_______________________________________
Note Registration Rights Agreement
Dated As of February 26, 1998
among
Aladdin Gaming Holdings, LLC
and
Aladdin Capital Corp.
and
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Credit Suisse First Boston Corporation,
CIBC Oppenheimer Corp.
and
Scotia Capital Markets (USA) Inc.
___________________________________________
NOTE REGISTRATION RIGHTS AGREEMENT
This Note Registration Rights Agreement (the "Agreement") is
made and entered into this 26th day of February, 1998, among Aladdin Gaming
Holdings, LLC, a Nevada limited-liability company ("Holdings"), Aladdin Capital
Corp., a Nevada corporation ("Capital" and, together with Holdings, the
"Issuers"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit
Suisse First Boston Corporation, CIBC Oppenheimer Corp. and Scotia Capital
Markets (USA) Inc. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement,
dated February 18, 1998, among the Issuers, Aladdin Gaming Enterprises, Inc., a
Nevada corporation ("Enterprises" and, together with the Issuers, the "Aladdin
Parties"), Aladdin Holdings, LLC, a Delaware limited liability company ("AHL"),
the Trust under Article Sixth u/w/o Sigmund Sommer (the "Trust"), London Clubs
International, plc, a United Kingdom public limited company ("London Clubs" and,
together with the Aladdin Parties, AHL and the Trust, the "Venture Parties") and
the Initial Purchasers (the "Purchase Agreement"), which provides for, among
other things, the sale by the Aladdin Parties to the Initial Purchasers of Units
consisting in the aggregate of $221.5 million principal amount at maturity of
the Issuers' 13-1/2% Senior Discount Notes due 2010 (the "Securities") and
Warrants to purchase an aggregate of 2,215,000 shares of Class B non-voting
common stock of Enterprises. In order to induce the Initial Purchasers to enter
into the Purchase Agreement, the Issuers have agreed to provide to the Initial
Purchasers and their direct and indirect transferees the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"AHL" shall have the meaning set forth in the preamble.
"Aladdin Parties" shall have the meaning set forth in the
preamble.
"Capital" shall have the meaning set forth in the preamble.
"Closing Date" shall mean the Closing Time as defined in the
Purchase Agreement.
"Consummate" means, with respect to an Exchange Offer, the
occurrence of (i) the filing and effectiveness under the Act of the
Exchange Offer Registration Statement relating to the Exchange
Securities to be issued in the Exchange Offer, (ii) the maintenance of
such Registration Statement continuously effective and the keeping of
the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 2.1 hereof and (iii) the delivery by the
Issuers to the Trustee under the Indenture of Exchange Securities in
the same aggregate accreted value as the aggregate accreted value of
Securities that were tendered by Holders thereof pursuant to the
Exchange Offer.
"Depositary" shall mean The Depository Trust Company, or any
other depositary appointed by the Issuers, provided, however, that such
depositary must have an address in the Borough of Manhattan, in the
City of New York.
"Enterprises" shall have the same meaning set forth in the
preamble.
"Exchange Offer" shall mean the exchange offer by the Issuers
of Exchange Securities for Transfer Restricted Securities pursuant to
Section 2.1 hereof.
"Exchange Offer Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2.1 hereof.
"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such
registration statement, including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section
2.1 hereof.
"Exchange Securities" shall mean the 13-1/2% Senior Discount
Notes due 2010, issued by the Issuers under the Indenture containing
terms identical to the Securities in all material respects (except for
references to certain interest rate provisions, liquidated damages,
restrictions on transfers and restrictive legends), to be offered to
Holders in exchange for Transfer Restricted Securities pursuant to the
Exchange Offer.
"Holder" shall mean an Initial Purchaser, for so long as it
owns any Transfer Restricted Securities, and each of its successors,
assigns and direct and indirect transferees who become registered
owners of Transfer Restricted Securities under the Indenture and each
Participating Broker-Dealer that holds Exchange Securities for so long
as such Participating Broker-Dealer is required to deliver a prospectus
meeting the requirements of the 1933 Act in connection with any resale
of such Exchange Securities.
"Holdings" shall have the same meaning set forth in the
preamble.
"Indenture" shall mean the Indenture relating to the
Securities, dated as of February 26, 1998, between the Issuers and
State Street Bank and Trust Company, as
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trustee, as the same may be amended, supplemented, waived or otherwise
modified from time to time in accordance with the terms thereof.
"Initial Purchaser" or "Initial Purchasers" shall have the
meaning set forth in the preamble.
"Issuers" shall have the meaning set forth in the preamble.
"London Clubs" shall have the same meaning set forth in the
preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate accreted value of the outstanding Transfer Restricted
Securities; provided that whenever the consent or approval of Holders
of a specified percentage of Transfer Restricted Securities is required
hereunder, Transfer Restricted Securities held by the Issuers or any
Affiliate (as defined in the Indenture) of the Issuers shall be
disregarded in determining whether such consent or approval was given
by the Holders of such required percentage amount.
"Participating Broker-Dealer" shall mean any of Merrill Lynch
Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, CIBC Oppenheimer Corp. and Scotia Capital Markets (USA)
Inc. and any other broker-dealer which makes a market in the Securities
and exchanges Transfer Restricted Securities in the Exchange Offer for
Exchange Securities.
"Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, trust or
unincorporated organization, or a governmental agency or body or
political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section
2.1 hereof.
