EXHIBIT 1.1
THE MAJESTIC STAR CASINO, LLC
The Majestic Star Casino Capital Corp.
$130,000,000 10 7/8% Senior Secured Notes due 2006
PURCHASE AGREEMENT
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June 15, 1999
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
The Majestic Star Casino, LLC, an Indiana limited liability company
(the "Company"), and The Majestic Star Casino Capital Corp., an Indiana
corporation ("Capital" and, together with the Company, the "Issuers"), hereby
agree with you as follows:
1. Issuance of Securities. The Issuers propose to issue and sell to
Jefferies & Company, Inc. (the "Initial Purchaser"), and the Initial Purchaser
proposes to purchase $130,000,000 aggregate principal amount of the Issuers'
10 7/8% Senior Secured Notes due 2006, Series A (the "Series A Notes"). The
Series A Notes will be issued pursuant to an indenture (the "Indenture"), to be
dated as of June 18, 1999, by and among the Issuers, any future subsidiary
guarantors party thereto (the "Guarantors"), and IBJ Whitehall Bank & Trust
Company, as trustee (the "Trustee"). The Guarantors will unconditionally
guarantee the obligations under the Notes (defined below) and the Indenture
(collectively, the "Guaranty"). The obligations under the Notes and the Guaranty
will be secured by security interests in or pledges of (the "Security
Interests") certain assets (the "Collateral") of the Issuers, Barden
Development, Inc. ("BDI"), Gary Riverboat Gaming, LLC ("Gary") and certain of
the Issuers' respective future subsidiaries (collectively, the "Grantors"), as
set forth in the Offering Circular (defined below).
The Series A Notes will be offered and sold to the Initial Purchaser
pursuant to an exemption from the registration requirements under the Securities
Act of 1933, as amended (the "Act"). The Issuers have prepared a preliminary
offering circular, dated June 1, 1999 (the "Preliminary Offering Circular"), and
a final offering circular, dated June 15, 1999 (the "Offering Circular"),
relating to the offer and sale of the Series A Notes (the "Offering").
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Act, the Series A Notes
shall bear the following legend:
This security has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or any state securities laws.
Neither this security nor any interest or participation herein may be
reoffered, sold, assigned, transferred, pledged, encumbered or
otherwise disposed of in the absence of such registration or unless
such transaction is exempt from, or not subject to, registration.
The holder of this security by its acceptance hereof agrees to offer,
sell or otherwise transfer such security, prior to the date that is
two years (or such other period that may hereafter be provided under
Rule 144(k) as permitting resales of restricted securities by non-
affiliates without restriction) after the later of the original issue
date of this security and the last date on which the Issuers or any
affiliate of the Issuers was the owner of this security (or any
predecessor of such security) only (a) to the Issuers, (b) pursuant to
a registration statement which has been declared effective under the
Securities Act, (c) for so long as the securities are eligible for
resale pursuant to Rule 144A under the Securities Act, to a person it
reasonably believes is a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act that purchases for its own account
or for the account of a qualified institutional buyer to whom notice
is given that the transfer is being made in reliance on Rule 144A, (d)
to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act that is acquiring the security for its own account, or for the
account of such an institutional "accredited investor," for investment
purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act or (e)
pursuant to another available exemption from the registration
requirements of the Securities Act, subject to the Issuers' and the
Trustee's right prior to any such offer, sale or transfer pursuant to
clauses (d) or (e) to require the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them,
and in each of the foregoing cases, a certificate of transfer in the
form appearing on the other side of this security is completed and
delivered by the transferor to the Trustee.
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions hereof, the Issuers shall issue and sell to the Initial
Purchaser (and, in order to induce the Initial Purchaser to purchase the Notes,
the Grantors shall grant the Security Interests), and the Initial Purchaser
shall purchase from the Issuers $130,000,000 aggregate principal amount of
Series A Notes. The purchase price for the Series A Notes shall be 95.385% of
the principal amount thereof.
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3. Terms of Offering. The Initial Purchaser has advised the Issuers
that the Initial Purchaser will make offers to sell (the "Exempt Resales") the
Series A Notes purchased by the Initial Purchaser hereunder on the terms set
forth in the Offering Circular, as amended or supplemented, solely to (a)
persons whom the Initial Purchaser reasonably believes to be "qualified
institutional buyers" as defined in Rule 144A under the Act ("QIBs") and (b) a
limited number of institutional "accredited investors," as defined in Rule
501(a)(1), (2), (3) or (7) under the Act ("Accredited Investors" and, together
with QIBs, "Eligible Initial Purchasers").
Holders of the Series A Notes (including subsequent transferees) will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be executed on and dated as of the Closing
Date (as defined below). Pursuant to the Registration Rights Agreement, the
Issuers will agree, among other things, to file with the Securities and Exchange
Commission (the "Commission") (a) a registration statement under the Act (the
"Exchange Offer Registration Statement") relating to, among other things, the
10 7/8% Senior Secured Notes due 2006, Series B, of the Issuers (the "Series B
Notes" and, together with the Series A Notes, each with the Guaranty endorsed
thereon, if any, the "Notes"), identical in all material respects to the Series
A Notes (except that the Series B Notes shall have been registered pursuant to
such registration statement) to be offered in exchange for the Series A Notes
(such offer to exchange being referred to as the "Registered Exchange Offer"),
and/or (b) under certain circumstances, a shelf registration statement pursuant
to Rule 415 under the Act (the "Shelf Registration Statement") relating to the
resale by certain holders of the Series A Notes.
On the Closing Date, the Grantors will enter into certain security and
pledge agreements, mortgages and certain other documents (collectively, the
"Security Documents") that will provide for the grant of the Security Interests
in the Collateral to the Trustee, as collateral agent (in such capacity, the
"Collateral Agent"), for the benefit of the holders of the Notes. The Security
Interests will secure the payment and performance when due of all of the
obligations of the Issuers, the Guarantors and the Grantors under the Indenture,
the Notes and the Security Documents.
In connection with the offering of the Series A Notes contemplated
hereby, the Company is offering to purchase (the "Tender Offer") any and all of
its outstanding 12 3/4% Senior Secured Notes due 2003 with Contingent Interest
(the "Old Notes") and soliciting consents (the "Consent Solicitation") to the
adoption of certain amendments (the "Amendments") to the indenture governing the
Old Notes (the "Old Notes Indenture"), each as more fully described in the
documents and instruments related thereto (the "Consent Solicitation
Documents"). In the event that any of the Old Notes are not repurchased in the
Tender Offer, the Company will defease such Old Notes pursuant to the terms of
the Old Notes Indenture (the "Defeasance").
This Agreement, the Indenture, the Registration Rights Agreement, the
Security Documents, the Notes, the Consent Solicitation Documents and all other
documents or instruments executed by the Issuers in connection with the
transactions contemplated hereby and thereby are referred to herein as the
"Documents." The transactions contemplated by the Documents, including without
limitation the Offering and the application of the use of the proceeds therefrom
as described
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in the Offering Circular, the Tender Offer, the Amendments, the Consent
Solicitation and the Defeasance are collectively referred to herein as the
"Transactions."
4. Delivery and Payment. Delivery to the Initial Purchaser of and
payment for the Series A Notes shall be made at a Closing (the "Closing") to be
held at 10:00 a.m., New York City time, on June 18, 1999 (the "Closing Date") at
the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York 10022-3897. The Closing Date and the location of delivery of and
the form of payment for the Series A Notes may be varied by agreement between
the Initial Purchaser and the Issuers.
The Issuers shall deliver to the Initial Purchaser one or more
certificates representing the Series A Notes (the "Global Securities"), each in
definitive form, registered in the name of Cede & Co., as nominee of The
Depository Trust Company ("DTC"), or such other names as the Initial Purchaser
may request upon at least one business day's notice to the Issuers, in an amount
corresponding to the aggregate principal amount of the Series A Notes sold
pursuant to Exempt Resales to QIBs and to Accredited Investors, respectively, in
each case against payment by the Initial Purchaser of the purchase price
therefor by immediately available Federal funds bank wire transfer to such bank
account as the Issuers shall designate to the Initial Purchaser at least two
business days prior to the Closing.
