel or to release the Vessel from
arrest on account of such claim or Lien, the Mortgagee, on request of the
Mortgagor or its agent, may assign to any person, firm or corporation executing
a surety or guarantee bond or other agreement to save or release the Vessel
from such arrest, all right, title and interest of the Mortgagee in and to said
insurance covering said loss, damage or expense, as collateral security to
indemnify against liability under said bond or other agreement.
SECTION 3.13. Requisition of Title to Vessel. In the event
that the title or ownership of the Vessel shall be requisitioned, purchased or
taken by the United States of America or any government of any state of the
United States or any other country or any department, agency or representative
thereof, pursuant to any present or future law, proclamation, decree, order or
otherwise, the lien of this Mortgage shall be deemed to attach to the claim for
compensation, and the compensation, purchase price, reimbursement or award for
such requisition, purchase or other taking of such title or ownership is hereby
declared payable to Mortgagee, who shall be entitled to receive the same and
shall apply it as provided in the Indenture or to the extent not provided for
in the Indenture, in accordance with the provisions of Section 4.10 hereof. In
the event of any such requisition, purchase or taking, the Mortgagor shall
promptly execute and deliver to Mortgagee such documents, if any, as in the
opinion of counsel for Mortgagee may be necessary or useful
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to facilitate or expedite the collection by Mortgagee of such compensation,
purchase price, reimbursement or award.
SECTION 3.14. Requisition of Vessel but not Title. In the
event that the United States of America or any government of any other country
or any department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law, proclamation,
decree, order or otherwise, and in the event Mortgagor is in default of the
terms of this Mortgage, all charter hire and compensation resulting therefrom
shall be payable to Mortgagee, and if, as a result of such requisitioning,
chartering or taking of the use of the Vessel such government, department,
agency or representative thereof shall pay or become liable to pay any sum by
reason of the loss of or injury to or depreciation of the Vessel any such sum
is hereby made payable to Mortgagee, who shall be entitled to receive the same
and shall apply any such sums referred to in this Section as provided in the
Indenture or to the extent not provided for in the Indenture, in accordance
with the provisions of Section 4.10 hereof. In the event of any such
requisitioning, chartering or taking of the use of the Vessel, the Mortgagor
shall promptly execute and deliver to Mortgagee such documents, if any, and
shall promptly do and perform such acts, if any, as in the opinion of counsel
for Mortgagee may be necessary or useful to facilitate or expedite the
collection by Mortgagee of such claims arising out of the requisitioning,
chartering or taking of the use of the Vessel.
SECTION 3.15. Execution of Additional Documents. Mortgagor
agrees to execute all additional documents, instruments, UCC Financing
Statements and other agreements necessary and appropriate, to keep this
mortgage in effect, to better reflect the true intent of this Mortgage, and to
consummate fully all of the transactions contemplated by the Notes, and the
Indenture, hereby.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01.
A. Events of Default. The term "Event of Default," wherever
used in this Mortgage, shall mean any one or more of the following events:
(1) The occurrence of an Event of Default as defined
in Section 6.01 of the Indenture; or
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(2) Default in the due and punctual observance and
performance of any provisions of Sections 3.04, 3.07, 3.10 and 3.12 of Article
III herein; or
(3) Default in the due observance or performance of
any of the other covenants and conditions herein required to be kept and
performed and continuance of such default for thirty (30) days after receipt of
a notice of any such Event of Default; provided, however, that the Mortgagor
shall not be deemed to be in default for failure to keep the Vessel in good
repair and safe condition pursuant to Section 3.08 of Article III if the
Mortgagor shall be diligently taking steps to comply with the requirements of
said Section and prosecutes any such work so that such work is completed within
a reasonable time; or
(4) The Mortgagor shall (i) abandon the Vessel
without due cause; or (ii) cease to be a citizen of the United States of
America within the meaning of Title 46, Section 802 of the United States Code.
The Mortgagee shall not be deemed to have knowledge of an
Event of Default unless actually known by the Mortgagee.
B. Remedies. Then and in each and every such case Mortgagee
shall have the right to:
(1) Exercise all the rights and remedies in
foreclosure and otherwise given to Mortgagee by the laws and regulations of the
United States of America or of the country wherein the Vessel shall then be
found or of any country wherein the Vessel may thereafter be found or of any
other applicable jurisdiction;
(2) Bring suit at law, in equity or in admiralty, as
it may be advised, to recover judgment for any and all amounts due under the
Notes, the Indenture, the other Collateral Documents and this Mortgage;
(3) Take the Vessel without legal process wherever
the same may be; and the Mortgagor or other person in possession, forthwith
upon demand of Mortgagee shall surrender to Mortgagee possession of the Vessel
and Mortgagee may, without being responsible for loss or damage, hold, lay up,
lease, charter, operate or otherwise use the Vessel for such time and upon such
terms as it may deem to be for its best advantage, accounting only for the net
profits, if any, arising from such use of the Vessel and charging upon all
receipts from the use of the Vessel or from the sale thereof by court
proceedings or pursuant to Subsection (4) of Section 4.01 next following, all
costs, expenses, charges, damages or losses by reason of such use; and if at
any time Mortgagee shall avail itself of the right
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herein given it to take the Vessel, Mortgagee shall have the right to dock the
Vessel for a reasonable time at any dock, pier, or other premises of the
Mortgagor or leased by the Mortgagor without charge, or to dock it at any other
place at the cost and expense of the Mortgagor;
(4) Without being responsible for loss or damage,
sell the Vessel at any place and at such time as Mortgagee may specify and in
such manner as Mortgagee may deem advisable free from any claim by the
Mortgagor in admiralty, in equity, at law or by statute, after first giving
notice of the time and place of sale with a general description of the property
in the following manner:
(a) By publishing such notice for three (3)
times a week for two consecutive weeks, with the last date of publication not
more than twenty (20) nor less than five (5) days immediately preceding the
sale, in a daily newspaper of general circulation published in
__________________;
(b) If the place of sale should not be
___________, then also by publication of a similar notice in a daily newspaper,
if any, published at the place of sale; and
(c) By mailing a similar notice to the
Mortgagor on the day of first publication.
Mortgagee may adjourn any such sale from time to time by
announcement at the time and place appointed for such sale or for such
adjourned sale, and without further notice or publication Mortgagee may make
any such sale at the time and place to which the same shall be so adjourned.
Any such sale may be conducted without bringing the Vessel to be sold to the
place designated for such sale and in such manner as Mortgagee may deem to be
for its best advantage.