"Private Exchange Securities" shall have the meaning set forth
in Section 2.1 hereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including any such prospectus supplement with respect to
the terms of the offering of any portion of the Transfer Restricted
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Issuers with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. (the "NASD")
registration and filing fees, including, if applicable, the fees and
expenses of any
3
"qualified independent underwriter" (and its counsel) that is required
to be retained by any holder of Transfer Restricted Securities in
accordance with the rules and regulations of the NASD, (ii) all fees
and expenses incurred in connection with compliance with state
securities or blue sky laws and compliance with the rules of the NASD
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Transfer Restricted Securities and
any filings with the NASD), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and
compliance with this Agreement, except for such expenses incurred by
Holders, underwriters or their respective counsel, (iv) all fees and
expenses incurred in connection with the listing if any, of any of the
Transfer Restricted Securities on any securities exchange or exchanges,
(v) all rating agency fees, (vi) the fees and disbursements of counsel
for any of the Venture Parties and of the independent public
accountants of any of the Venture Parties, including the expenses of
any special audits or "cold comfort" letters required by or incident to
such performance and compliance and (vii) the fees and expenses of the
Trustee, and any escrow agent or custodian, but excluding, except as
otherwise expressly provided in clauses (i) through (vii) above, (a)
the fees and expenses of the Initial Purchasers in connection with the
Exchange Offer or the Shelf Registration, including fees and expenses
of counsel to the Initial Purchasers in connection therewith, and (b)
underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of Transfer Restricted Securities
by a Holder.
"Registration Statement" shall mean any registration statement
of the Issuers which covers any of the Exchange Securities or Transfer
Restricted Securities pursuant to the provisions of this Agreement, and
all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Rule 144" shall mean Rule 144 promulgated under the 1933 Act,
as such Rule may be amended from time to time, or any similar rule
(other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the 1933 Act.
"Rule 144A" shall mean Rule 144A promulgated under the 1933
Act, as such Rule may be amended from time to time, or any similar rule
(other than Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission or any
successor agency or government body performing the functions currently
performed by the United States Securities and Exchange Commission.
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"Securities" shall have the meaning set forth in the preamble.
"Shelf Registration" shall mean a registration effected
pursuant to Section 2.2 hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Issuers pursuant to the provisions of
Section 2.2 of this Agreement which covers all of the Transfer
Restricted Securities or all of the Private Exchange Securities on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to
such registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits
thereto and all material incorporated by reference therein.
"Transfer Restricted Securities" shall mean the Securities
and, if issued, the Private Exchange Securities; provided, however,
that each Security and, if issued, each Private Exchange Security,
shall continue to be a Transfer Restricted Security until (i) the date
on which such security has been exchanged by a Person other than a
broker-dealer for an Exchange Security in the Exchange Offer, (ii)
following the exchange by a Participating Broker-Dealer in the Exchange
Offer of a Security for an Exchange Security, the date on which such
Exchange Security is sold to a purchaser who receives from such
Participating Broker-Dealer on or prior to the date of such sale a copy
of the Prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Security has been effectively
registered under the 1933 Act and disposed of in accordance with the
Shelf Registration Statement or (iv) the date on which such Security is
distributed to the public pursuant to Rule 144 under the 1933 Act.
"Trust" shall have the meaning set forth in the preamble.
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
"Venture Parties" shall have the meaning set forth in the
preamble.
2. Registration Under the 1933 Act.
2.1. Exchange Offer. The Issuers shall, for the benefit of the
Holders, at the Issuers' cost, (A) prepare and, as soon as practicable but not
later than 45 days following the Closing Date, file with the SEC an Exchange
Offer Registration Statement on an appropriate form under the 1933 Act with
respect to a proposed Exchange Offer and the issuance and delivery to the
Holders, in exchange for the Transfer Restricted Securities (other than Private
Exchange Securities), of a like principal amount of Exchange Securities, (B) use
their reasonable best efforts to cause the Exchange Offer Registration Statement
to be declared effective under the 1933 Act on or prior to 150 days from the
Closing Date, (C) use their reasonable best efforts to keep the Exchange Offer
Registration Statement effective until the closing of the Exchange Offer and (D)
use their reasonable best efforts to cause the Exchange Offer to be consummated
on or prior to 30 business days following the date on which the Exchange Offer
Registration Statement was declared effective by the SEC. The Exchange
Securities will be issued under the Indenture.
5
Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers
shall promptly commence the Exchange Offer, it being the objective of such
Exchange Offer to enable each Holder eligible and electing to exchange Transfer
Restricted Securities for Exchange Securities (assuming that such Holder (a) is
not an affiliate of the Issuers within the meaning of Rule 405 under the 1933
Act, (b) is not a broker-dealer tendering Transfer Restricted Securities
acquired directly from the Issuers for its own account, (c) acquired the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any Person to participate in the Exchange
Offer for the purpose of distributing the Exchange Securities) and to transfer
such Exchange Securities from and after their receipt without any limitations or
restrictions under the 1933 Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Issuers shall:
(a) mail or cause to be mailed as promptly as
reasonably practicable to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Exchange Offer open for acceptance for a
period of not less than 30
calendar days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law) (such period referred to herein as the "Exchange
Period");
(c) utilize the services of the Depositary for
the Exchange Offer;
(d) permit Holders to withdraw tendered Transfer
Restricted Securities at any time prior to 5:00 p.m. (Eastern Time), on the
second to last business day of the Exchange Period, by sending to the
institution specified in the notice, a telegram, telex, facsimile transmission
or letter setting forth the name of such Holder, the principal amount of
Transfer Restricted Securities delivered for exchange, and a statement that such
Holder is withdrawing such Holder's election to have such Securities exchanged;
(e) notify each Holder that any Transfer Restricted
Security not tendered will
remain outstanding and continue to accrue interest, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(f) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Securities acquired by them and having the status of an
unsold allotment in the initial distribution and determine upon advice of
external counsel that it is ineligible to participate in the Exchange Offer, as
soon as practicable upon receipt by the Issuers of a written request from such
Initial Purchaser, the Issuers shall issue and deliver to such Initial Purchaser
in exchange (the "Private Exchange") for the Securities held by such Initial
Purchaser, a like principal amount of debt securities of the Issuers, that are
identical (except that such securities shall bear appropriate transfer
restrictions) to the Exchange Securities (the "Private Exchange Securities").