The Global Securities in definitive form shall be made available to
the Initial Purchaser for inspection at the New York offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022-3897 (or
such other place as shall be acceptable to the Initial Purchaser) not later than
9:30 a.m. one business day immediately preceding the Closing Date.
5. Agreements of the Issuers. The Issuers, jointly and severally,
hereby agree:
(a) To (i) advise the Initial Purchaser promptly after obtaining
knowledge (and, if requested by the Initial Purchaser, confirm such advice
in writing) of (A) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of
any of the Notes for offer or sale in any jurisdiction, or the initiation
of any proceeding for such purpose by any state securities commission or
other regulatory authority, or (B) the happening of any event that makes
any statement of a material fact made in the Offering Circular untrue or
that requires the making of any additions to or changes in the Offering
Circular in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, (ii) use their
best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption from qualification of any of the Notes under
any state securities or Blue Sky laws, and (iii) if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of any of the
Notes under any such laws, use their best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
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(b) To (i) furnish the Initial Purchaser, without charge, as
many copies of the Offering Circular, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request, and (ii) promptly
prepare, upon the Initial Purchaser's request, any amendment or supplement
to the Offering Circular that the Initial Purchaser deems may be necessary
in connection with Exempt Resales (and the Issuers hereby consent to the
use of the Preliminary Offering Circular and the Offering Circular, and any
amendments and supplements thereto, by the Initial Purchaser in connection
with Exempt Resales).
(c) Not to amend or supplement the Offering Circular prior to
the Closing Date unless the Initial Purchaser shall previously have been
advised thereof and shall not have objected thereto within three business
days after being furnished a copy thereof.
(d) At any time prior to the completion of the resale by the
Initial Purchaser of the Notes, (i) if any event shall occur as a result of
which, in the reasonable judgment of the Issuers or the Initial Purchaser,
it becomes necessary or advisable to amend or supplement the Offering
Circular in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to amend or supplement the Offering Circular to comply with
Applicable Law (as defined below), forthwith to prepare an appropriate
amendment or supplement to the Offering Circular (in form and substance
satisfactory to the Initial Purchaser) so that (A) as so amended or
supplemented, the Offering Circular will not include an untrue statement of
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (B) the Offering Circular will comply with
Applicable Law, and (ii) if it becomes necessary or advisable to amend or
supplement the Offering Circular so that the Offering Circular will contain
all of the information specified in, and meet the requirements of, Rule
144A(d)(4) of the Act, forthwith to prepare an appropriate amendment or
supplement to the Offering Circular (in form and substance satisfactory to
the Initial Purchaser) so that the Offering Circular, as so amended or
supplemented, will contain the information specified in, and meet the
requirements of, such Rule.
(e) To cooperate with the Initial Purchaser and the Initial
Purchaser's counsel in connection with the qualification of the Notes under
the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may request and continue such qualification in effect so long as
reasonably required for Exempt Resales; provided, that the Issuers shall
not be required in connection therewith to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction where it is not now so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject.
(f) Whether or not any of the Transactions are consummated or
this Agreement is terminated, to pay (i) all costs, expenses, fees and
taxes incident to and in
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connection with: (A) the preparation, printing and distribution of the
Preliminary Offering Circular and the Offering Circular and all amendments
and supplements thereto (including, without limitation, financial
statements and exhibits), and all preliminary and final Blue Sky memoranda
and all other agreements, memoranda, correspondence and other documents
prepared and delivered in connection herewith, (B) the printing, processing
and distribution (including, without limitation, word processing and
duplication costs) and delivery of, and performance under, each of the
Documents, (C) the issuance and delivery of the Notes, including the fees
of the Trustee and the cost of its personnel, (D) the qualification of the
Notes for offer and sale under the securities or Blue Sky laws of the
several states (including, without limitation, the reasonable fees and
disbursements of the Initial Purchaser's counsel relating to such
registration or qualification), (E) furnishing such copies of the
Preliminary Offering Circular and the Offering Circular, and all amendments
and supplements thereto, as may reasonably be requested for use by the
Initial Purchaser, and (F) the preparation of the Notes, (ii) all fees and
expenses of the counsel and accountants of the Issuers, (iii) all expenses
and listing fees in connection with the application for quotation of the
Notes in the National Association of Securities Dealers, Inc. ("NASD")
Automated Quotation System -PORTAL ("PORTAL"), (iv) all fees and expenses
(including fees and expenses of counsel) of the Issuers in connection with
approval of the Notes by DTC for "book-entry" transfer, (v) all fees
charged by rating agencies in connection with the rating of the Notes and
(vi) all fees and expenses (including reasonable fees and expenses of
counsel) incurred by the Initial Purchaser in connection with the
preparation, negotiation and execution of the Documents and the
consummation of the Transactions.
(g) To use the proceeds from the sale of the Series A Notes in
the manner described in the Offering Circular under the caption "Use of
Proceeds." Without limiting the foregoing, concurrently with the
consummation of the Offering, the Company shall deposit sufficient proceeds
to defease the Old Notes pursuant to Section 8.04 of the Old Notes
Indenture.
(h) To the extent it may lawfully do so, not to insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any usury or other similar laws, wherever enacted, now or at any time
hereafter in force, that would prohibit or forgive the payment of all or
any portion of the principal of or interest on the Notes, or that may
affect the covenants or the performance of the Indenture (and, to the
extent it may lawfully do so, each Issuer 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
granted to the Trustee in the Indenture or the Collateral Agent in the
Security Documents but shall suffer and permit the execution of every such
power as though no such law had been enacted).
(i) To do and perform all things required to be done and
performed under the Documents prior to and after the Closing Date
(including, without limitation, all things necessary or advisable to obtain
on the Closing Date all termination statements, mortgage
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releases and other documents necessary to terminate the Liens (as defined
in the Indenture) securing Indebtedness (as defined in the Indenture) that
is being repaid with the net proceeds of the Offering or that is being
defeased pursuant to the Defeasance).
(j) Not to, and to ensure that no affiliate (as defined in Rule
501(b) of the Act) of either of the Issuers will, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any "security"
(as defined in the Act) that would be integrated with the sale of the
Series A Notes in a manner that would require the registration under the
Act of the sale to the Initial Purchaser or to the Eligible Initial
Purchasers of the Series A Notes.
(k) For so long as any of the Notes remain outstanding, during
any period in which either of the Issuers is not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to make available, upon request, to any owner of the Notes in
connection with any sale thereof and any prospective Eligible Initial
Purchasers of such Notes from such owner, the information required by Rule
144A(d)(4) under the Act.
(l) To comply with the representation letter of the Issuers to
DTC relating to the approval of the Notes by DTC for "book entry" transfer.
(m) To use their best efforts to effect the inclusion of the
Notes in PORTAL.
(n) For so long as the Notes are outstanding, and whether or not
required to do so by the rules and regulations of the Commission, (i) to
furnish to the Trustee and deliver or cause to be delivered to the holders
of the Notes and the Initial Purchaser (A) all quarterly and annual
financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company were required to
file such Forms, including for each, a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with
respect to the annual information only, a report thereon by the Company's
independent certified public accountants, and (B) all reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports, and (ii) from and after the time the
Exchange Offer Registration Statement or the Shelf Registration Statement
(or such other registration statement with respect to the Notes) is filed
with the Commission, to file such information with the Commission so long
as the Commission will accept such filings.
(o) Except in connection with the Registered Exchange Offer or
the filing of the Shelf Registration Statement, not to, and not to
authorize or permit any person acting on their behalf to, (i) distribute
any offering material in connection with the offer and sale of the Notes
other than the Preliminary Offering Circular and the Offering Circular and
any amendments and supplements to the Offering Circular prepared in
compliance with Section 5(d) hereof, or (ii) solicit any offer to buy or
offer to sell the Notes by means of any form of general solicitation or
general advertising (including, without limitation, as such terms are
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used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(p) Not to, directly or indirectly, without the prior consent of
the Initial Purchaser, offer, sell, grant any option to purchase, or
otherwise dispose (or announce any offer, sale, grant of any option to
purchase or other disposition) of any debt securities of either of the
Issuers for a period of six months after the date of the Offering Circular,
except as contemplated by the Registration Rights Agreement; provided, that
the foregoing will not apply to borrowings from financial institutions or
to the issuance of debt securities to the seller of assets or businesses
acquired by the Company as part of the purchase price therefor, in each
case only to the extent not prohibited by the Indenture.