(5) Mortgagor hereby consents to the appointment of
a consent keeper or substitute custodian by Mortgagee with the costs thereof to
be a cost of the sale to be paid from the proceeds of the sale or by Mortgagor.
SECTION 4.02. Sale of Vessel by Mortgagee. Any sale of the
Vessel made in pursuance of this Mortgage, whether under the power of sale
hereby granted or any judicial proceedings, shall operate to divest all right,
title and interest of any nature whatsoever of the Mortgagor therein and
thereto, and shall bar the Mortgagor, its successors and assigns, and all
persons claiming by, through or under them. At any such sale, Mortgagee or any
other holder of the Notes (the "holder/purchaser") may bid for and purchase the
Vessel and upon compliance with the terms of sale may hold, retain and dispose
of such property without
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further accountability therefor. In case of any such sale the holder/purchaser
shall be entitled, for the purpose of making settlement or payment for the
property purchased, to use and apply the Notes or any portion thereof in order
that there may be credited against the amount remaining due and unpaid thereon
the sums payable to the holder/purchaser out of the net proceeds of such sale
after allowing for the costs and expense of sale and other charges; and
thereupon the holder/purchaser shall be credited, on account of such purchase
price, with the net proceeds that shall have been so credited upon the Notes.
No purchaser shall be bound to inquire whether notice has been given, or
whether any default has occurred, or as to the propriety of the sale or as to
the application of the proceeds thereof.
SECTION 4.03. Mortgagee to Sign for Mortgagor. Upon the
occurrence and continuance of an Event of Default, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor to execute and deliver to any
purchaser aforesaid and is hereby vested with full power and authority to make,
in the name and in behalf of the Mortgagor, a good conveyance of the title to
the Vessel so sold. In the event of any sale of the Vessel, under any power
herein contained, the Mortgagor will, if and when required by Mortgagee,
execute such form of conveyance of such Vessel as Mortgagee may direct or
approve.
SECTION 4.04. Mortgagee to Collect Hire, etc. Upon the
occurrence and continuance of an Event of Default, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor upon the happening of any Event of
Default, in the name of the Mortgagor to demand, collect, receive, compromise
and sue for, so far as may be permitted by law, all earnings, tolls, rents,
issues, revenues, income and profits of the Vessel and all amounts due from
underwriters under any insurance thereon as payment of losses or as return
premiums or otherwise, and all other sums, due or to become due at the time of
the happening of any Event of Default in respect of the Vessel, or in respect
of any insurance thereof from any person whomsoever, and to make, give and
execute in the name of the Mortgagor acquittances, receipts, releases, or other
discharges for the same, whether under seal or otherwise, and to endorse and
accept in the name of the Mortgagor all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
All amounts so received shall first be applied to operating expenses and then
to unpaid Secured Obligations.
SECTION 4.05. Mortgagee's Right to Possession. Whenever any
right to enter and take possession of the Vessel accrues to Mortgagee, it may
require the Mortgagor to deliver, and the Mortgagor shall on demand, at its own
cost and expense, deliver the Vessel to Mortgagee as demanded. If any legal
proceedings
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shall be taken to enforce any right under this Mortgage, Mortgagee shall, to
the extent permitted by law, be entitled as a matter of right to the
appointment of a receiver of the Vessel and the earnings, tolls, rents, issues,
revenues, income and profits due or to become due and arising from the
operation thereof.
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor.
The Mortgagor authorizes and empowers Mortgagee or its appointees or any of
them to appear in the name of the Mortgagor, its successors and assigns, in any
court where a suit is pending against the Vessel because of or on account of
any alleged lien against the Vessel from which the Vessel has not been released
and to take such proceedings as to them or any of them may seem proper towards
the defense of such suit and the discharge of such lien, in the event that the
Mortgagor shall not be taking proceedings reasonably satisfactory to Mortgagee,
and in such case all expenditures made or incurred by Mortgagee or its
appointees for the purpose of such defense or discharge shall be a debt due
from the Mortgagor, its successors and assigns, to Mortgagee, and shall be
secured by the lien of this Mortgage in like manner and extent as if the amount
and description thereof were written herein.
SECTION 4.07. Right of Mortgagee. Each and every power and
remedy herein given to Mortgagee shall be cumulative and shall be in addition
to every other power and remedy herein given or now or hereafter existing at
law, in equity, in admiralty or by statute, and each and every power and remedy
whether herein given or otherwise existing may be exercised from time to time
and as often and in such order as may be deemed expedient by Mortgagee, and the
exercise or the beginning of the exercise of any power to remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other power or remedy. No delay or omission by Mortgagee in the
exercise of any right or power or in the pursuance of any remedy accruing upon
any default as above defined shall impair any such right, power or remedy or be
construed to be a waiver of any such Event of Default or to be any acquiescence
therein; nor shall the acceptance by Mortgagee of any security or of any
payment of or on account of the Notes after any Event of Default or of any
payment on account of any past default be construed to be a waiver of any right
to take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby.
SECTION 4.08. Cure of Defaults. If at any time after an
Event of Default and prior to the actual sale of the Vessel by Mortgagee or
prior to any foreclosure proceedings, the Mortgagor completely cures all Events
of Default and pays all expenses, advances and damages to Mortgagee consequent
on such Events of
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Default, then Mortgagee shall retain the option to restore the Mortgagor to its
former position, but such action, if any, shall not affect any subsequent Event
of Default or impair any rights consequent thereon.
SECTION 4.09. Restoration of Position. In case Mortgagee
shall have proceeded to enforce any right, power or remedy under this Mortgage
by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to Mortgagee, then and in every such case the Mortgagor and Mortgagee
shall be restored to their former positions and rights hereunder with respect
to the property subject or intended to be subject to this Mortgage, and all
rights, remedies and powers of Mortgagee shall continue as if no such
proceedings had been taken.
SECTION 4.10. Proceeds of Sale. The proceeds of any sale of
the Vessel and the net earnings from the hire or from any operation or use of
the Vessel by Mortgagee under any of the powers herein specified and any and
all other money received by Mortgagee pursuant to or under the terms of this
Mortgage or in any proceedings hereunder, the application of which has not
elsewhere been specifically provided, shall be applied as follows:
FIRST: To the payment of all reasonable expenses and
charges, including the expenses of any sale, and expenses of any retaking,
attorneys' fees, court costs, keepers' fees, necessary repairs and any other
expenses or advances made or incurred by Mortgagee in the protection of its
rights or the pursuance of its remedies hereunder, and to provide adequate
indemnity against liens claiming priority over or equality with the lien of
this Mortgage;
SECOND: To the payment in full of any amounts then
due and unpaid under the Notes and the Secured Obligations.