6
The Exchange Securities and the Private Exchange Securities
shall be issued under (i) the Indenture or (ii) an indenture identical in all
material respects to the Indenture and which, in either case, has been qualified
under the Trust Indenture Act of 1939, as amended (the "TIA"), or is exempt from
such qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the
Private Exchange Securities shall be subject to such transfer restrictions. The
Indenture or such indenture shall provide that the Exchange Securities, the
Private Exchange Securities and the Securities shall vote and consent together
on all matters as one class and that none of the Exchange Securities, the
Private Exchange Securities or the Securities will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities shall
be of the same series as, and the Issuers shall use commercially reasonable
efforts to have the Private Exchange Securities bear the same CUSIP number as,
the Exchange Securities. The Issuers shall not have any liability under this
Agreement solely as a result of such Private Exchange Securities not bearing the
same CUSIP number as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer
and/or the Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Transfer Restricted
Securities duly tendered and not validly withdrawn pursuant to
the Exchange Offer in accordance with the terms of the
Exchange Offer Registration Statement and the letter of
transmittal which shall be an exhibit thereto;
(ii) accept for exchange all Securities properly
tendered pursuant to the Private Exchange;
(iii) deliver to the Trustee for cancellation all
Transfer Restricted Securities so accepted for exchange; and
(iv) cause the Trustee promptly to authenticate and
deliver Exchange Securities or Private Exchange Securities, as
the case may be, to each Holder of Transfer Restricted
Securities so accepted for exchange in a principal amount
equal to the principal amount of the Transfer Restricted
Securities of such Holder so accepted for exchange.
Interest on each Exchange Security and Private Exchange
Security will accrue from the last date on which interest was paid on the
Transfer Restricted Securities surrendered in exchange therefor or, if no
interest has been paid on the Transfer Restricted Securities, from the date of
original issuance. The Exchange Offer and the Private Exchange shall not be
subject to any conditions, other than (i) that the Exchange Offer or the Private
Exchange, or the making of any exchange by a Holder, does not violate applicable
law or any applicable interpretation of the staff of the SEC, (ii) the due
tendering of Transfer Restricted Securities in accordance with the Exchange
Offer and the Private Exchange, (iii) that each Holder of Transfer Restricted
Securities exchanged in the Exchange Offer shall have made customary
representations in connection therewith, including that all Exchange Securities
to be received by it shall be acquired in the ordinary course of its business
and that at the time of the consummation of the Exchange Offer it
7
shall have no arrangement or understanding with any person to participate in the
distribution (within the meaning of the 1933 Act) of the Exchange Securities,
and shall have made such other representations as may be reasonably necessary
under applicable SEC rules, policy, regulations or interpretations to render the
use of Form S-4 or other appropriate form under the 1933 Act available and (iv)
that no action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency or body with respect to the
Exchange Offer or the Private Exchange which, in the Issuers' judgment, would
reasonably be expected to impair the ability of the Issuers to proceed with the
Exchange Offer or the Private Exchange. The Issuers shall inform the Initial
Purchasers of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Transfer Restricted Securities in the
Exchange Offer.
2.2. Shelf Registration. If (i) the Issuers are not required
to file the Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer as contemplated in Section 2.1 because the Exchange Offer is not
permitted by applicable law or by SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC or (ii) any Holder of Transfer
Restricted Securities (having a reasonable basis to do so) notifies the Issuers
prior to the 20th day following consummation of the Exchange Offer that (A) it
is prohibited by law or SEC policy from participating in the Exchange Offer or
(B) it may not resell the Securities 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) it is a Participating Broker-Dealer and owns Securities acquired
directly from the Issuers or an affiliate of the Issuers, then in case of each
of clauses (i) and (ii) the Issuers shall, at their cost:
(a) Use their reasonable best efforts to file with
the SEC on or prior to 45 days after the earlier of (x) the
date on which the Issuers determine or receive notice from the
SEC that the Exchange Offer Registration Statement cannot be
filed as a result of clause (i) above and (y) the date on
which the Issuers receive the notice specified in clause (ii)
above, (such earlier date, the "Filing Deadline"), a Shelf
Registration Statement relating to the offer and sale of the
Transfer Restricted Securities by the Holders from time to
time in accordance with the methods of distribution elected by
the Majority Holders participating in the Shelf Registration
and set forth in such Shelf Registration Statement, and use
their reasonable best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC on or prior to
the later of (x) 90 days after the Filing Deadline for the
Shelf Registration Statement and (y) 150 days after the
Closing Date.
(b) Use their reasonable best efforts to keep the
Shelf Registration Statement continuously effective in order
to permit the Prospectus forming part thereof to be usable by
Holders for a period of two years (or nine months in the case
of a Shelf Registration Statement relating only to Private
Exchange Securities) from the date the Shelf Registration
Statement is declared effective by the SEC, or for such
shorter period that will terminate when all Transfer
8
Restricted Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding or otherwise to be
Transfer Restricted Securities (the "Effectiveness Period").
(c) Notwithstanding any other provisions hereof, use
their reasonable best efforts to ensure that (i) any Shelf
Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act and the
rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Shelf Registration
Statement, and any supplement to such Prospectus (as amended
or supplemented from time to time), does not include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Issuers shall not permit any securities other than
Transfer Restricted Securities to be included in the Shelf Registration
Statement. The Issuers further agree, if necessary, to supplement or amend the
Shelf Registration Statement, as required by Section 3(b) below, and to furnish
to the Holders of Transfer Restricted Securities copies of any such supplement
or amendment promptly after its being used or filed with the SEC.