(q) At any time prior to the completion of the resale by the
Initial Purchaser of the Notes, to notify the Initial Purchaser promptly in
writing if either of the Issuers or any of their Affiliates becomes a party
in interest or a disqualified person with respect to any employee benefit
plan. The terms "ERISA," "Affiliates," "party in interest," "disqualified
person" and "employee benefit plan" shall have the meanings as set forth in
Section 6(cc) hereof.
6. Representations and Warranties of the Issuers. Each of the
Issuers, jointly and severally, represents and warrants to the Initial Purchaser
that:
(a) The Preliminary Offering Circular as of its date did not,
and each of the Offering Circular and the Consent Solicitation Documents,
as of its date does not and as of the Closing Date will not, and each
supplement or amendment thereto as of its date will not, contain any untrue
statement of a material fact or omit to state any material fact (except, in
the case of the Preliminary Offering Circular, for pricing terms and other
financial terms intentionally left blank) necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representation and warranty made in
this Section 6(a) shall not apply to any statements or omissions made in
reliance on and in conformity with information relating to the Initial
Purchaser furnished in writing to the Issuers by the Initial Purchaser
specifically for inclusion in the Preliminary Offering Circular or the
Offering Circular. The parties hereto acknowledge that for purposes of
this Agreement (including Section 8 hereof) the only information furnished
in writing to the Issuers by the Initial Purchaser specifically for
inclusion in the Preliminary Offering Circular or the Offering Circular is
the information set forth (i) on the cover page of the Offering Circular
with respect to the price of the offering and (ii) under the caption "Plan
of Distribution" in the Preliminary Offering Circular and the Offering
Circular in the third paragraph (except for the third sentence), the sixth
and seventh sentences of the fourth paragraph, and the fifth paragraph. No
injunction or order has been issued that either (i) asserts that any of the
Transactions is subject to the registration requirements of the Act, or
(ii) would prevent or suspend the issuance or sale of the Notes or the use
of the Preliminary Offering Circular, the Offering Circular, or any
amendment or supplement thereto, in any
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jurisdiction. Each of the Preliminary Offering Circular and the Offering
Circular, as of their respective dates contained, and the Offering
Circular, as amended or supplemented, as of the Closing Date will meet the
requirements of, Rule 144A(d)(4) under the Act. Except as adequately
disclosed in the Offering Circular, there are no related party transactions
that would be required to be disclosed in the Offering Circular if the
Offering Circular were a prospectus included in a registration statement on
Form S-1 filed under the Act.
(b) Other than the Old Notes, there are no securities of either
of the Issuers registered under the Exchange Act or listed on a national
securities exchange registered under Section 6 of the Exchange Act or
quoted in a United States automated inter-dealer quotation system. The
Series A Notes are eligible for resale pursuant to Rule 144A.
(c) Each of the Issuers and Buffington Harbor Riverboats, L.L.C.,
a Delaware limited liability company ("BHR"), (i) has been duly organized,
is validly existing and is in good standing under the laws of its
jurisdiction of organization, (ii) has all requisite power and authority to
carry on its business and to own, lease and operate its properties and
assets as described in the Offering Circular, and (iii) is duly qualified
or licensed to do business and is in good standing as a foreign limited
liability company or corporation, as the case may be, authorized to do
business in each jurisdiction in which the nature of such businesses or the
ownership or leasing of such properties requires such qualification, except
where the failure to be so qualified could not, singly or in the aggregate,
have a material adverse effect on (A) the properties, business, operations,
earnings, assets, liabilities or condition (financial or otherwise) of the
Issuers, taken as a whole, (B) the ability of either of the Issuers to
perform its obligations under any of the Documents, (C) the enforceability
of any of the Security Documents or the attachment, perfection or priority
of any of the Security Interests intended to be created thereby in any
portion of the Collateral or (D) the validity of any of the Documents or
the consummation of any of the Transactions (each, a "Material Adverse
Effect").
(d) Immediately following the Closing, (i) the Company will have
no direct or indirect subsidiaries other than Capital, (ii) Capital will
have no direct or indirect subsidiaries, and (iii) the Company will own,
free and clear of all Liens other than Permitted Liens (as defined in the
Indenture), a 50% membership interest in BHR. Except as adequately
disclosed in the Offering Circular, there are no outstanding (A) securities
convertible into or exchangeable for any capital stock of Capital or any
membership interests of either of the Company or BHR, (B) options, warrants
or other rights to purchase or subscribe for any capital stock of Capital
or any membership interests of either of the Company or BHR or securities
convertible into or exchangeable for any capital stock of Capital or any
membership interests of either of the Company or BHR, or (C) contracts,
commitments, agreements, understandings, arrangements, calls or claims of
any kind relating to the issuance of any capital stock of Capital or any
membership interests of either of the Company or BHR, any such convertible
or exchangeable securities or any such options, warrants or rights. Except
as set forth above and as adequately disclosed in the Offering
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Circular, immediately following the Closing, none of the Issuers or BHR
will directly or indirectly own any capital stock or other equity interest
in any person.
(e) All of the outstanding shares of capital stock or membership
interests, as the case may be, of each of the Issuers and BHR have been
duly authorized and validly issued, are fully paid and nonassessable, and
were not issued in violation of, and are not subject to, any preemptive or
similar rights. All of the outstanding shares of capital stock of Capital
are owned directly by the Company, free and clear of all Liens other than
Permitted Liens. The table under the caption "Capitalization" in the
Offering Circular (including the footnotes thereto) sets forth, as of its
date, (i) the capitalization of the Company and (ii) the pro forma as
adjusted capitalization of the Company after giving effect to the
Transactions and the repayment of the note to Barden Development, Inc.
Immediately following the Closing, except as set forth in such table,
neither of the Issuers will have any liabilities, absolute, accrued,
contingent or otherwise other than (A) liabilities that are reflected in
the Financial Statements (defined below), or (B) liabilities incurred
subsequent to March 31, 1999 in the ordinary course of business, consistent
with past practice, that could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(f) Except for this Agreement and the Registration Rights
Agreement, and as adequately disclosed in the Offering Circular, neither of
the Issuers has entered into any agreement (i) to register any of its
securities under the Act, or (ii) to purchase or offer to purchase any
securities of either of the Issuers or any of their respective affiliates.
(g) Each of the Issuers has all requisite power and authority to
enter into, deliver and perform its obligations under the Documents to
which it is a party and to consummate the Transactions contemplated
thereby. Each of the Documents has been duly and validly authorized by
each of the Issuers that is or will be a party thereto, and this Agreement
is, and, when executed and delivered on the Closing Date, each other
Document will be, a valid and binding obligation of each of the Issuers
that is or will be a party thereto, enforceable in accordance with its
terms, except to the extent that (i) enforceability thereof may be subject
to bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) any rights of acceleration and the availability of
equitable remedies may be subject to general principles of equity. When
executed and delivered, each of the Documents will conform to the
description thereof in the Offering Circular. On the Closing Date, the
Indenture will conform to the requirements of the Trust Indenture Act of
1939, as amended (the "TIA"), applicable to an indenture that is required
to be qualified under the TIA.