THIRD: To the payment of any surplus thereafter
remaining to the Mortgagor or to whomsoever may be entitled thereto.
SECTION 4.11. Repairs to Vessel and Sale of Equipment. Until
one or more of the Events of Default hereinabove described shall happen, the
Mortgagor (a) shall be suffered and permitted to retain actual possession and
use of the Vessel; (b) may at any time alter, repair, change or re-equip the
Vessel, subject, however, to the provisions of Section 3.08 of Article III and
Section 4.11 of the Indenture; and (c) subject to Section 10.07 of the
Indenture shall have the right, from time to time in its discretion and without
obtaining a release thereof by Mortgagee, to dispose of, free from the lien
hereof, equipment or other
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appurtenances, of the Vessel that may become worn out or obsolete or otherwise
are no longer useful, necessary, profitable or advantageous in the operation of
the Vessel, provided that either prior to or promptly following such removal
any such property shall be replaced with serviceable equipment or other
appurtenances of substantially equal utility and of a value at least equal to
that of the replaced property when first acquired and free of any security
interest of any other person (except Permitted Liens as defined in the
Indenture), which shall forthwith become subject to the lien of this Mortgage
as a preferred mortgage thereon.
ARTICLE V
ASSIGNMENT OF WARRANTIES OF TITLE
SECTION 5.01. Assignment. [Mortgagor, in further
consideration of the premises and of the additional covenants herein contained,
does hereby assign, transfer and set over and confirm unto Mortgagee, and its
successors and assigns IN TRUST FOREVER, all representations, warranties and
covenants as to title and freedom from liens made, granted and agreed to by
________________ in that certain Bill of Sale, dated __________ pertaining to
the Vessel, to the extent permitted by any applicable law, including the laws
of the state of _______________.][to be added if appropriate].
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Addresses. Any notice to be given under this
Mortgage shall, except as otherwise expressly provided herein, be made in
accordance with Section 11.02 of the Indenture.
SECTION 6.02. Counterparts. This Mortgage may be executed in
any number of counterparts and all such counterparts executed and delivered
each as an original shall constitute but one and the same instrument.
SECTION 6.03. Interest of Mortgagor. The interest of the
Mortgagor in the Vessel and the interest mortgaged by this Mortgage is that of
one hundred percent (100%) absolute and sole ownership.
SECTION 6.04. Survivorship of Covenants. All the covenants,
promises, stipulations and agreements of the Mortgagor in the Secured
Obligations contained shall bind the Mortgagor and
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its successors and assigns and shall inure to the benefit of Mortgagee and its
successors and assigns.
SECTION 6.05. Amendments. Except as otherwise provided by the
Indenture, 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 tender offer or exchange offer for Notes) shall be required to amend,
modify, supplement, or waive any provision of this Mortgage. Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 6.06. Discharge of Lien. When the Notes have been
paid in full and the Secured Obligations of the Mortgagor to the Mortgagee have
been satisfied in full, Mortgagee shall, at the Mortgagor's expense, execute
and deliver to the Mortgagor such documents as the Mortgagor shall reasonably
request to evidence the surrender and discharge of the lien hereof upon the
Vessel.
SECTION 6.07. Incorporation into Mortgage. The Whereas
Clauses and the Granting Clause of this Mortgage are incorporated in and are
made a part of this Mortgage.
SECTION 6.08. Governing Law. This Mortgage shall be governed
by and construed according to the provisions of the Act, and where silent, by
the General Maritime Law of the United States.
SECTION 6.09. Conflict. In the event that the provisions of
this Mortgage shall conflict with or be inconsistent with the provisions of the
Indenture, the terms and provisions of the Indenture shall control and govern
the obligations, rights and responsibilities of the parties hereto. If any
provision of this Mortgage conflicts with any provision of the Trust Indenture
Act, the provisions of the Trust Indenture Act shall control.
SECTION 6.10. No Waiver. No provision of this Mortgage, the
Indenture or any Collateral Document shall be deemed to constitute a waiver by
the Mortgagee of the preferred status of this Mortgage given by federal law and
any provision of this Mortgage, the Indenture or any Collateral Document which
would otherwise constitute such a waiver shall to such extent be of no force or
effect.
SECTION 6.11. Gaming Laws. (a) Each of the provisions of
this Mortgage is subject to, and shall be enforced in compliance with, the
provisions of any applicable laws, including, without limitation, the rules and
regulations of the Indiana Gaming commission (together with the Indiana
Riverboat Gambling Act, the "Gaming Laws").
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(b) The Mortgagee acknowledges, understands and agrees that
the Gaming Laws may impose certain licensing or transaction approval
requirements prior to the exercise of the rights and remedies granted to it
under the Mortgage with respect to the Vessel subject to the Gaming Laws.
(c) If any consent under the Gaming Laws is required in
connection with the taking of any of the actions which may be taken by the
Mortgagee in the exercise of its rights hereunder, then Mortgagor agrees to use
its reasonable best efforts to secure such consent and to cooperate with the
Trustee in obtaining any such consent. Upon the occurrence and during the
continuation of any Event of Default, Mortgagor shall promptly execute and/or
cause the execution of all applications, certificates, instruments, and other
documents and papers that the Mortgage may be required to file in order to
obtain any necessary approvals under the Gaming Laws, and if Mortgagor fails or
refuses to execute such documents, the Trustee or the clerk of the court with
jurisdiction may execute such documents on behalf of Mortgagor.
(d) Notwithstanding any other provision of this Mortgage to
the contrary, nothing in this Mortgage shall (i) effect any transfer of any
ownership interest (within the meaning of 68 Indiana Administrative Code 5) in
Mortgagor or (ii) effect any transfer, sale, purchase, lease or hypothecation
of, or any borrowing or loaning of money against, or any establishment of any
voting trust agreement or other similar agreement with respect to (all within
the meaning of Indiana Code 4-33-4-21), any certificate of suitability or any
owner's license heretofore or hereafter issued to any person, including
Mortgagor, under any of the Gaming Laws, including Indiana Code 4-33.
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IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage
in multiple original counterparts on the day and year first above written.