2.3. Expenses. The Issuers shall pay all Registration Expenses
in connection with the registration pursuant to Section 2.1 or 2.2. Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to, and fees and other costs of counsel in connection with, the sale or
disposition of such Holder's Transfer Restricted Securities pursuant to the
Shelf Registration Statement.
2.4. Effectiveness. An Exchange Offer Registration Statement
pursuant to Section 2.1 hereof or a Shelf Registration Statement pursuant to
Section 2.2 hereof will not be deemed to have become effective unless it has
been declared effective by the SEC; provided, however, that if, after it has
been declared effective, the offering of Transfer Restricted Securities pursuant
to an Exchange Offer Registration Statement or a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have been effective during the period of such
interference, until the offering of Transfer Restricted Securities pursuant to
such Registration Statement may legally resume.
2.5. Interest.
If (i) any of the Registration Statements required by this
Agreement is not filed with the SEC on or prior to the date specified for
such filing in this Agreement, (ii) any of such Registration Statements is
not declared effective by the SEC on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) the Exchange Offer Registration Statement or the Shelf
Registration Statement is declared effective but shall thereafter cease to be
effective or fail to be usable in connection with exchanges or resales of
Transfer Restricted Securities without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then the
Issuers agree that liquidated damages shall accrue on the accreted value of
Securities constituting Transfer Restricted Securities for any period during
which a Registration Default exists and remains uncured at a rate of 0.25%
per annum with respect to the first 90-day period immediately following the
occurrence of the first Registration Default. The amount of liquidated
damages will increase by an additional 0.25% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up
to a maximum amount of liquidated damages of 1.00% per annum on the accreted
value of the Securities constituting Transfer Restricted Securities.
The Issuers shall notify the Trustee within five business days
after each and every date on which an event occurs in respect of which
liquidated damages are required to be paid. All accrued liquidated damages shall
be paid on or before the applicable semiannual interest
9
payment date by wire transfer of immediately available funds or by federal funds
check as set forth in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Restricted Securities will
cease.
3. Registration Procedures.
In connection with the obligations of the Issuers with respect
to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Issuers
shall:
(a) prepare and file with the SEC a Registration Statement,
within the relevant time period specified in Section 2, on the appropriate form
under the 1933 Act, which form (i) shall be selected by the Issuers, (ii) shall,
in the case of a Shelf Registration, be available for the sale of the Transfer
Restricted Securities by the selling Holders thereof, (iii) shall comply as to
form in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the SEC
to be filed therewith or incorporated by reference therein and (iv) shall comply
in all material respects with the requirements of Regulation S-T under the 1933
Act;
(b) use their reasonable best efforts to prepare and file with
the SEC such amendments and post-effective amendments to each Registration
Statement as may be necessary under applicable law to keep such Registration
Statement effective for the applicable period; and use their reasonable best
efforts to cause each Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) under the 1933 Act and comply with the
provisions of the 1933 Act, the 1934 Act and the rules and regulations
thereunder applicable to them with respect to the disposition of all securities
covered by each Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the selling
Holders thereof (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Transfer Restricted Securities, at least three business days prior to
filing, that a Shelf Registration Statement with respect to the Transfer
Restricted Securities is being filed and advising such Holders that the
distribution of Transfer Restricted Securities will be made in accordance with
the method selected by the Majority Holders participating in the Shelf
Registration; (ii) furnish to each Holder of Transfer Restricted Securities and
to each underwriter of an underwritten offering of Transfer Restricted
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or underwriter may reasonably request, including
financial statements and schedules and, if the Holder so requests, a reasonable
number of copies of all exhibits in order to facilitate the public sale or other
disposition of the Transfer Restricted Securities; and (iii) consent to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Securities in connection with the offering and
sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
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(d) use their reasonable best efforts to register or qualify
the Transfer Restricted Securities under all applicable state securities or
"blue sky" laws of such jurisdictions in the United States as any Holder of
Transfer Restricted Securities covered by a Registration Statement and, in the
case of a Shelf Registration Statement, each underwriter of an underwritten
offering of Transfer Restricted Securities shall reasonably request in writing a
reasonable period of time prior to the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such Holder
and underwriter to consummate the disposition or exchange in each such
jurisdiction of such Transfer Restricted Securities owned by such Holder;
provided, however, that the Issuers shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where they
would not otherwise be required to qualify but for this Section 3(d), or (ii)
take any action which would subject them to general service of process or
taxation in any such jurisdiction where they are not then so subject;
(e) upon receiving notice of any of the following events,
notify promptly each Holder of Transfer Restricted Securities under a Shelf
Registration or any Participating Broker-Dealer who has notified the Issuers
that it is utilizing the Exchange Offer Registration Statement as provided in
paragraph (f) below and, if requested by such Holder or Participating
Broker-Dealer, confirm such notice in writing promptly (i) when a Registration
Statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the SEC or any
state securities authority for post-effective amendments and supplements to a
Registration Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC or
any state securities authority of any stop order suspending the effectiveness of
a Registration Statement or the initiation of any proceedings for that purpose,
(iv) in the case of a Shelf Registration, if, between the effective date of a
Registration Statement and the closing of any sale of Transfer Restricted
Securities covered thereby, the representations and warranties of the Issuers
contained in any underwriting agreement, securities sales agreement or other
similar agreement, if any, relating to the offering cease to be true and correct
in all material respects, (v) of the happening of any event or the discovery of
any facts during the period a Shelf Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading in any material respect, (vi) of the receipt
by the Issuers of any notification with respect to the suspension of the
qualification of the Transfer Restricted Securities or the Exchange Securities,
as the case may be, for sale in any jurisdiction or the initiation of any