(h) The Series A Notes have been duly and validly authorized by
each of the Issuers for issuance and sale to the Initial Purchaser pursuant
to this Agreement and, when executed and authenticated in accordance with
the terms of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms hereof, will be valid and binding
obligations of each of the Issuers, enforceable against each of the Issuers
in accordance with their terms, except to the extent that (i)
enforceability thereof may be subject
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to bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) any rights of acceleration and the availability of
equitable remedies may be subject to general principles of equity. The
Series B Notes have been duly and validly authorized by each of the Issuers
and, when executed, authenticated and delivered in accordance with the
terms of the Indenture and the Registration Rights Agreement, will be valid
and binding obligations of each of the Issuers, enforceable against each of
the Issuers in accordance with their terms, except to the extent that (i)
enforceability thereof may be subject to bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) any rights of
acceleration and the availability of equitable remedies may be subject to
general principles of equity. The Notes rank and will rank on a parity with
all senior indebtedness of each of the Issuers that is outstanding on the
date hereof or that may be incurred hereafter, and senior to all other
indebtedness of each of the Issuers that is outstanding on the date hereof
or that may be incurred hereafter.
(i) The Company is not in violation of its certificate of
formation or operating agreement (the "Company Charter Documents"), Capital
is not in violation of its charter or by-laws (the "Capital Charter
Documents"), and BHR is not in violation of its certificate of formation or
operating agreement (the "BHR Charter Documents" and, together with the
Company Charter Documents and the Capital Charter Documents, the "Charter
Documents"). None of the Company, Capital or BHR is (i) in violation of any
Federal, state, local or foreign statute, law (including, without
limitation, common law and the Riverboat Gambling Act of the State of
Indiana, including the rules and regulations promulgated thereunder) or
ordinance, or any judgment, decree, rule, regulation or order
(collectively, "Applicable Law") of any government, governmental or
regulatory agency or body (including, without limitation, the Indiana
Gaming Commission (the "IGC")), court, arbitrator or self-regulatory
organization, domestic or foreign (each, a "Governmental Authority"), or
(ii) in breach of or default under any bond, debenture, note or other
evidence of indebtedness, indenture, mortgage, deed of trust, lease or any
other agreement or instrument to which any of them is a party or by which
any of them or their respective property is bound (collectively,
"Applicable Agreements"), other than breaches or defaults that could not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Other than as adequately disclosed in Offering Circular,
there exists no condition that, with the passage of time or otherwise,
would constitute (i) a violation of such Charter Documents or Applicable
Laws or (ii) a breach of or default under any Applicable Agreement or (iii)
result in the imposition of any penalty or the acceleration of any
indebtedness, other than breaches, penalties or defaults that could not,
singly or in the aggregate, result in a Material Adverse Effect. All
Applicable Agreements are in full force and effect and are valid and
binding obligations, and no default has occurred or is continuing
thereunder, other than such defaults that could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(j) Neither the execution, delivery or performance of the
Documents nor the consummation of the Transactions shall conflict with,
violate, constitute a breach of or a
11
default (with the passage of time or otherwise) under, require the consent
of any person (other than consents already obtained) under, result in the
imposition of a Lien on any assets of any of the Issuers or BHR (except
pursuant to the Documents), or result in an acceleration of indebtedness
under or pursuant to (i) the Charter Documents, (ii) any Applicable
Agreement, other than such breaches, violations or defaults that could not,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (iii) any Applicable Law. After giving effect to the
Transactions, no Default or Event of Default (each, as defined in the
Indenture) will exist.
(k) No permit, certificate, authorization, approval, consent,
license or order of, or filing, registration, declaration or qualification
with, any Governmental Authority (collectively, "Permits") and no approval
or consent of any other person, is required in connection with, or as a
condition to, the execution, delivery or performance of any of the
Documents or the consummation of any of the Transactions, other than such
Permits (i) as have been made or obtained on or prior to the Closing Date,
(ii) as are not required to be made or obtained on or prior to the Closing
Date that will be made or obtained when required, or (iii) the failure of
which to make or obtain could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(l) Except as adequately disclosed in the Offering Circular,
there is no action, claim, suit, demand, hearing, notice of violation or
deficiency, or proceeding, domestic or foreign (collectively,
"Proceedings"), pending or, to the knowledge of the Issuers, threatened,
that either (i) seeks to restrain, enjoin, prevent the consummation of, or
otherwise challenge any of the Documents or any of the Transactions, or
(ii) could, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. None of the Issuers or BHR is subject to any
judgment, order, decree, rule or regulation of any Governmental Authority
that could, singly or in the aggregate, have a Material Adverse Effect.
(m) Each of the Company, Capital and BHR and each of their
respective directors, members, managers, officers, employees and agents
(collectively, the "Regulated Persons") has, and is in compliance with the
terms and conditions of, all Permits (including, without limitation,
Permits with respect to engaging in gaming operations) necessary or
advisable to own, lease and operate the properties and to conduct the
businesses described in the Offering Circular other than those the failure
of which to have could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. All such Permits are valid and
in full force and effect. No event has occurred which allows, or after
notice or lapse of time would allow, the imposition of any material
penalty, revocation or termination by the issuer thereof or which results,
or after notice or lapse of time would result, in any material impairment
of the rights of the holder of any such Permits. None of the Company,
Capital or BHR has reason to believe that any issuer is considering
limiting, conditioning, suspending, modifying, revoking or not renewing any
such Permit.
12
(n) To the best knowledge of the Issuers, (i) no Governmental
Authority is investigating any Regulated Person (other than normal reviews
by the IGC incident to the gaming activities of the Company), and (ii)
there is no basis for the IGC to deny the renewal of the current Permits
held by any of them.
(o) Immediately following the Closing, the Company (i) will have
good and marketable title, free and clear of all Liens (other than
Permitted Liens), to all property and assets described in the Offering
Circular as being owned by it, and (ii) will enjoy peaceful and undisturbed
possession under all leases to which it is a party as lessee.
(p) The assets of each of the Company and BHR include all of the
assets and properties material to the conduct of the businesses of either
of them as currently conducted, and such assets are in working condition,
except where the failure of such assets to be in working condition could
not, singly or in the aggregate, have a Material Adverse Effect. Capital
has no assets.
(q) Each of the Company and BHR maintains reasonably adequate
insurance covering its properties, operations, personnel and businesses
against such losses and risks in accordance with customary industry
practice. All such insurance is outstanding and duly in force.
(r) Upon execution and delivery of the Security Documents and
the issuance of the Notes, the Security Documents will create, in favor of
the Collateral Agent, for the benefit of the holders of the Notes, a legal,
valid and enforceable Lien on, and security interest in, all of the right,
title and interest of the Grantors in the Collateral and the proceeds
thereof and, upon the completion of the filings, deliveries or recordings
required by the Security Documents, the Collateral Agent will have a fully
perfected, first priority Lien on, and security interest in, the
Collateral, subject to no Liens other than Permitted Liens.
(s) All material tax returns required to be filed by each of the
Issuers and by BHR in any jurisdiction (including foreign jurisdictions)
have been filed and all such returns are true, complete and correct in all
material respects, and all material taxes, assessments, fees and other
charges (including, without limitation, withholding taxes, penalties and
interest) due or claimed to be due from each of the Issuers or from BHR
have been paid, other than those being contested in good faith by
appropriate proceedings, or those that are currently payable without
penalty or interest and, in each case, for which an adequate reserve or
accrual has been established on the books and records of each of the
Issuers or BHR, as the case may be, in accordance with GAAP (as defined
below). There are no proposed tax assessments against either of the
Issuers or against BHR that could, singly or in the aggregate, have a
Material Adverse Effect. The charges, accruals and reserves on the books
and records of each of the Issuers and of BHR, as the case may be, in
respect of any material tax liability for any tax periods not finally
determined are adequate to meet any assessments of tax for any such period.
13
(t) The Company owns, or is licensed under, and has the right to
use, all patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Intellectual
Property") currently used in, or necessary for the conduct of, its
businesses, free and clear of all Liens, other than Permitted Liens. No
claims have been asserted by any person challenging the use of any such
Intellectual Property by either of the Issuers or questioning the validity
or effectiveness of any license or agreement related thereto, and the
Company has no knowledge of any material infringement by it of the
Intellectual Property rights of any other person.
(u) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) material
transactions are executed in accordance with management's general or
specific authorization, (ii) material transactions are recorded as
necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles of the United States, consistently
applied ("GAAP"), and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any material differences.