WITNESSES: THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
_________________________ By: _____________________________
Title: _________________________
ATTEST:
_________________________
Title:___________________
155
ACKNOWLEDGMENT
STATE OF ________ )
: ss.:
COUNTY OF ______)
BE IT KNOWN, that on _________, 199__, personally appeared
before me, ________________who, being duly sworn, deposed and said:
That he/she is the ___________ of the Manager of The Majestic
Star Casino, LLC, the limited liability company described in and which executed
the foregoing Preferred Ship Mortgage; that by order of the Board of Directors
of said Manager he/she signed his/her name thereto and acknowledged to me that
he executed said Preferred Ship Mortgage as such officer of said corporation on
behalf to The Majestic Star Casino, LLC; and that the same is the free and
voluntary act and deed of said corporation, and of himself/herself as such
officer thereof, for the uses and purposes therein expressed.
______________________________
Sworn to and Subscribed
before me this ______ day
of ________, 199____
_______________________
NOTARY PUBLIC
156
NOTICE OF MORTGAGE
____________
(OFFICIAL NO. ________)
This Vessel, owned by The Majestic Star Casino, LLC (the
"Owner"), is subject to a First Preferred Ship Mortgage in the principal amount
of $105,000,000, dated ________,199__, as the same may be amended or
supplemented, in favor of IBJ Schroder Bank & Trust Company, as trustee. The
Owner hereby gives notice that it has not granted to itself, any charterer, the
Master of this Vessel or any other person, and none thereof has any right,
power or authority to create, incur or permit to exist upon this Vessel any
liens or encumbrances whatsoever other than liens for crew's wages or salvage.
Any such right, power or authority is also prohibited under the terms of said
Mortgage.
157
================================================================================
EXHIBIT A-I-1
(Face of Note)
12-3/4% SENIOR SECURED NOTES due 2003
WITH CONTINGENT INTEREST
No.
CUSIP No. $_____________________
THE MAJESTIC STAR CASINO, LLC
promises to pay to
or registered assigns,
the principal sum of
Dollars on May 15, 2003.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Dated: May 22, 1996
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: ___________________________________
Authorized Signatory
================================================================================
A-I-1
158
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of 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 NOTE (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 NOTE
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 NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH NOTE 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 COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
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 OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE.
___________________________
1
This paragraph is to be included only if the Note is in global form.
A-I-2
159
(Back of Note)
12-3/4% Senior Secured Notes due 2003
With Contingent Interest
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. INTEREST. The Majestic Star Casino, LLC, or any successor thereto as
provided in the Indenture (the "Company"), promises to pay interest at the rate
of 12-3/4% per annum of the principal amount of this Note (the "Fixed
Interest") from the Issuance Date to the date of payment of such principal
amount of this Note and shall pay the Liquidated Damages payable pursuant to
Section 5 of the Registration Rights Agreement. Installments of Fixed Interest
and Liquidated Damages shall become due and payable semi-annually in arrears on
each May 15 and November 15, commencing November 15, 1996, to the holder of
record at the close of business on the preceding May 1 or November 1.
Additionally, installments of accrued and unpaid Fixed Interest shall become
due and payable with respect to any principal amount of this Note that matures
(whether at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise) upon such maturity of such principal amount of this
Note. The Company 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; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of Fixed
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.
Fixed Interest on this Note shall be computed on the basis of a 360-day year,
consisting of twelve 30-day months. Each installment of Fixed Interest shall
be calculated to accrue from and including the most recent date to which Fixed
Interest has been paid or provided for (or from and including the Issuance Date
if no installment of Fixed Interest has been paid) to, but not including, the
date of payment.
In addition, this Note shall bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of this
Note. Installments of accrued or deferred Contingent Interest on this Note
accrued through the Accrual Period last ended shall become due and payable
semi-annually on each May 15 and November 15 after the Commencement Date to the
holder of record at the close of business on the preceding May 1 or November 1,
provided that no Contingent Interest shall be payable with respect to any
period prior to the Commencement Date and that such installment of Contingent
Interest is not permitted to be deferred on such date. Additionally, all
installments of accrued or deferred Contingent Interest shall become due and
payable (and may not be further deferred) with respect to any principal amount
of this Note that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of this Note.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest shall cause
the Company's Adjusted Fixed Charge Coverage
A-I-3
160
Ratio for the four consecutive fiscal quarters last completed prior to such
interest payment date to be less than 2.0 to 1 on a pro forma basis after
giving effect to the assumed payment of such Contingent Interest and (b) the
principal amount of this Note corresponding to such Contingent Interest has not
then matured and become due and payable (at stated maturity, upon acceleration,
upon maturity of repurchase obligation or otherwise). Contingent Interest that
is deferred shall become due and payable, in whole or in part, on the earlier
of (i) the next succeeding interest payment date on which all or a portion of
such Contingent Interest is not permitted to be deferred, and (ii) upon the
maturity of the corresponding principal amount of this Note (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). No interest shall accrue on any Contingent Interest deferred and
which has not yet become due and payable. To the extent permitted by law,
interest shall accrue on overdue Contingent Interest at the same rate as the
Fixed Interest plus 1% per annum.
Each installment of Contingent Interest shall be calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to, and including, either (a) the last day of the
next Semiannual Period if the corresponding principal amount of this Note has
not become due and payable or (b) the date of payment if the corresponding
principal amount of this Note has become due and payable (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). With respect to each Accrual Period, Contingent Interest shall
accrue daily on the principal amount of this Note outstanding during such
period as follows: (i) for any portion of an Accrual Period which consists of
all or part of a Semiannual Period that ends during such Accrual Period, 1/180
of the Base Contingent Interest with respect to such principal amount for such
Semiannual Period until fully accrued and (ii) for any other portion of an
Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for the Semiannual Period that began and last ended after the
Commencement Date.
Any reference in this Note to "accrued and unpaid interest" includes the
amount of unpaid Contingent Interest and Liquidated Damages, if any, due and
payable.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person at
any time the Fixed Charge Coverage Ratio of such Person on such date adjusted
as follows: (a) for purposes of the calculation of the Fixed Charge Coverage
Ratio, Fixed Charges shall be adjusted to include (rather than exclude)
Contingent Interest, whether paid or accrued, and (b) the amount of Contingent
Interest on a pro forma basis shall equal the Contingent Interest accrued and
reflected in the financial statements for the last two Semiannual Periods with
respect to which Contingent Interest was accruable or payable or, if two such
Semiannual Periods have not occurred, then the amount accrued and reflected in
the financial statements with respect to the previous Semiannual Period
multiplied by 2.0.