proceeding for such purpose and (vii) of any determination by the Issuers that a
posteffective amendment to such Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution" which section shall be reasonably acceptable to
Merrill Lynch, Pierce, Fenner & Smith Incorporated on behalf of the
Participating Broker-Dealers, and which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect to the
potential "underwriter" status of any broker-dealer that holds Transfer
Restricted Securities acquired for its own account
11
as a result of market-making activities or other trading activities and that
will be the beneficial owner (as defined in Rule 13d-3 under the 1934 Act) of
Exchange Securities to be received by such broker-dealer in the Exchange Offer,
whether such positions or policies have been publicly disseminated by the staff
of the SEC or such positions or policies, in the reasonable judgment of Merrill
Lynch, Pierce, Fenner & Smith Incorporated on behalf of the Participating
Broker-Dealers and its counsel, represent the prevailing views of the staff of
the SEC, including a statement that any such broker-dealer who receives Exchange
Securities for Transfer Restricted Securities pursuant to the Exchange Offer may
be deemed a statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Securities, (ii) furnish to each Participating Broker-Dealer who has delivered
to the Issuers the notice referred to in Section 3(e), without charge, as many
copies of each Prospectus included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or supplement thereto,
as such Participating Broker-Dealer may reasonably request, (iii) consent to the
use of the Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto, and (iv) include in the
transmittal letter or similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x) the following
provision:
"If the exchange offeree is a broker-dealer holding Transfer
Restricted Securities acquired for its own account as a result
of market-making activities or other trading activities, it
will deliver a prospectus meeting the requirements of the 1933
Act in connection with any resale of Exchange Securities
received in respect of such Transfer Restricted Securities
pursuant to the Exchange Offer;" and
(y) a statement to the effect that by a broker-dealer making the acknowledgment
described in clause (x) and by delivering a Prospectus in connection with the
exchange of Transfer Restricted Securities, the broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the 1933 Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Issuers agree to deliver to the Initial Purchasers on behalf of the
Participating Broker-Dealers, if requested by any such Initial Purchaser, upon
the Consummation of the Exchange Offer (i) an opinion of counsel or opinions of
counsel reasonably satisfactory to the Initial Purchasers covering (x) the
matters and subject to the qualfications and exceptions customarily received by
such Initial Purchasers requested in connection with the Exchange Offer
Registration Statement and (y) such other matters as may be reasonably
requested, (ii) officers' certificates substantially in the form customarily
delivered in a public offering of debt securities and (iii) a comfort letter or
comfort letters in customary form to the extent permitted by Statement on
Auditing Standards No. 72 of the American Institute of Certified Public
Accountants (or if such a comfort letter is not permitted, an agreed upon
procedures letter in customary form) from the Issuers' independent certified
public accountants and the independent certified accountants of London Clubs
(and, if necessary, independent certified public accountants of the Trust, any
subsidiary of the Issuers,
12
London Clubs or the Trust or of any business acquired by the Issuers for which
financial statements are, or are required to be, included in the Registration
Statement);
(g) (i) in the case of an Exchange Offer, furnish counsel for
the Initial Purchasers and (ii) in the case of a Shelf Registration, furnish
counsel for the Holders of Transfer Restricted Securities copies of any comment
letters received from the SEC or any other request by the SEC or any state
securities authority for amendments or supplements to a Registration Statement
and Prospectus or for additional information;
(h) make commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of a Registration Statement
as soon as reasonably practicable;
(i) in the case of a Shelf Registration, furnish to each
Holder of Transfer Restricted Securities, and each underwriter, if any, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits thereto,
unless requested);
(j) in the case of a Shelf Registration, cooperate with the
selling Holders of Transfer Restricted Securities to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations (consistent with the
provisions of the Indenture) and registered in such names as the selling Holders
or the underwriters, if any, may reasonably request at least three business days
prior to the closing of any sale of Transfer Restricted Securities;
(k) in the case of a Shelf Registration, upon the occurrence
of any event or the discovery of any facts, each as contemplated by Sections
3(e)(v) and 3(e)(vii) hereof, as promptly as practicable after the occurrence of
such an event, use their reasonable best efforts to prepare a supplement or
post-effective amendment to the Registration Statement or the related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Transfer
Restricted Securities or Participating Broker-Dealers, such Prospectus will not
contain at the time of such delivery any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading or will remain
so qualified. At such time as such public disclosure is otherwise made or the
Issuers determine that such disclosure is not necessary, in each case to correct
any misstatement of a material fact or to include any omitted material fact, the
Issuers agree promptly to notify each Holder of such determination and to
furnish each Holder such number of copies of the Prospectus as amended or
supplemented, as such Holder may reasonably request;
(l) in the case of a Shelf Registration, a reasonable time
prior to the filing of any Registration Statement, any Prospectus, any amendment
to a Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement, provide a
reasonable number of copies of such document to the Initial Purchasers on
13
behalf of such Holders; and make representatives of the Issuers as shall be
reasonably requested by the Holders of Transfer Restricted Securities, or the
Initial Purchasers on behalf of such Holders, available for discussion of such
document;
(m) obtain a CUSIP number for all Exchange Securities, Private
Exchange Securities or Transfer Restricted Securities, as the case may be, not
later than the effective date of a Registration Statement, and provide the
Trustee with printed certificates for the Exchange Securities, Private Exchange
Securities or the Transfer Restricted Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(n) (i) cause the Indenture to be qualified under the TIA in
connection with the registration of the Exchange Securities or Transfer
Restricted Securities, as the case may be, (ii) cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for the
Indenture to be so qualified in accordance with the terms of the TIA and (iii)
execute, and use their reasonable best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(o) in the case of a Shelf Registration, enter into agreements
(including underwriting agreements) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Transfer
Restricted Securities, and in such connection whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration, if requested by (x) any Initial Purchaser, in the case where an
Initial Purchaser holds Securities acquired by it as part of its initial
distribution and (y) any other Holder of Securities covered thereby:
(i) make such representations and warranties to the