(v) The audited financial statements and related notes of the
Company contained in the Offering Circular (the "Audited Financial
Statements") and the unaudited financial statements and related notes of
the Company contained in the Offering Circular (the "Interim Financial
Statements" and, together with the Audited Financial Statements, the
"Financial Statements") present fairly the financial position, results of
operations and cash flows of the Company as of the respective dates and for
the respective periods to which they apply, and have been prepared in
accordance with GAAP and the requirements of Regulation S-X that would be
applicable if the Offering Circular were a prospectus included in a
registration statement on Form S-1 filed under the Act. The summary
historical financial data included in the Offering Circular have been
prepared on a basis consistent with that of the Financial Statements and
present fairly the financial position and results of operations of the
Company as of the respective dates and for the respective periods
indicated. All other financial, statistical, and market and industry-
related data included in the Offering Circular are fairly and accurately
presented and are based on or derived from sources the Issuers believe to
be reliable and accurate. PricewaterhouseCoopers LLP are independent
public accountants with respect to the Company.
(w) Subsequent to the respective dates as of which information
is given in the Offering Circular, except as adequately disclosed in the
Offering Circular, (i) neither Issuer has incurred any liabilities, direct
or contingent, that are material, singly or in the aggregate, to either of
them, or has entered into any material transactions not in the ordinary
14
course of business, (ii) there has not been any decrease in the capital
stock or membership interests, as the case may be, or any increase in long-
term indebtedness or any material increase in short-term indebtedness of
either of the Issuers, or any payment of or declaration to pay any
dividends or any other distribution with respect to either of the Issuers,
and (iii) there has not been any material adverse change in the properties,
business, operations, assets, liabilities or condition (financial or
otherwise) of the Issuers taken as a whole or of BHR (each of clauses (i),
(ii) and (iii), a "Material Adverse Change").
(x) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act (i)
has imposed (or has informed either of the Issuers that it is considering
imposing) any condition (financial or otherwise) on the Issuers' retaining
any rating assigned to any securities of either of the Issuers, or (ii) has
indicated to either of the Issuers that it is considering (A) the
downgrading, suspension, or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any
rating so assigned, or (B) any change in the outlook for any rating of any
securities of either of the Issuers.
(y) All indebtedness represented by the Series A Notes is being
incurred in good faith. On the Closing Date (after giving effect to the
Transactions), the Company will be solvent, and will have on the Closing
Date (after giving effect to the Transactions) sufficient capital for
carrying on its business and will be on the Closing Date (after giving
effect to the Transactions) able to pay its debts as they mature.
(z) Neither of the Issuers nor anyone acting on their behalf
has (i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the Notes or
to facilitate the sale or resale of any of the Notes, (ii) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, any
of the Notes, or (iii) except as adequately disclosed in the Offering
Circular, paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of either of the
Issuers.
(aa) Without limiting clause (k) above, no registration under
the Act, and no qualification of the Indenture under the TIA is required
for the sale of the Series A Notes to the Initial Purchaser as contemplated
hereby or for the Exempt Resales, assuming (i) that the purchasers in the
Exempt Resales are Eligible Initial Purchasers, (ii) the accuracy of the
Initial Purchaser's representations contained herein regarding the absence
of general solicitation in connection with the sale of the Series A Notes
to the Initial Purchaser and in the Exempt Resales, and (iii) the accuracy
of the representations made by each Accredited Investor who purchases the
Series A Notes pursuant to an Exempt Resale as set forth in the letters of
representation in the form of Annex A to the Offering Circular. No form of
general solicitation or general advertising was used by either of the
Issuers or any of their respective affiliates or any of their respective
representatives in connection with the offer and sale of
15
any of the Series A Notes or in connection with Exempt Resales. No
securities of the same class as any of the Notes have been offered, issued
or sold by either of the Issuers or any of their respective affiliates
within the six-month period immediately prior to the date hereof.
(bb) Without limiting clause (k) above, no registration under
the Act, or filing under the Exchange Act, or the TIA is required in
connection with the commencement or consummation of the Tender Offer,
Consent Solicitation, Amendments or Defeasance.
(cc) Except for the Company's 401(k) plan, neither of the
Issuers nor any of their respective "Affiliates" is a "party in interest"
or a "disqualified person" with respect to any employee benefit plans. No
condition exists or event or transaction has occurred in connection with
any employee benefit plan that could result in either of the Issuers or any
such "Affiliate" incurring any liability, fine or penalty that could,
singly or in the aggregate, have a Material Adverse Effect. Neither of the
Issuers nor any trade or business under common control with the Issuers
(for purposes of Section 414(c) of the Code) maintains any employee pension
benefit plan that is subject to Title IV of the Employee Retirement Income
Act of 1974, as amended, or the rules and regulations promulgated
thereunder ("ERISA").
The terms "employee benefit plan," "employee pension benefit
plan," and "party in interest" shall have the meanings assigned to such
terms in Section 3 of ERISA. The term "Affiliate" shall have the meaning
assigned to such term in Section 407(d)(7) of ERISA, and the term
"disqualified person" shall have the meaning assigned to such term in
section 4975 of the Internal Revenue Code of 1986, as amended, or the
rules, regulations and published interpretations promulgated thereunder
(the "Code").
(dd) None of the Transactions will violate or result in a
violation of Section 7 of the Exchange Act (including, without limitation,
Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System). Neither of the Issuers is subject to regulation, or
shall become subject to regulation upon the consummation of the
Transactions, under the Investment Company Act of 1940, as amended, and the
rules and regulations and interpretations promulgated thereunder, the
Public Utility Holding Company Act of 1935, as amended, the Commodity
Exchange Act or any Federal or state statute or regulation limiting its
ability to incur or assume indebtedness for borrowed money.
(ee) Neither of the Issuers is under any obligation to pay any
broker's fee or commission in connection with the Transactions (other than
commissions and fees to the Initial Purchaser as set forth in the Offering
Circular).
(ff) Neither of the Issuers nor BHR is engaged in any unfair
labor practice. Except as adequately disclosed in the Offering Circular,
there is (i) no unfair labor practice complaint or other proceeding pending
or, to the knowledge of the Issuers or BHR, threatened against either of
the Issuers or BHR before the National Labor Relations Board
16
or any state, local or foreign labor relations board or any industrial
tribunal, and no material grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is so pending or, to the
knowledge of the Issuers or BHR, threatened, (ii) no strike, labor dispute,
slowdown or stoppage pending or, to the knowledge of the Issuers or BHR,
threatened against either of the Issuers or BHR, and (iii) no union
representation question existing with respect to the employees of either of
the Issuers or BHR, and, to the knowledge of the Issuers or BHR, no union
organizing activities are taking place that, could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(gg) Except as disclosed in the Offering Circular and except as
would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (i) the Issuers and BHR are in compliance with all
applicable Environmental Laws, (ii) the Issuers and BHR have made all
filings and provided all notices required under all Environmental Laws,
have all Permits required under all Environmental Laws and are in
compliance with all their requirements, (iii) there is no Environmental
Claim pending or, to the knowledge of the Issuers or BHR, threatened under
any Environmental Law against either of the Issuers or BHR or any person or
entity for whom the Issuers or BHR may be liable by law or contract, (iv)
no Lien has been recorded under any Environmental Law with respect to any
assets, facility or property owned, operated, leased or controlled by
either of the Issuers or BHR, (v) neither of the Issuers nor BHR has
received notice that it has been identified as a potentially responsible
party under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA") or any comparable state law,
(vi) no property or facility of the Issuer or BHR is listed or proposed for
listing on the National Priorities List under CERCLA or listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority and (vii) there are
no past, present or, to the knowledge of the Issuers or BHR, foreseeable
actions, activities, conditions, events, incidents or circumstances that
could form the basis for any Environmental Claim in the future.
"Environmental Law" means any Applicable Laws relating to
pollution or protection of the environmental or health or safety or any
chemical, material or substance that is subject to regulation thereunder.
"Environmental Claims" means any and all administra tive, regulatory or
judicial actions, suits, demands, demand letters, claims, notices of
responsibility, information requests, Liens, communications and notices of
noncompliance or violation, investigations or Proceedings relating in any
way to any Environmental Law.