"Base Contingent Interest" means with respect to any principal amount of
Notes as of any date after the Commencement Date, an amount equal to the
product of (a) 5.0% of the Company's Consolidated Cash Flow for the Semiannual
Period last completed and (b) a
A-I-4
161
fraction, the numerator of which is the amount of such principal and the
denominator of which is $105.0 million; provided however that additional
Contingent Interest will cease accruing on any outstanding principal amount of
the Notes if the aggregate amount of such Base Contingent Interest in respect
of any two consecutive Semiannual Periods (and excluding any deferred
Contingent Interest from prior periods) exceeds the Maximum Contingent
Interest.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Consolidated Cash Flow" shall have the meaning set forth in the
Indenture.
"Contingent Interest" means, as of any payment date, Base Contingent
Interest on this Note accrued through the Accrual Period last ended (including
any Accrual Period that ends on such payment date) and any Base Contingent
Interest previously accrued and the payment of which has been permitted to be
deferred.
"Maximum Contingent Interest" means with respect to any amount of
principal of Notes, an amount equal to the product of (a) 5.0% of $60.0 million
and (b) a fraction, the numerator of which is the amount of such principal and
the denominator of which is $105.0 million.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31, or each period that begins on April 1 and ends on
the next succeeding September 30.
2. METHOD OF PAYMENT. The Company shall pay interest (including
Contingent Interest, if any) on the Notes (except defaulted interest) and
Liquidated Damages to the Persons who are registered Holders of Notes at the
close of business on May 1 or November 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date (the "Record Date"), except as provided in Section
2.12 of the Indenture with respect to defaulted interest or as provided with
respect to Notes called for redemption after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. The Notes shall be payable as to
principal, premium, if any, interest (including Contingent Interest, if any)
and Liquidated Damages at the office or agency of the Company maintained for
such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest (including Contingent Interest, if
any) and Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders and provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, premium on, all Global Notes and all other Notes the
Holders of which shall have provided wire transfer instructions to the Company
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.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Schroder Bank & Trust
Company (including any successor appointed under the Indenture, the
"Trustee"), the
A-I-5
162
Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
4. INDENTURE AND COLLATERAL DOCUMENTS. The Company issued the Notes
under an Indenture dated as of May 22, 1996 (as it may be amended from time to
time, the "Indenture") between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Section Section 77aaa-77bbbb) as in effect on the Issuance Date. 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
Company limited to $105 million in aggregate principal amount. The terms of
the Indenture shall govern any inconsistencies between the Indenture and the
Notes. The Notes are secured by certain collateral, pursuant to the Collateral
Documents referred to in the Indenture, which may be released pursuant to the
terms thereof.
5. OPTIONAL REDEMPTION. Except as set forth below, the Company shall not
have the option to redeem the Notes prior to May 15, 2000. From and after May
15, 2000, the Company shall have the option to redeem the Notes, in whole or in
part, upon not less than 30 nor more than 60 days' notice at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest (including Contingent Interest and Liquidated
Damages, if any) thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2000 106.375
2001 104.250
2002 102.125
2003 100.00
The Company shall have the option on and after May 15, 1997 and prior to
May 15, 1998, to redeem up to $12.0 million principal amount of the Notes
solely out of any amounts remaining in the Interest Reserve Account, upon not
less than 30 nor more than 60 days' notice, at the redemption price of 112.75%
of the principal amount thereof plus accrued and unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon to the applicable
redemption date.
Notwithstanding any other provisions of Article 3 of the Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial owner of the
Notes be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, at its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
of such notice of such finding by the applicable Gaming
A-I-6
163
Regulatory Authority (or such earlier dates as may be required by the
applicable Gaming Regulatory Authority) or (ii) to call for redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
lesser of the principal amount thereof or the price at which such Holder or
beneficial owner acquired the Notes, together with, in either case, accrued and
unpaid interest (including Contingent Interest, if any), to the earlier of the
date of redemption or the date of the finding of suitability by such Gaming
Regulatory Authority, which may be less than 30 days following the notice of
redemption if so ordered by such Gaming Regulatory Authority. The Company
shall not be required to pay or reimburse any Holder or beneficial owner of
Notes who is required to apply for any such license, qualification or finding
of suitability for the costs of the licensure or investigation for such
qualification or finding of suitability. Such expenses shall be the obligation
of such Holder or beneficial owner.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as
provided in the Indenture, the Company may be required to purchase all or a
portion of the Notes. Holders of Notes that are subject to an offer to
purchase will receive an offer to purchase from the Company prior to any
related purchase date, and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder 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 (including Contingent Interest or
Liquidated Damages, if any) 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 Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company 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. The Company 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. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest on this Note and for all other purposes whatsoever, whether or not
this Note is overdue, and neither the Trustee, any
A-I-7
164
Agent, nor the Company shall be affected by notice to the contrary. The
registered Holder of a Note shall be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Collateral Documents 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 of a Note, the Indenture, the Notes or the
Collateral Documents 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 comply with Article 5 of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such 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, to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 of the Indenture or to secure the Notes
with additional collateral.
12. DEFAULTS AND REMEDIES. Events of Default include (as more fully
described, and subject to, the terms and conditions of the Indenture as it may
be amended from time to time): (i) default in payment of interest (including
Continent Interest or Liquidated Damages, if any) when due and payable on any
Note for 30 days; (ii) default in payment of principal of or premium, if any,
on any Note when due; (iii) failure by the Company to comply with Section 4.07,
4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28, 4.29, 4.31 or 5.01 of the Indenture;
(iv) failure by the Company for 30 days after written notice to it to comply
with any of its other agreements in the Indenture, the Notes or the Collateral
Documents; (v) for any reason, other than due to the act of the Trustee, the
Disbursement Agent or the Holders and other than the satisfaction in full and
discharge of all obligations secured thereby, to the extent permitted by the
Indenture, any Collateral Document ceases to be in full force and effect or any
Lien intended to be perfected thereby ceases to be or is not a valid and
perfected Lien having the ranking or priority contemplated thereby, except for
Permitted Liens, and such condition continues for a period of 30 consecutive
days after the Company receives notice of such condition; (vi) prior to
Delivery of the Permanent Vessel, the Charter ceases to be in full force and
effect or any default occurs under the Charter or any Collateral Document that
continues beyond any applicable cure period; (vii) payment defaults under and
the acceleration prior to express maturity of certain other indebtedness which
aggregates $1.0 million or more; (viii) certain final judgments that remain
unpaid, undischarged and unstayed if the aggregate of all such undischarged
judgments exceeds $1.0 million; (ix) breach of any representation or warranty
in, or the repudiation by the Company of its obligations with respect to the
Charter, the Berthing Agreement or any of the Collateral Documents; (x) certain
events of bankruptcy or insolvency; (xi) revocation, termination, suspension or
other cessation of effectiveness of any Gaming License which results in the
cessation or suspension of gaming operations for a period of more than 90
consecutive days at the Majestic Star Casino; (xii) cessation of gaming
operations for a period of more than 90 consecutive days at the Majestic Star
Casino (other than as a result of a casualty loss) after the Majestic Star
Casino becomes Operating; (xiii) cessation of gaming operations for a period of
more than 180 consecutive days as a result of
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165
a casualty loss except if the Company is diligently pursuing reconstruction and
opening of the Majestic Star Casino and such reconstruction and operating can
be accomplished with the funds available to the Company; (xiv) the Majestic
Star Casino is not Operating by December 31, 1996 and continues to be not
Operating; and (xv) the Permanent Vessel has not been Delivered by June 30,
1998. 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 the principal, premium, if any, interest (including all Contingent
Interest accrued or deferred and Liquidated Damages) and any other monetary
obligations on all of the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes shall 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 (including Contingent Interest, if any)) 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 (including
Contingent Interest, if any) on, or the principal of, the Notes. The Company
is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required, within five Business Days 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. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee. 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.