Holders of such Transfer Restricted Securities and the
underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in similar
underwritten offerings as may be reasonably requested by them;
(ii) obtain opinions of counsel to the Issuers and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
managing underwriters, if any, and the holders of a majority
in principal amount of the Transfer Restricted Securities
being sold) addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered
in opinions requested in sales of securities or underwritten
offerings and such other matters as may be reasonably
requested by such Holders and underwriters (provided that such
opinion may be subject to customary qualifications and
exceptions);
(iii) obtain "cold comfort" letters and updates
thereof from the Issuers' independent certified public
accountants and the independent certified public accountants
of London Clubs (and, if necessary, independent certified
public accountants of the Trust, any subsidiary of the
Issuers, London Clubs or the Trust or of any business acquired
by the Issuers for which financial statements are, or
14
are required to be, included in the Registration Statement)
addressed to the underwriters, if any, and use reasonable
efforts to have such letter addressed to the selling Holders
of Transfer Restricted Securities (to the extent consistent
with Statement on Auditing Standards No. 72 of the American
Institute of Certified Public Accounts), such letters to be in
customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in
connection with similar underwritten offerings;
(iv) enter into a securities sales agreement with the
Holders and an agent of the Holders providing for, among other
things, the appointment of such agent for the selling Holders
for the purpose of soliciting purchases of Transfer Restricted
Securities, which agreement shall be in form, substance and
scope customary for similar offerings;
(v) if an underwriting agreement is entered into,
cause it to set forth indemnification provisions and
procedures substantially equivalent to the indemnification
provisions and procedures set forth in Section 4 hereof with
respect to the underwriters and all other parties to be
indemnified pursuant to said Section or, at the request of any
underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and
(vi) deliver such documents and certificates as may
be reasonably requested and as are customarily delivered in
similar offerings to the Holders of a majority in principal
amount of the Transfer Restricted Securities being sold and
the managing underwriters, if any.
The obligations of the Issuers under this paragraph (o) are subject to the
Holders and underwriters providing representations, warranties and
indemnifications customarily provided by such persons under such agreements, and
the Holders entering into custody agreements and powers of attorney containing
the representations, warranties and indemnifications customarily provided by
such persons in connection with secondary offerings of securities. The above
shall be done at each closing under any underwriting or similar agreement as and
to the extent required thereunder;
(p) in the case of a Shelf Registration or if a Prospectus is
required to be delivered by any Participating Broker-Dealer in the case of an
Exchange Offer, make available for inspection by representatives of the Holders
of the Transfer Restricted Securities, any underwriters participating in any
disposition pursuant to a Shelf Registration Statement, any Participating
Broker-Dealer and any counsel or accountant retained by any of the foregoing
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Issuers reasonably necessary to the
Inspectors to enable them to conduct any due diligence as is customary, and
cause the respective officers, directors, employees, and any other agents of the
Issuers to supply all information reasonably requested by the Inspectors in
connection therewith, and make such representatives of the Issuers available for
discussion of such documents as shall be reasonably requested by the Initial
Purchasers in connection
15
therewith; provided that records which the Issuers
determine, in good faith, to be confidential and which the Issuers notify the
Inspectors are confidential shall not be disclosed by the Inspector unless: (i)
the disclosure of such records shall be necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release of
such records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or is otherwise required by law or (iii) the information
contained in such records has been made generally available to the public (other
than by a breach of these provisions by the Inspectors or any of their officers,
employees or agents). Each Holder and each such Participating Broker-Dealer will
be required to agree in writing that any such confidential information shall not
be disclosed other than pursuant to clauses (i), (ii) or (iii) of the previous
sentence.
(q) (i) in the case of an Exchange Offer Registration
Statement, a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any amendment to
any Exchange Offer Registration Statement or amendment or supplement to such
Prospectus, provide copies of such document to the Initial Purchasers and to
counsel to the Holders of Transfer Restricted Securities and to make such
changes in any such document prior to the filing thereof which the Initial
Purchasers or counsel to the Holders of Transfer Restricted Securities may
reasonably request if the Issuers, acting reasonably and in good faith, deem
such changes to be reasonable, and, except as otherwise required by applicable
law, not file any such document in a form to which the Initial Purchasers on
behalf of the Holders of Transfer Restricted Securities and counsel to the
Holders of Transfer Restricted Securities shall not have previously been advised
and furnished a copy of or to which the Initial Purchasers on behalf of the
Holders of Transfer Restricted Securities or counsel to the Holders of Transfer
Restricted Securities shall reasonably object if the Issuers, acting reasonably
and in good faith, deem such objection to be reasonable, and make the
representatives of the Issuers available for discussion of such documents as
shall be reasonably requested by the Initial Purchasers; and
(ii) in the case of a Shelf Registration, a reasonable
time prior to filing any Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to such Shelf Registration Statement or amendment or
supplement to such Prospectus, provide copies of such document to the Holders
of Transfer Restricted Securities, to the Initial Purchasers, to counsel for the
Holders and to the underwriter or underwriters of an underwritten offering of
Transfer Restricted Securities, if any, make such changes in any such document
prior to the filing thereof as the Initial Purchasers, the counsel to the
Holders or the underwriter or underwriters reasonably request if the Issuers,
acting reasonably and in good faith, deem such changes to be reasonable, and not
file any such document in a form to which the Majority Holders, the Initial
Purchasers on behalf of the Holders of Transfer Restricted Securities, counsel
for the Holders of Transfer Restricted Securities or any underwriter shall not
have previously been advised and furnished a copy of or to which the Majority
Holders, the Initial Purchasers of behalf of the Holders of Transfer Restricted
Securities, counsel to the Holders of Transfer Restricted Securities or any
underwriter shall reasonably object if the Issuers, acting reasonably and in
good faith, deem such objection to be reasonable, and make the representatives
of the Issuers available for discussion of such document as shall be reasonably
requested by the Holders of Transfer
16
Restricted Securities, the Initial Purchasers on behalf of such Holders, counsel
for the Holders of Transfer Restricted Securities or any underwriter.