(hh) No representation or warranty made by either of the Issuers
in any of the Documents was or will be, when made, inaccurate, untrue or
incorrect in any material respect. Each certificate signed by any officer
of either of the Issuers and delivered to the Initial Purchaser or counsel
for the Initial Purchaser in connection with the Transactions shall
17
be deemed to be a representation and warranty by each Issuer to the Initial
Purchaser as to the matters covered thereby.
7. Representations and Warranties of the Initial Purchaser. The
Initial Purchaser represents and warrants that:
(a) It is a QIB.
(b) It (i) is not acquiring the Series A Notes with a view to
any distribution thereof that would violate the Act or the securities laws
of any state of the United States or any other applicable jurisdiction, and
(ii) will be soliciting offers for the Series A Notes only from, and will
be reoffering and reselling the Series A Notes only to (A) persons in the
United States whom it reasonably believes to be QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule
144A or (B) a limited number of Accredited Investors that execute and
deliver to each of the Issuers and the Initial Purchaser a letter
containing certain representations and agreements in the form attached as
Annex A to the Offering Circular.
(c) No form of general solicitation or general advertising in
violation of the Act has been or will be used by the Initial Purchaser or
any of its representatives in connection with the offer and sale of any of
the Series A Notes.
(d) In connection with the Exempt Resales, it will solicit
offers to buy the Series A Notes only from, and will offer and sell the
Series A Notes only to, Eligible Initial Purchasers who, in purchasing such
Series A Notes, will be deemed to have represented and agreed (i) if such
Eligible Initial Purchasers are QIBs, that they are purchasing the Series A
Notes for their own accounts or accounts with respect to which they
exercise sole investment discretion and that they or such accounts are
QIBs, (ii) that such Series A Notes will not have been registered under the
Act and may be resold, pledged or otherwise transferred, prior to the date
that is two years (or such other period that may hereafter be provided
under Rule 144(k) as permitting resales of restricted securities by non-
affiliates without restriction) after the later of the original issue date
of the Series A Notes and the last date on which either of the Issuers or
any of their respective affiliates was the owner of the Series A Notes only
(A) to the Issuers, (B) pursuant to a registration statement which has been
declared effective under the Act, (C) for so long as the Series A Notes are
eligible for resale pursuant to Rule 144A under the Act, to a person who
the seller reasonably believes is a QIB that purchases for its own account
or the account of a QIB to whom notice is given that the transfer is being
made in reliance on Rule 144A, (D) to an institutional "accredited
investor" within the meaning of Subparagraph (a)(1), (2), (3) or (7) of
Rule 501 under the Act that is acquiring the Series A Notes for its own
account or the account of such an institutional "accredited investor," for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Act or (E) pursuant
to another available exemption from the registration requirements of the
Act, and (iii) that the holder will, and each
18
subsequent holder is required to, notify any purchaser from it of the
security evidenced thereby of the resale restrictions set forth in (ii)
above.
(e) It has all requisite power and authority to enter into,
deliver and perform its obligations under this Agreement and the
Registration Rights Agreement and each of this Agreement and the
Registration Rights Agreement has been duly and validly authorized by it.
8. Indemnification of the Initial Purchaser.
(a) Each of the Issuers shall, jointly and severally, without
limitation as to time, indemnify and hold harmless the Initial Purchaser
and each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) the Initial Purchaser (any of
such persons being hereinafter referred to as a "controlling person"), and
the respective officers, directors, partners, employees, representatives
and agents of the Initial Purchaser and any such controlling person
(collectively, the "Purchaser Indemnified Parties"), to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities,
costs (including, without limitation, costs of preparation and reasonable
attorneys' fees) and expenses (including, without limitation, costs and
expenses incurred in connection with investigating, preparing, pursuing or
defending against any of the foregoing) (collectively, "Losses"), as
incurred, directly or indirectly caused by, related to, based upon, arising
out of or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Circular
or the Offering Circular (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or (ii)
any act, omission, transaction or event contemplated by the Documents;
provided, that the Issuers shall not be liable to any Purchaser Indemnified
Party for any Losses that (x) result solely from an untrue statement of a
material fact contained in, or the omission of a material fact from, any
Preliminary Offering Circular, which untrue statement or omission was
completely corrected in the Offering Circular (as then amended or
supplemented) if it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (1) such Purchaser
Indemnified Party sold the Notes to the person alleging such Loss and
failed to send or give, at or prior to the written confirmation of such
sale, a copy of the Offering Circular (as then amended or supplemented), if
required by law to have so delivered it, and (2) the Issuers had previously
furnished copies thereof to such Purchaser Indemnified Party within a
reasonable amount of time prior to such sale or such confirmation, and (3)
the corrected Offering Circular, if delivered, would have been a complete
defense against the person asserting such Loss; (y) arise solely from the
gross negligence or willful misconduct of such Purchaser Indemnified Party;
or (y) are based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with
information relating to the Initial Purchaser furnished in writing to the
Issuers by the Initial Purchaser specifically for inclusion in the
Preliminary Offering Circular
19
or the Offering Circular. The parties hereto agree that the only
information furnished in writing to the Issuers by the Initial Purchaser
specifically for inclusion in the Preliminary Offering Circular or the
Offering Circular is set forth in Section 6(a) hereof. The Issuers shall
notify the Initial Purchaser promptly of the institution, threat or
assertion of any Proceeding of which either of the Issuers is aware in
connection with the matters addressed by this Agreement which involves
either of the Issuers or any of the Purchaser Indemnified Parties.
(b) If any Proceeding shall be brought or asserted against any
person entitled to indemnification hereunder (an "Indemnified Party"), such
Indemnified Party shall give prompt written notice to the indemnifying
party; provided, that the failure to so notify the indemnifying parties
shall not relieve the indemnifying parties from any obligation or liability
except to the extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that the indemnifying party has been prejudiced
materially by such failure.
Neither of the Issuers shall consent to entry of any judgment in
or enter into any settlement of any pending or threatened Proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not any Indemnified Party is a party thereto) unless such
judgment or settlement includes, as an unconditional term thereof, the
giving by the claimant or plaintiff to each Indemnified Party of a release,
in form and substance satisfactory to the Initial Purchaser, from all
Losses that may arise from such Proceeding or the subject matter thereof
(whether or not any Indemnified Party is a party thereto).
(c) The Initial Purchaser agrees to indemnify and hold harmless
each of the Issuers and each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act)
either of the Issuers (any of such persons being hereinafter referred to as
a "controlling person"), and the respective members, managers, officers,
directors, partners, employees, representatives and agents of the Issuers
and any such controlling person to the same extent as the foregoing
indemnity from the Issuer to each of the Purchaser Indemnified Parties, but
only with respect to Losses that are caused by an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Initial Purchaser furnished in
writing to the Issuers by the Initial Purchaser specifically for inclusion
in the Preliminary Offering Circular or the Offering Circular. The parties
hereto agree that the only information furnished in writing to the Issuers
by the Initial Purchaser specifically for inclusion in the Preliminary
Offering Circular or the Offering Circular is set forth in Section 6(a)
hereof.
(d) If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or is insufficient to hold such
Indemnified Party harmless for any Losses in respect of which this Section
8 would otherwise apply by its terms (other than by reason of exceptions
provided in this Section 8), then the Issuers, in lieu of indemnifying such
20
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers, on
the one hand, and the Initial Purchaser, on the other hand, from the
Offering, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuers, on the one hand, and the Initial
Purchaser, on the other hand, in connection with the actions, statements or
omissions that resulted in such Losses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers, on
the one hand, and the Initial Purchaser, on the other hand, shall be deemed
to be in the same proportion as the total net proceeds from the Offering
(before deducting expenses) received by the Issuers, and the total
discounts and commissions received by the Initial Purchaser, bear to the
total price of the Series A Notes in Exempt Resales in each case as set
forth in the table on the cover page of the Offering Circular. The
relative fault of the Issuers, on the one hand, and the Initial Purchaser,
on the other hand, shall be determined by reference to, among other things,
whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Issuers, on the one hand, or the Initial
Purchaser, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The amount paid or payable by an Indemnified Party as a
result of any Losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any Proceeding, to the
extent such party would have been indemnified for such fees or expenses if
the indemnifica tion provided for in this Section 8 was available to such
party.