14. NO RECOURSE AGAINST OTHERS. No officer or office holder, employee,
agent, representative or member of the Company, as such, shall have any
liability for any obligations of the Company under the Notes, the Indenture or
the Collateral Documents, as applicable, 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.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or any authenticating agent.
16. 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).
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17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to
Holders of Notes under the Indenture, Holders shall have all the rights set
forth in the Collateral Documents.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and 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 Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or any of the Collateral Documents.
Requests may be made to:
The Majestic Star Casino, LLC
One Buffington Drive
Gary, Indiana 46406
Attention: Executive Vice President
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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 Company. The agent may substitute
another to act for him.
Date: _________________
Your Signature:______________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee.
168
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10, 4.11, 4.16, 4.28 or 4.29 of the Indenture, check the box
below:
/ / Section 4.10 / / Section 4.11 / / Section 4.16
/ / Section 4.28 / / Section 4.29
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10, Section 4.11, Section 4.16, Section 4.28 or
Section 4.29 of the Indenture, state the principal amount you elect to have
purchased: $___________________.
Date:__________________ Your Signature:______________________
(Sign exactly as your name appears
on the Note)
Tax Identification No.: _____________
Signature Guarantee.
169
================================================================================
EXHIBIT A-II-1
(Face of Note)
12-3/4% SENIOR EXCHANGE SECURED NOTES due 2003
WITH CONTINGENT INTEREST
No.
CUSIP No. $_____________________
THE MAJESTIC STAR CASINO, LLC
promises to pay to
or registered assigns,
the principal sum of
Dollars on May 15, 2003.
Interest Payment Dates: May 15 and November 15
Record Dates: May 1 and November 1
Dated: May 22, 1996
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: _______________________________
Authorized Signatory
================================================================================
170
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York;) ("DTC"), to the issuer or its agent for registration or 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 in as much as the registered owner hereof, Cede & Co., has an
interest herein.]1
- ------------------
1
This paragraph is to be included only if the Note is in global form.
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(Back of Note)
12-3/4% Senior Exchange Secured Notes due 2003
With Contingent Interest
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless other indicated.
1. INTEREST. The Majestic Star Casino, LLC, or any successor thereto as
provided in the Indenture (the "Company"), promises to pay interest at the rate
of 12-3/4% per annum of the principal amount of this Note (the "Fixed
Interest") from the Issuance Date to the date of payment of such principal
amount of this Note. Installments of Fixed Interest shall become due and
payable semi-annually in arrears on each May 15 and November 15, commencing
November 15, 1996, to the holder of record at the close of business on the
preceding May 1 or November 1. Additionally, installments of accrued and
unpaid Fixed Interest shall become due and payable with respect to any
principal amount of this Note that matures (whether at stated maturity, upon
acceleration, upon maturity of repurchase obligation or otherwise) upon such
maturity of such principal amount of this Note. The Company 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; it shall pay
interest (including post-petition interest in any proceeding under Bankruptcy
Law) on overdue installments of Fixed 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. Fixed Interest on this Note shall be computed on
the basis of a 360-day year, consisting of twelve 30-day months. Each
installment of Fixed Interest shall be calculated to accrue from and including
the most recent date to which Fixed Interest has been paid or provided for (or
from and including the Issuance Date if no installment of Fixed Interest has
been paid) to, but not including, the date of payment.
In addition, this Note shall bear Contingent Interest, calculated as
described below, from the Commencement Date to the date of payment of this
Note. Installments of accrued or deferred Contingent Interest on this Note
accrued through the Accrual Period last ended shall become due and payable
semi-annually on each May 15 and November 15 after the Commencement Date to the
holder of record at the close of business on the preceding May 1 or November 1,
provided that no Contingent Interest shall be payable with respect to any
period prior to the Commencement Date and that such installment of Contingent
Interest is not permitted to be deferred on such date. Additionally, all
installments of accrued or deferred Contingent Interest shall become due and
payable (and may not be further deferred) with respect to any principal amount
of this Note that matures (whether at stated maturity, upon acceleration,
maturity of repurchase obligation or otherwise) upon such maturity of such
principal amount of this Note.
The Company, at its option, may defer payment of all or a portion of any
installment of Contingent Interest then otherwise due if, and only to the
extent that, (a) the payment of such portion of Contingent Interest shall cause
the Company's Adjusted Fixed Charge Coverage Ratio for the four consecutive
fiscal quarters last completed prior to such interest payment date to be less
than 2.0 to 1 on a pro forma basis after giving effect to the assumed payment
A-II-3
172
of such Contingent Interest and (b) the principal amount of this Note
corresponding to such Contingent Interest has not then matured and become due
and payable (at stated maturity, upon acceleration, upon maturity of repurchase
obligation or otherwise). Contingent Interest that is deferred shall become
due and payable, in whole or in part, on the earlier of (i) the next succeeding
interest payment date on which all or a portion of such Contingent Interest is
not permitted to be deferred, and (ii) upon the maturity of the corresponding
principal amount of this Note (whether at stated maturity, upon acceleration,
upon maturity of repurchase obligation or otherwise). No interest shall accrue
on any Contingent Interest deferred and which has not yet become due and
payable. To the extent permitted by law, interest shall accrue on overdue
Contingent Interest at the same rate as the Fixed Interest plus 1% per annum.