(r) in the case of a Shelf Registration, use their
commercially reasonable efforts to cause all Transfer Restricted Securities to
be listed on any securities exchange on which similar debt securities issued by
the Issuers are then listed if requested by the Majority Holders, or if
requested by the underwriter or underwriters of an underwritten offering of
Transfer Restricted Securities, if any;
(s) in the case of a Shelf Registration, use their reasonable
best efforts to cause the Transfer Restricted Securities to be rated by the
appropriate rating agencies, if so requested by the Majority Holders, or if
requested by the underwriter or underwriters of an underwritten offering of
Transfer Restricted Securities, if any;
(t) otherwise materially comply with all material applicable
rules and regulations of the SEC and make available to their security holders,
as soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder;
(u) cooperate and assist in any filings required to be made
with the NASD and, in the case of a Shelf Registration, in the performance of
any due diligence investigation by any underwriter and its counsel (including
any "qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD); and
(v) upon consummation of an Exchange Offer or a Private
Exchange, obtain any customary opinion of counsel to the Issuers addressed to
the Trustee for the benefit of all Holders of Transfer Restricted Securities
participating in the Exchange Offer or Private Exchange, and which includes an
opinion that the issuance of the Exchange Securities or the Private Exchange
Securities, as applicable, has been duly authorized by the Issuers and, when the
Exchange Securities or the Private Exchange Securities have been duly executed,
authenticated and issued in accordance with the Indenture as contemplated by
this Agreement, shall constitute legal, valid and binding obligations of the
Issuers, enforceable against the Issuers in accordance with its respective terms
(with customary exceptions, qualifications and assumptions).
The Issuers may require each seller of Transfer Restricted
Securities as to which a registration is being effected to furnish to the
Issuers such information regarding such seller as may be required by the staff
of the SEC to be included in a Registration Statement and the Issuers may
exclude from such registration the Transfer Restricted Securities of any seller
who fails to furnish such information within a reasonable time (which amount of
reasonable time shall be reasonably determined by the Issuers); provided, that
the Issuers shall provide written notice to any such seller of any such request.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Issuers of the happening of any
event or the discovery of any facts, each of the kind described in Section
3(e)(v) hereof, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to a Registration Statement until such
17
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(k) hereof, and, if so directed by the Issuers, such
Holder will deliver to the Issuers (at its expense) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Transfer Restricted Securities current at the
time of receipt of such notice.
In the event that the Issuers fail to use their reasonable
best efforts to effect the Exchange Offer or file any Shelf Registration
Statement and maintain the effectiveness of any Shelf Registration Statement as
provided herein, the Issuers shall not without the consent of the Majority
Holders file any Registration Statement with respect to any securities (within
the meaning of Section 2(1) of the 1933 Act) of the Issuers other than Transfer
Restricted Securities.
If any of the Transfer Restricted Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
underwriter or underwriters and manager or managers that will manage such
offering will be selected by the Majority Holders of such Transfer Restricted
Securities included in such offering and shall be acceptable to the Issuers. No
Holder of Transfer Restricted Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements.
4. Indemnification; Contribution
(a) The Issuers agree to indemnify and hold harmless each
Initial Purchaser, each Holder, each Participating Broker-Dealer, each Person
who participates as an underwriter (any such Person being an "Underwriter") and
each Person, if any, who controls any Holder or Underwriter within the meaning
of Section 15 of the 1933 Act or Section 15 of the 1934 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment or supplement thereto)
pursuant to which Exchange Securities or Transfer Restricted Securities
were registered under the 1933 Act, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any
18
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged
untrue statement or omission; provided that (subject to Section 4(d)
below) any such settlement is effected with the written consent of the
Issuers; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by any
indemnified party), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Issuers by the
Holder, Initial Purchaser, Participating Broker-Dealer or Underwriter expressly
for use in a Registration Statement (or any amendment thereto) or any Prospectus
(or any amendment or supplement thereto). The foregoing indemnity with respect
to any untrue statement contained in or any omission from any preliminary
Prospectus shall not inure to the benefit of any Holder, Initial Purchaser,
Participating Broker-Dealer or Underwriter (or any person controlling any such
person) from whom the person asserting such loss, liability, claim, damage or
expense purchased Securities that are the subject thereof if (i) the untrue
statement or omission contained in such preliminary Prospectus (excluding
documents incorporated by reference) was corrected; (ii) such person was not
sent or given a copy of the final Prospectus (excluding documents incorporated
by reference) which corrected the untrue statement or omission at or prior to
the written confirmation of the sale of such Securities to such person; and
(iii) the Issuers satisfied their obligation pursuant to Section 3 of this
Agreement to provide a sufficient number of copies of the final Prospectus to
the Holder, Initial Purchaser, Participating Broker-Dealer or Underwriter.