Each party hereto agrees that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), the Initial
Purchaser shall not be required to contribute, in the aggregate, any amount
in excess of the amount by which the total discounts and commissions
received by the Initial Purchaser with respect to the Series A Notes
purchased by it exceeds the amount of any damages that the Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the Issuers or the Initial
Purchaser may otherwise have to the Indemnified Parties.
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9. Conditions.
(a) The obligations of the Initial Purchaser to purchase the
Series A Notes under this Agreement are subject to the satisfaction or
waiver of each of the following conditions:
(i) All the representations and warranties of each of
the Issuers in each of the Documents to which it is a party shall be true
and correct in all material respects (other than representations and
warranties with a materiality qualifier, which shall be true and correct as
written) at and as of the Closing Date after giving effect to the
Transactions with the same force and effect as if made on and as of such
date. On or prior to the Closing Date, each of the Issuers and, to the
knowledge of the Issuers, each other party to the Documents (other than the
Initial Purchaser) shall have performed or complied in all material
respects with all of the agreements and satisfied in all material respects
all conditions on their respective parts to be performed, complied with or
satisfied pursuant to the Documents.
(ii) The Offering Circular shall have been printed and
copies made available to the Initial Purchaser not later than 12:00 noon,
New York City time, on the first business day following the date of this
Agreement or at such later date and time as the Initial Purchaser may
approve.
(iii) No injunction, restraining order or order of any
nature by a Governmental Authority shall have been issued as of the Closing
Date that would prevent or interfere with the consummation of any of the
Transactions; and no stop order suspending the qualification or exemption
from qualification of any of the Series A Notes in any jurisdiction shall
have been issued and no Proceeding for that purpose shall have been
commenced or be pending or contemplated.
(iv) No Applicable Law shall have been enacted,
adopted or issued that would, as of the Closing Date, prevent the
consummation of any of the Transactions. No Proceeding shall be pending or
threatened other than Proceedings that (A) if adversely determined could
not, singly or in the aggregate, adversely affect the issuance or
marketabil ity of the Series A Notes, and (B) could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(v) Since the date as of which information is given
in the Offering Circular, there shall not have been any Material Adverse
Change.
(vi) The Notes shall have (A) been designated PORTAL
securities in accordance with the rules and regulations adopted by the NASD
relating to trading in the
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PORTAL market, and (B) received a rating of "B" and "B2" from Standard &
Poor's Corporation and Moody's Investors Services, Inc., respectively.
(vii) As of the Closing Date, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice
have been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review)
for a possible change that does not indicate the direction of the possible
change in, any rating of any securities of either of the Issuers
(including, without limitation, the placing of any of the foregoing ratings
on credit watch with negative or developing implications or under review
with an uncertain direction) by any "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act, (ii) there shall not have occurred any change, nor shall any
notice have been given of any potential or intended change, in the outlook
for any rating of any securities of either of the Issuers by any such
rating organization and (iii) no such rating organization shall have given
notice that it has assigned (or is considering assigning) a lower rating to
the Notes than that on which the Notes were marketed.
(viii) The Initial Purchaser shall have received on the
Closing Date (A) certificates dated the Closing Date, signed by (1) the
Chief Executive Officer, and (2) the principal financial or accounting
officer of each of the Issuers, on behalf of such Issuer, confirming the
matters set forth in paragraphs (i), (iii), (iv), (v), (vii) and (xiii) of
this Section 9(a), (B) a certificate, dated the Closing Date, signed by the
(1) Chief Executive Officer and (2) the principal financial or accounting
officer of each of the Issuers, on behalf of such Issuer stating that the
industry, statistical and market-related data included in the Offering
Circular has been reviewed by such persons and, to the best knowledge of
such persons, subject to the risks and limitations described in the
Preliminary Offering Circular and the Offering Circular, is true and
accurate in all material respects and is based on or derived from sources
which the Issuers believe to be reliable and accurate, which certificate
shall be in form and substance satisfactory to counsel for the Initial
Purchasers, (C) a certificate, dated the Closing Date, signed by the
Secretary of each of the Issuers, BDI and Gary, certifying such matters as
the Initial Purchaser may reasonably request, and (D) a certificate of
solvency, dated the Closing Date, signed by the principal financial or
accounting officer of the Company substantially in the form previously
approved by the Initial Purchaser.
(ix) The Initial Purchaser shall have received:
(A) the opinions (in form and substance satisfactory to
the Initial Purchaser and counsel to the Initial Purchaser) of Dykema
Gossett PLLC, special counsel to the Issuers, dated the Closing Date,
in the form of Exhibit A hereto;
(B) the opinions (in form and substance satisfactory to
the Initial Purchaser and counsel to the Initial Purchaser) of Barnes
& Thornburg, special
23
Indiana counsel to the Issuers, dated the Closing Date, in the form of
Exhibit B-1 hereto, and Butzel Long, special admiralty counsel to the
Issuers, dated the Closing Date, in the form of Exhibit B-2 hereto;
(C) reliance letters from each counsel or special
counsel to the Issuers (in form and substance satisfactory to the
Initial Purchaser and counsel to the Initial Purchaser), dated the
Closing Date, permitting the Initial Purchaser to rely on all other
opinions rendered by such counsel in connection with any of the
Transactions; and
(D) an opinion, dated the Closing Date, of Skadden,
Arps, Slate, Meagher & Flom LLP, in form and substance reasonably
satisfactory to the Initial Purchaser covering such matters as are
customarily covered in such opinions.
(x) The Initial Purchaser shall have received from
PricewaterhouseCoopers LLP, independent public accountants, with respect to
the Issuers, (A) a customary comfort letter, dated the date of the
Offering Circular, in form and substance reasonably satisfactory to the
Initial Purchaser, with respect to the financial statements and certain
financial information contained in the Offering Circular, and (B) a
customary comfort letter, dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchaser, to the effect that
PricewaterhouseCoopers LLP reaffirms the statements made in its letter
furnished pursuant to clause (A), except that the specified date referred
to shall be a date not more than five days prior to the Closing Date.
(xi) The Documents shall have been executed and
delivered by all parties thereto and the Initial Purchaser shall have
received a fully executed original of each Document.
(xii) The Initial Purchaser shall have received copies
of all opinions, certificates, letters and other documents delivered under
or in connection with the Transactions.
(xiii) Each of the Transactions shall have been
consummated on terms that conform to the description thereof in the
Offering Circular. The terms of each Document shall conform in all material
respects to the description thereof in the Offering Circular.
(xiv) The Initial Purchaser shall have received copies
of duly executed payoff letters, UCC-3 termination statements, mortgage
releases and other collateral releases and terminations, each in form and
substance satisfactory to the Initial Purchaser evidencing, as the case may
be, (A) the Defeasance, (B) the repurchase of the Old Notes pursuant to the
Tender Offer, (C) the termination of each agreement and instrument relating
to any indebtedness secured by the Collateral and (D) the release of each
item of
24
Collateral securing such indebtedness and the termination of all
Liens created thereunder, and each such payoff letter, release and
termination shall be in full force and effect.