Each installment of Contingent Interest shall be calculated to accrue (an
"Accrual Period") from, but not including, the most recent date to which
Contingent Interest has been paid or provided for or through which Contingent
Interest had been calculated and deferred (or from and including the
Commencement Date if no installment of Contingent Interest has been paid,
provided for or deferred) to , and including, either (a) the last day of the
next Semiannual Period if the corresponding principal amount of this Note has
not become due and payable or (b) the date of payment if the corresponding
principal amount of this Note has become due and payable (whether at stated
maturity, upon acceleration, upon maturity of repurchase obligation or
otherwise). With respect to each Accrual Period, Contingent Interest shall
accrue daily on the principal amount of this Note outstanding during such
period as follows: (i) for any portion of an Accrual Period which consists of
all or part of a Semiannual Period that ends during such Accrual Period, 1/180
of the Base Contingent Interest with respect to such principal amount for such
Semiannual Period until fully accrued and (ii) for any other portion of an
Accrual Period, 1/180 of the Base Contingent Interest with respect to such
principal amount for the Semiannual Period that began and last ended after the
Commencement Date.
Any reference in this Note to "accrued and unpaid interest" includes the
amount of unpaid Contingent Interest and Liquidated Damages, if any, due and
payable.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person at
any time the Fixed Charge Coverage Ratio of such Person on such date adjusted
as follows: (a) for purposes of the calculation of the Fixed Charge Coverage
Ratio, Fixed Charges shall be adjusted to include (rather than exclude)
Contingent Interest, whether paid or accrued, and (b) the amount of Contingent
Interest on a pro forma basis shall equal the Contingent Interest accrued and
reflected in the financial statements for the last two Semiannual Periods with
respect to which Contingent Interest was accruable or payable or, if two such
Semiannual Periods have not occurred, then the amount accrued and reflected in
the financial statements with respect to the previous Semiannual Period
multiplied by 2.0.
"Base Contingent Interest" means with respect to any principal amount of
Notes as of any date after the Commencement Date, an amount equal to the
product of (a) 5.0% of the Company's Consolidated Cash Flow for the Semiannual
Period last completed and (b) a fraction, the numerator of which is the amount
of such principal and the denominator of which is $105.0 million; provided
however that additional Contingent Interest will cease accruing on
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173
any outstanding principal amount of the Notes if the aggregate amount of such
Base Contingent Interest in respect of any two consecutive Semiannual Periods
(and excluding any deferred contingent Interest from prior periods) exceeds the
Maximum Contingent Interest.
"Commencement Date" means the first day that the Majestic Star Casino
becomes Operating.
"Consolidated Cash Flow" shall have the meaning set forth in the
Indenture.
"Contingent Interest" means, as of any payment date, Base Contingent
Interest on this Note accrued through the Accrual Period last ended (including
any Accrual Period that ends on such payment date) and any Base Contingent
Interest previously accrued and the payment of which has been permitted to be
deferred.
"Maximum Contingent Interest" means with respect to any amount of
principal of Notes, an amount equal to the product of (a) 5.0% of $60.0 million
and (b) a fraction, the numerator of which is the amount of such principal and
the denominator of which is $105.0 million.
"Semiannual Period" means each period that begins on October 1 and ends on
the next succeeding March 31, or each period that begins on April 1 and ends on
the next succeeding September 30.
2. METHOD OF PAYMENT. The Company shall pay interest (including
Contingent Interest, if any) on the Notes (except defaulted interest) and
Liquidated Damages to the Persons who are registered Holders of Notes at the
close of business on May 1 or November 1 next preceding the Interest Payment
Date, even if such Notes are canceled after such record date and on or before
such Interest Payment Date (the "Record Date"), except as provided in Section
2.12 of the Indenture with respect to defaulted interest or as provided with
respect to Notes called for redemption after such record date and on or before
such Interest Payment Date. The Holder hereof must surrender this Note to a
Paying Agent to collect principal payments. The Notes shall be payable as to
principal, premium, if any, interest (including Contingent Interest, if any)
and Liquidated Damages at the office or agency of the Company maintained for
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest (including Contingent Interest, if any) and
Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders and 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 Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Schroder Bank & Trust
Company (including any successor appointed under the Indenture, the "Trustee"),
the Trustee under the Indenture, shall act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
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174
4. INDENTURE AND COLLATERAL DOCUMENTS. The Company issued the Notes under
an Indenture dated as of May 22, 1996 (as it may be amended from time to time,
the "Indenture") between the Company and the Trustee. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Section
Section 77aaa-77bbbb) as in effect on the Issuance Date. 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 Company
limited to $105 million in aggregate principal amount. The terms of the
Indenture shall govern any inconsistencies between the Indenture and the Notes.
The Notes are secured by certain collateral, pursuant to the Collateral
Documents referred to in the Indenture, which may be released pursuant to the
terms thereof.
5. OPTIONAL REDEMPTION. Except as set forth below, the Company shall not
have the option to redeem the Notes prior to May 15, 2000. From and after May
15, 2000, the Company shall have the option to redeem the Notes, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest (including Contingent Interest and Liquidated
Damages, if any) thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on May 15 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2000 106.375
2001 104.250
2002 102.125
2003 100.00
The Company shall have the option on and after May 15, 1997 and prior to
May 15, 1998, to redeem up to $12.0 million principal amount of the Notes
solely out of any amounts remaining in the Interest Reserve Account, upon not
less than 30 nor more than 60 days' notice, at the redemption price of 112.75%
of the principal amount thereof plus accrued and unpaid interest (including
Contingent Interest and Liquidated Damages, if any) thereon to the applicable
redemption date.