(b) Each Holder, Initial Purchaser, Participating
Broker-Dealer and Underwriter severally, but not jointly, agrees to indemnify
and hold harmless the Issuers, the Initial Purchasers, the Participating
Broker-Dealers, each Underwriter and the other selling Holders, and each of
their respective directors and officers, and each Person, if any, who controls
the Issuers, the Participating Broker-Dealers, the Initial Purchasers, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 4(a)
hereof, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto) or any Prospectus included therein (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
with respect to such Holder, Initial Purchaser, Participating Broker-Dealer or
Underwriter furnished to the Issuers by such Holder, Initial Purchaser,
Participating Broker-Dealer or Underwriter expressly for use in the
19
Registration Statement (or any amendment thereto) or such Prospectus (or any
amendment or supplement thereto); provided, however, that no such Holder,
Initial Purchaser, Participating Broker-Dealer or Underwriter shall be liable
for any claims hereunder in excess of the amount of net proceeds received by
such Holder, Initial Purchaser, Participating Broker-Dealer or Underwriter from
the sale of Transfer Restricted Securities pursuant to such Registration
Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but
failure so to notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying party or parties be liable
for the fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 4 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 4(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 4(a)(ii)
effected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent that it
considers such request to be reasonable and (ii) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
20
(e) (i) If the indemnification provided for in this Section
4(a) is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the Issuers on the one hand and the
Holders and the Initial Purchasers on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
(ii) If the indemnification provided for in this Section 4(b)
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the such indemnifying party on the
one hand and each of the other Holders, Participating Broker-Dealers,
Underwriters and the Initial Purchasers and the Issuers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative fault of the Issuers, the Holders, Participating
Broker-Dealers, Underwriters and the Initial Purchasers, as applicable, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Issuers, the
Holders, Participating Broker-Dealers, Underwriters and the Initial Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuers, the Holders and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 4
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 4. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
4 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities sold by it were offered exceeds
the amount of any damages which such initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
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No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 4, each Person, if any, who
controls an Initial Purchaser or Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Initial Purchaser or Holder, and each manager or director
of the Issuers, and each Person, if any, who controls the Issuers within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have
the same rights to contribution as the Issuers. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A to the Purchase Agreement and not joint.
5. Miscellaneous
5.1. Rule 144 and Rule 144A. For so long as the Issuers are
subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the
Issuers covenant that they will file the reports required to be filed by them
under the 1933 Act and Section 13(a) or l5-(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder. If the Issuers cease to be so
required to file such reports, the Issuers covenant that they will upon the
request of any Holder of Transfer Restricted Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such information to a prospective purchaser as
is necessary to permit sales pursuant to Rule 144A under the 1933 Act and they
will take such further action as any Holder of Transfer Restricted Securities
may reasonably request, and (c) take such further action that is reasonable in
the circumstances, in each case, to the extent required from time to time to
enable such Holder to sell its Transfer Restricted Securities without
registration under the 1933 Act within the limitation of the exemptions provided
by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to
time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time
to time, or (iii) any similar rules or regulations hereafter adopted by the SEC.
Upon the request of any Holder of Transfer Restricted Securities, the Issuers
will deliver to such Holder a written statement as to whether they have complied
with such requirements.
5.2. No Inconsistent Agreements. The Issuers have not entered
into and the Issuers will not after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Transfer Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not and will
not for the term of this Agreement in any way conflict with the rights granted
to the holders of the Issuers' other issued and outstanding securities under any
such agreements.
5.3. Participation in Underwritten Registrations. No Holder
may participate in any underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Transfer Restricted Securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionairres, powers of attorney, indemnities, underwriting agreements,
lock-up letters,
22
custody agreements and other documents required under the terms
of such underwriting agreements.
5.4. Amendments and Waivers. The provisions of this Agreement
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Issuers have obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding Transfer
Restricted Securities affected by such amendment, modification, supplement,
waiver or departure.
5.5. Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (a) if to a Holder, at the most current address given by such Holder to
the Issuers by means of a notice given in accordance with the provisions of this
Section 5.4, which address initially is the address set forth in the Purchase
Agreement with respect to the Initial Purchasers, with a copy to Latham &
Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071-2007,
Attention: Pamela B. Kelly, Esq.; and (b) if to the Issuers, initially at the
Issuers' addresses set forth in the Purchase Agreement, and thereafter at such
other address of which notice is given in accordance with the provisions of this
Section 5.4, with a copy to Skadden, Arps, Slate, Meagher & Flom L.L.P. &
Affiliates, 919 Third Avenue, New York, New York, Attention: Wallace Schwartz,
Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; two
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the person giving the same to the Trustee
under the Indenture, at the address specified in such Indenture.
5.6. Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Securities in violation of the terms of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities, in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such person shall be entitled to receive the benefits
hereof.
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5.7. Third Party Beneficiaries. The Initial Purchasers (even
if the Initial Purchasers are not Holders of Transfer Restricted Securities)
shall be third party beneficiaries to the agreements made hereunder between the
Issuers, on the one hand, and the Holders, on the other hand, and shall have the
right to enforce such agreements directly to the extent they deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder. Each Holder of Transfer Restricted Securities shall be a
third party beneficiary to the agreements made hereunder between the Issuers, on
the one hand, and the Initial Purchasers, on the other hand, and shall have the
right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights hereunder.
5.8. Specific Enforcement. Without limiting the remedies
available to the Initial Purchasers and the Holders, the Issuers acknowledge
that any failure by the Issuers to comply with their obligations under Sections
2.1 through 2.4 hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which monetary damages would not be adequate, that
it would not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchasers or any Holder may
obtain such relief as may be required to specifically enforce the Issuers'
obligations under Sections 2.1 through 2.4 hereof.
5.9. Restriction on Resales. Until the expiration of two years
after the original issuance of the Securities the Issuers will not, and will
cause their "affiliates" (as such term is defined in Rule 144(a)(1) under the
1933 Act) not to, resell any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act) that have been
reacquired by any of them and shall immediately upon any purchase of any such
Securities submit such Securities to the Trustee for cancellation.
5.10. Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
5.11. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
5.13. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALADDIN GAMING HOLDINGS, LLC
By: /s/ Richard Goeglein
-------------------------------
Name: Richard Goeglein
Title: Chief Executive Officer/President
ALADDIN CAPITAL CORP.
By: /s/ Richard Goeglein
-------------------------------
Name: Richard Goeglein
Title: Chief Executive Officer/President
Confirmed and accepted as
of the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC OPPENHEIMER CORP.
SCOTIA CAPITAL MARKETS (USA) INC.
BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Gregory Margolies
----------------------------
Name: Gregory Margolies
Title: Authorized Signatory