(xv) The Issuers shall have furnished to the Initial
Purchaser the Security Documents duly executed by the respective Grantors
party thereto, together with:
(A) proper financing statements, each in the form to be
filed on the Closing Date under the UCC of all jurisdictions that may
be deemed necessary or desirable in order to perfect the Liens created
by the Security Documents, covering the Collateral and naming the
Collateral Agent as secured party, which financing statements shall be
so filed on the Closing Date;
(B) contemplated requests for information, listing all
effective financing statements filed as of the date thereof in the
jurisdictions referred to in the prior subparagraph that name either
of the Issuers, BDI or Gary as debtor, together with copies of such
financing statements (none of which shall cover the Collateral
described in the Security Documents, except to the extent such
Collateral secures the obligations under the Old Notes and such
Collateral is released in connection herewith and evidence thereof is
delivered pursuant to paragraph (xiv) above);
(C) reasonable evidence that all other actions
necessary or desirable to perfect and protect the Liens created by the
Security Documents have been taken;
(D) the Preferred Ship Mortgage (as defined in the
Indenture), duly executed by the Company, together with:
(1) evidence that counterparts of the Preferred Ship
Mortgage are in a form to be recorded on the Closing Date with
the United States Coast Guard National Vessel Documentation
Center, New Orleans, Louisiana Detachment (which counterparts
shall be so recorded on the Closing Date), in order to create a
valid first preferred mortgage under the Ship Mortgage Act on the
Majestic Star Casino Vessel (as defined in the Indenture) in
favor of the Collateral Agent and the holders of the Notes and
that all filing and recording taxes and fees have been paid;
(2) such evidence that all other action that the
Collateral Agent may deem necessary or desirable in order to
create a valid first preferred mortgage on the Majestic Star
Casino Vessel has been taken; and
(3) such evidence of the insurance required by the terms
of the Preferred Ship Mortgage.
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(xvi) Counsel to the Initial Purchaser shall have been
furnished with such documents as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 9 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(b) The obligation of each of the Issuers to sell the Series A
Notes under this Agreement is subject to the satisfaction or waiver of each
of the following conditions:
(i) The Initial Purchaser shall have delivered
payment to the Issuers for the Series A Notes pursuant to Sections 2 and 4
of this Agreement and shall have complied with all other obligations and
agreements required to be complied with by it hereunder on or prior to the
Closing Date.
(ii) All of the representations and warranties of the
Initial Purchaser in this Agreement shall be true and correct in all
material respects at and as of the Closing Date, with the same force and
effect as if made on and as of such date.
(iii) No injunction, restraining order or order of any
nature by a Governmental Authority shall have been issued as of the Closing
Date that would prevent or interfere with the issuance and sale of the
Series A Notes; and no stop order suspending the qualification or exemption
from qualification of any of the Series A Notes in any jurisdiction shall
have been issued and no Proceeding for that purpose shall have been
commenced or be pending or contemplated as of the Closing Date.
10. Termination. The Initial Purchaser may terminate this Agreement
at any time prior to the Closing Date by written notice to the Issuers if any of
the following has occurred:
(a) since the date as of which information is given in the
Offering Circular, any material adverse effect or development involving a
prospective adverse effect on the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or
otherwise), of either of the Issuers, whether or not arising in the
ordinary course of business, that could, in Initial Purchaser's judgment,
(i) make it impracticable or inadvisable to proceed with the offering or
delivery of the Series A Notes on the terms and in the manner contemplated
in the Offering Circular, or (ii) materially impair the investment quality
of any of the Notes;
(b) the failure of either of the Issuers to satisfy the
conditions contained in Section 9(a) hereof on or prior to the third
business day following the date of this Agreement;
(c) any outbreak or escalation of hostilities or other national
or international calamity or crisis or material adverse change in economic
conditions in or the financial markets of the United States or elsewhere,
if the effect of such outbreak, escalation, calamity,
26
crisis or material adverse change in the economic conditions in or in the
financial markets of the United States or elsewhere could make it, in the
Initial Purchaser's judgment, impracticable or inadvisable to market or
proceed with the offering or delivery of the Series A Notes on the terms
and in the manner contemplated in the Offering Circular or to enforce
contracts for the sale of any of the Series A Notes;
(d) the suspension or limitation of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange or
the NASDAQ National Market or any setting of limitations on prices for
securities on any such exchange or NASDAQ National Market;
(e) the enactment, publication, decree or other promulgation
after the date hereof of any Applicable Law that in the Initial Purchaser's
opinion materially and adversely affects, or could materially and adversely
affect, the properties, business, prospects, operations, earnings, assets,
liabilities or condition (financial or otherwise) of either of the Issuers;
(f) any securities of either of the Issuers shall have been
downgraded or placed on any "watch list" for possible downgrading by any
"nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 431(g)(2) under the Act; or
(g) the declaration of a banking moratorium by any Governmental
Authority; or the taking of any action by any Governmental Authority after
the date hereof in respect of its monetary or fiscal affairs that in the
Initial Purchaser's opinion could have a material adverse effect on the
financial markets in the United States or elsewhere.
The indemnities and contribution and expense reimbursement provisions
and other agreements, representations and warranties of each of the Issuers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchaser, (ii) acceptance of the Notes, and payment for them hereunder, and
(iii) any termination of this Agreement. Without limiting the foregoing,
notwithstanding any termination of this Agreement, the Issuers shall be jointly
and severally liable (i) for all expenses that they have agreed to pay pursuant
to Section 5(f) hereof, and (ii) pursuant to Section 8 hereof.
11. Miscellaneous.
(a) Notices given pursuant to any provision of this Agreement
shall be addressed as follows: (i) if to the Issuers, One Buffington
Harbor Dr., Gary, Indiana 46406-3000, Attention: Michael Kelly, Chief
Operating and Financial Officer, with a copy to Dykema Gossett, PLLC, 400
Renaissance Center, Detroit, Michigan 48243, Attention: Frank K. Zinn, Esq.
and (ii) if to the Initial Purchaser, 11100 Santa Monica Boulevard, 10th
Floor,
27
Los Angeles, California 90025, Attention: Jerry M. Gluck, Esq.,
with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand
Avenue, Suite 3400, Los Angeles, California 90071, Attention: Michael A.
Woronoff (provided, that any notice pursuant to Section 8 hereof will be
mailed, delivered, telegraphed or telecopied and confirmed to the party to
be notified and its counsel), or in any case to such other address as the
person to be notified may have requested in writing.
(b) This Agreement has been and is made solely for the benefit
of and shall be binding upon each of the Issuers, the Initial Purchaser
and, to the extent provided in Section 8 hereof, the controlling persons
officers, directors, partners, employees, representa tives and agents
referred to in Section 8, and their respective heirs, executors,
administrators, successors and assigns, all as and to the extent provided
in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Series A Notes from the Initial
Purchaser merely because of such purchase. Notwithstanding the foregoing,
it is expressly understood and agreed that each purchaser who purchases
Series A Notes from the Initial Purchaser is intended to be a beneficiary
of the Issuers' covenants contained in the Registration Rights Agreement to
the same extent as if the Notes were sold and those covenants were made
directly to such purchaser by each of the Issuers, and each such purchaser
shall have the right to take action against each of the Issuers to enforce,
and obtain damages for any breach of, those covenants.
(c) This Agreement shall be construed and interpreted, and the
rights of the parties shall be determined in accordance with the laws of
the State of New York. Each party hereto consents specifically to the
jurisdiction of the federal courts of the United States sitting in the
Southern District of New York, or if such federal court declines to
exercise jurisdiction over any action filed pursuant to this Agreement, the
courts of the State of New York sitting in the County of New York, and any
court to which an appeal may be taken in connection with any action filed
pursuant to this Agreement, for the purposes of all legal proceedings
arising out of or relating to this Agreement. In connection with the
foregoing consent, each party irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
court's exercise of personal jurisdiction over each party to this Agreement
or the laying of venue of any such proceeding brought in such a court and
any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. Each party further irrevocably waives its right
to a trial by jury and consents that service of process may be effected in
any manner permitted under the laws of the State of New York.
(d) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
28
(e) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as
that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
(g) This Agreement may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given,
provided that the same are in writing and signed by each of the signatories
hereto.
29
Please confirm that the foregoing correctly sets forth the agreement
between the Issuers and the Initial Purchaser.
Very truly yours,
THE MAJESTIC STAR CASINO, LLC
By: Barden Development, Inc., its manager
By: /s/ Don H. Barden
-------------------------------------------
Name: Don H. Barden
Title: President
THE MAJESTIC STAR CASINO CAPITAL CORP.
By: /s/ Don H. Barden
-------------------------------------------
Name: Don H. Barden
Title: President
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By: /s/ Brent Stevens
-------------------------
Name: Brent Stevens
Title: Managing Director
30