Notwithstanding any other provisions of Article 3 of the Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial owner of the
Notes be licensed, qualified or found suitable under any applicable gaming laws
in order to maintain any gaming license or franchise of the Company under any
applicable gaming laws, and the Holder or beneficial owner fails to apply for a
license, qualification or finding of suitability within 30 days after being
requested to do so by such Gaming Regulatory Authority (or such lesser period
that may be required by such Gaming Regulatory Authority) or if such Holder or
beneficial owner is not so licensed, qualified or found suitable, the Company
has the right, as its option, (i) to require such Holder or beneficial owner to
dispose of such Holder's or beneficial owner's Notes within 30 days of receipt
of such notice of such finding by the applicable Gaming Regulatory Authority
(or such earlier dates as may be required by the applicable Gaming Regulatory
Authority) or (ii) to call for redemption of the Notes of such Holder or
beneficial owner at a redemption price equal to the lesser of the principal
amount thereof or the price at
A-II-6
175
which such Holder or beneficial owner acquired the Notes, together with, in
either case, accrued and unpaid interest (including Contingent Interest, if
any), to the earlier of the date of redemption or the date of the finding of
unsuitability by such Gaming Regulatory Authority, which may be less than 30
days following the notice of redemption if so ordered by such Gaming Regulatory
Authority. The Company shall not be required to pay or reimburse any Holder or
beneficial owner of Notes who is required to apply for any such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expenses
shall be the obligation of such Holder or beneficial owner.
6. MANDATORY REDEMPTION. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as
provided in the Indenture, the Company may be required to purchase all or a
portion of the Notes. Holders of Notes that are subject to an offer to
purchase will receive an offer to purchase from the Company prior to any
related purchase date, and may elect to have such Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder 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 (including Contingent Interest or
Liquidated Damages, if any) 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 Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company 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. The Company 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. Prior to due presentment to the Trustee for
registration of the transfer of this Note, the Trustee, any agent and the
Company may deem and treat the Person in whose names this Note is registered as
its absolute owner for the purpose of receiving payment of principal of and
interest (including Contingent Interest, if any) on this Note and for all other
purposes whatsoever, whether or not this Note is overdue, and neither the
Trustee, any Agent, nor the Company shall be affected by notice to the
contrary. The registered Holder of a Note shall be treated as its owner for
all purposes.
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176
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, the Notes or the Collateral Documents may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes, 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 of a Note, the Indenture, the Notes or the
Collateral Documents 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 comply with Article 5 of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes or that does not adversely affect the legal rights under
the Indenture of any such 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, to enter into additional or supplemental Collateral Documents
including, without limitation, the First Preferred Ship Mortgage on the
Permanent Vessel pursuant to Article 10 of the Indenture or to secure the Notes
with additional collateral.
12. DEFAULTS AND REMEDIES. Events of Default include (as more fully
described, and subject to, the terms and conditions of the Indenture as it may
be amended from time to time): (i) default in payment of interest (including
Contingent Interest, if any) when due and payable on any Note for 30 days;
(ii) default in payment of principal of or premium, if any, on any Note when
due; (iii) failure by the Company to comply with Section 4.07, 4.09, 4.10,
4.11, 4.15, 4.16, 4.18, 4.28, 4.29, 4.31 or 5.01 of the Indenture; (iv) failure
by the Company for 30 days after written notice to it to comply with any of its
other agreements in the Indenture, the Notes or the Collateral Documents; (v)
for any reason, other than due to the act of the Trustee, the Disbursement
Agent or the Holders and other than the satisfaction in full and discharge of
all obligations secured thereby, to the extent permitted by the Indenture, any
Collateral Document ceases to be in full force and effect or any Lien intended
to be perfected thereby ceases to be or is not a valid and perfected Lien
having the ranking or priority contemplated thereby, except for Permitted
Liens, and such condition continues for a period of 30 consecutive days after
the Company receives of such condition; (vi) prior to Delivery of the Permanent
Vessel, the Charter ceases to be in full force and effect or any default occurs
under the Charter or any Collateral Document that continues beyond any
applicable cure period; (vii) payment defaults under and the acceleration prior
to express maturity of certain other indebtedness which aggregates $1.0 million
or more; (viii) certain final judgments that remain unpaid, undischarged and
unstayed if the aggregate of all such undischarged judgments exceeds $1.0
million; (ix) breach of any representation or warranty in, or the repudiation
by the Company of its obligations with respect to, the Charter, the Berthing
Agreement or any of the Collateral Documents; (x) certain events of bankruptcy
or insolvency; (xi) revocation, termination, suspension or other cessation of
effectiveness of any Gaming License which results in the cessation or
suspension of gaming operations for a period of more than 90 consecutive days
at the Majestic Star Casino; (xii) cessation of gaming operations for a period
of more than 90 consecutive days at the Majestic Star Casino (other than as a
result of a casualty loss) after the Majestic Star Casino becomes Operating;
(xiii) cessation of gaming operations for a period of more than 180 consecutive
days as a result of a casualty loss except if the Company is diligently
pursuing reconstruction and opening of the Majestic Star Casino and such
reconstruction and opening can be accomplished with the funds available to the
Company; (xiv) the Majestic Star Casino is not Operating by December
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177
31, 1996 and continues to be not Operating; and (xv) the Permanent Vessel has
not been Delivered by June 30, 1998. 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 the principal, premium, if any, interest
(including all Contingent Interest accrued or deferred) and any other monetary
obligations on all of the Notes to be due and payable. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes shall 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 (including Contingent Interest, if any)) 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 in the payment of interest (including Contingent
Interest, if any) on, or the principal of, the Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required, within five Business Days upon becoming
aware of any Default or Event or Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee. 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.
14. NO RECOURSE AGAINST OTHERS. No officer or office holder, employee,
agent, representative or member of the Company, as such, shall have any
liability for any obligations of the Company under the Notes, the Indenture or
the Collateral Documents, as applicable, 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.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating Agent.
16. 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).
17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to
Holders of Notes under the Indenture, Holders shall have all the rights set
forth in the Collateral Documents.
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18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and 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 Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or any of the Collateral Documents.
Requests may be made to:
The Majestic Star Casino, LLC
One Buffington Drive
Gary, Indiana 46406
Attention: Executive Vice President
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179
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 Company. The agent may substitute
another to act for him.
Date: _____________________
Your Signature:____________________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-II-11
180
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10, 4.11, 4.16, 4.28 or 4.29 of the Indenture, check the box
below:
/ / Section 4.10 / /Section 4.11 / /Section 4.16
/ / Section 4.28 / /Section 4.29
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10, Section 4.11, Section 4.16 , Section 4.28 or
Section 4.29 of the Indenture, state the principal amount you elect to have
purchased: $______________________________.
Date:______________ Your Signature: ____________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.: ___________________
Signature Guarantee.
A-II-12
181
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EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 12-3/4% Senior Secured Notes due 2003 of The Majestic Star Casino, LLC.
This Certificate relates to $_____ principal amount of Notes held in
*_______ book-entry or *___________ definitive 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 Depository a Note or
Notes in definitive, registered form of authorized denominations is 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)(A) 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.)
______________________________
*Check applicable box.
B-1
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